After EU passes crypto rules, lawyers ask whether the UK will follow suit 

The EU’s landmark Markets in Crypto-Assets (MiCA) regulation, decided last week, will be the world’s first regulatory framework for crypto and could serve as a “benchmark” for the UK’s own legislation, according to legal experts.

The MiCA regulation, which will come into force at the end of 2023, will apply to crypto-asset issuers and service providers in the EU.

Under the new regulatory framework, crypto-asset service providers will need to be authorised to operate in the EU, while stablecoin providers will need to maintain sufficient reserves and crypto industry players will need to give information of their environmental and climate footprint. 

MiCA’s rules will also tackle fraudulent schemes, market abuse, and manipulation. 

“This landmark regulation will put an end to the crypto wild west and confirms the EU’s role as a standard-setter for digital topics,” said Bruno Le Maire, French minister for the economy, finance, industrial and digital Sovereignty.

Legal experts and the UK Treasury spoke to City PM on crypto rules in the UK in light of MiCa.

Mark Deem, partner at Mishcon de Reya, said there is a possibility that the EU will “become the default or benchmark position as far as regulation is concerned”.

He said the UK would risk losing “any strategic advantage” if it did not adopt regulation similar to MiCA and that the most important thing for regulators would be offering “suitable regulation” that encourages investment in crypto. 

Harry Eddis, partner at law firm Linklaters, said the UK will “take notice” of MiCA and may utilise some of its approaches, but would not implement MiCA in the same way as the EU. 

Senior Associate Sophia Le Vesconte at Linklaters said, “the UK will use MiCA as a reference point,” and check where it can depart from or follow it.

Asim Arshad, senior associate at Mackrell Solicitors, said he thought the UK would be keen to distance itself from some of the EU’s “stricter policies” and make itself an “attractive centre for those… who may feel rattled by MiCA”.

Meanwhile, a spokesperson for the Treasury – which is due to consult on a “world-leading” crypto regulatory regime later this year – told City PM it was “firmly committed” to putting the UK at the forefront of crypto by “capitalising on the freedoms gained by leaving the EU”. The UK’s framework will “support the safe adoption of crypto” while also facilitating innovation, they added