Regulations

MiCA: an opportunity for Financial Institutions and the EU crypto industry

The Markets in Crypto-Assets Regulation (MiCA) is a regulation in EU law that aims to regulate crypto-assets and crypto-asset-related services and activities carried out in the EU. It was approved by the European Parliament on April 20, 2023 and will become law in 2024.

The MiCA regulation covers three types of crypto-assets:

• Asset-referenced tokens (ARTs): These are crypto-assets that are pegged to a real-world asset, such as a fiat currency or a commodity.
• Electronic money tokens (EMTs): These are crypto-assets that are used as a means of payment.
• Other crypto-assets: These are all other types of crypto-assets that are not covered by the first two categories.

The MiCA regulation establishes a number of requirements for crypto-asset issuers, crypto-asset service providers, and crypto-asset exchanges. These requirements include:

• Authorisation and supervision of crypto-asset issuers and service providers.
• Requirements for the management of the underlying assets of ARTs.
• Protection of consumers and investors.
• Prevention of market abuse and manipulation.
• Environmental impact reporting.

As CheckSig, we believe MiCA is a significant step forward in the regulation and broader adoption of crypto-assets in the EU. It’s framework will improve consumer and investor protection, while also allowing the continued innovation in the crypto-asset sector.

• It provides a clear legal framework for crypto-assets in the EU, which will help to reduce uncertainty and attract investment.
• It protects consumers and investors from fraud and manipulation.
• It promotes innovation in the crypto-asset sector by providing a level playing field for all players.

The MiCA regulation is a complex piece of legislation, and it will take some time for it to be fully implemented. However, it is a positive step forward for the regulation of crypto-assets in the EU.

At CheckSig, we embrace our role in this transformative phase of the industry and actively collaborate with regulators to ensure we meet or exceed all MiCA requirements.

DORA: Aligning Operational Resilience with Crypt Expertise

The Digital Operational Resilience Act (DORA) is a regulation in EU law that aims to improve the resilience of the financial sector to digital operational risks. It was adopted by the European Parliament and the Council of the European Union on December 14, 2022 and will apply from July 1, 2024.

DORA applies to a wide range of financial institutions, including banks, insurance companies, investment firms, and Brokers and Trading Platforms. It requires these institutions to:

• Establish a comprehensive risk management framework for digital operational risks.
• Detect and report incidents of digital operational risk.
• Test and evaluate their resilience capabilities on a regular basis.
• Monitor the resilience of their critical third-party suppliers.

DORA also establishes a new supervisory authority, the European Cybersecurity Agency (ENISA), to oversee the implementation of the regulation.

DORA will require FInancial Institutions to:

• have a comprehensive risk management framework for digital operational risks. This framework must identify, assess, and mitigate the risks posed by ICT systems and processes.
• detect and report incidents of digital operational risk to the relevant authorities. This includes incidents such as data breaches, cyberattacks, and system outages.
• test and evaluate their resilience capabilities on a regular basis. This includes testing their ability to withstand and recover from ICT-related disruptions.
• monitor the resilience of their critical third-party suppliers. This includes suppliers of ICT systems, data, and services.

Due to their distinctive attributes, cryptocurrencies and digital assets introduce a unique operational risk profile for financial institutions. Often, the processes within these institutions might not align seamlessly with the specific cybersecurity features of this emerging asset class.

As a dedicated Crypto asset service provider and outsourcer specifically catering to Financial Institutions, CheckSig is unwaveringly committed to ensuring complete adherence to DORA. This commitment harmonizes our teams’ substantial operational risk comprehension with a profound crypto asset expertise, fostering a comprehensive approach to risk management in crypto.