Finance Monthly - August 2022

32 Finance Monthly. Bank i ng & F i nanc i a l Se r v i ce s to offer protection to consumers. Crypto-asset white papers would have to be “fair, clear and not misleading”. Crypto-asset service providers must strive to obtain the “best possible result” when executing orders for crypto assets on behalf of third parties. Issuers of asset-referenced tokens would be required to implement procedures for handling complaints. Again, these selected conduct-related examples illustrate that the influence of MiFID II on the development of MICA has been pervasive. Added to this are requirements for crypto-asset providers to implement systems and controls to detect potential market abuse perpetrated by their clients. When is MICA likely to enter into force? Is there anything crypto-asset services providers can do now to prepare for its implementation? It is mooted that MiCA will enter into force in 2024. By reviewing the requirements in MiCA as early as possible, existing entities that could be subject to its authorisation requirements have an opportunity to put themselves in a strong position. Those who are familiar with implementing other major EU regulatory packages such as MIFID II, the European Markets Infrastructure Regulation (EMIR) and the Alternative Investment Fund Managers Directive (AIFMD) appreciate the importance of getting off to a good start in developing regulatory change programmes. The time and resources required should never be underestimated, particularly where achieving compliance is heavily dependent on technology. Furthermore, starting early helps the senior management of a business forward project capital and cost requirements. This is key to avoiding nasty surprises, enabling a crypto-asset business to face the future with confidence. MiCA is perhaps the most notable regulatory initiative emanating from the EU that will not have been contributed to by UK policymakers. How is the regulatory landscape for crypto assets evolving in the UK in comparison? In March 2022 the Bank of England’s (BoE) Financial Policy Committee (FPC) published a report entitled “Financial Stability in Focus: Crypto assets and decentralised finance” that provides insights into the possible trajectory of regulatory reform in this area. From a macroprudential perspective, the FPC observes that there is “limited interconnection” between the UK financial system and crypto

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