The European Union's crypto-focused MiCA legislation, created to govern the crypto sector, came into force on June 30 almost a year after it ended in April 2023. The aim of this legislation is to ensure that investors who collaborate with the crypto sector throughout the EU region protected against the financial risk factors and instability that come with volatile crypto assets are quite infamous. Policy analysts are calling on lawmakers in Nigeria and other neighboring nations to take inspiration from the EU to develop their own crypto regulations.
What are Nigeria's learnings from the EU MiCA
Nigerian policymakers are impressed with the MiCA laws because they prioritize the growth of this niche sector while protecting the interests of investors. Nigerian policy analyst Obinna Uzoije recently said in an interview with CoinTelegraph that crypto regulations like MiCA bring more clarity to the dos and don'ts for crypto companies and investors.
Uzoije said he advised the Economic Community of West African States (ECOWAS) to look into the intricacies of MiCA and how the legal framework has been rolled out systematically and uniformly across the EU region.
The ECOWAS region is made up of fifteen nations, including Nigeria, Ghana, Guinea and Senegal, among others. Of these fifteen nations, Nigeria and a few others are crypto-friendly, while some like Sierra Leone are strictly anti-crypto where crypto activities are banned, which has left other nations confused.
According to reports, Uzoije has suggested ECOWAS nations to reach a middle ground in crypto activities so that they could at least be used to uplift the financial status of these countries. Uniform rules for virtual assets, according to Uzoije, will not only attract companies looking for crypto-friendly regions to ECOWAS, but also diversify investment options for these countries and their citizens, the report added .
Furthermore, concrete legislation around cryptography could subsequently curb cases of misuse of cryptography for criminal activities such as money laundering and terrorist financing in the West African region. So far, the ECOWAS Commission headed by Imar Alieu Touray has not reacted to Uzoije's suggestions.
explained the MiCA
The MiCA framework, or Markets in Cryptographic Assets, was given the green light by EU regulations in October 2022. The rules that form part of this legislation cover preventive and risk mitigation steps related to crypto-based activities , such as insider trading, illegal disclosure of internal data. information and market manipulation.
Under these laws, any Web3 company wishing to operate in the EU must obtain a license from at least one of the EU's 27 national financial regulators. Crypto-related companies have also been mandated to publish white papers of the products and services they offer, along with clear warnings of risk and financial consequences.
At the beginning of June, the European Banking Authority (EBA) finalized the technical standards that Web3 companies must meet before they can operate in the EU under the MiCA regulation. The EBA addressed a number of issues in its final draft technical standards for MiCA, including those related to liquidity requirements, the stress testing program, asset reserves and recovery plans. The law also strengthens oversight of asset reference tokens (ARTs), which includes stablecoins while increasing monitoring of electronic money tokens (EMTs) such as CBDCs.
