The European Union’s crypto-focused MiCA legislation, created to govern the crypto sector, began on June 30, almost a year after it was completed in April 2023. The aim of this law is to ensure that investors involved in the crypto sector throughout the EU region are protected from financial risks and volatility that volatile crypto assets are quite notorious for. Political analysts are urging lawmakers in Nigeria and other neighboring countries to take inspiration from the EU to develop their own crypto regulations.
What has Nigeria learned from MiCA EU?
Nigerian policy makers are impressed with the MiCA laws as they prioritize the growth of this niche sector while protecting the interests of investors. Nigerian political analyst Obinna Uzoije recently said in an interview with CoinTelegraph that crypto regulations like MiCA bring more clarity on dos and don’ts for crypto companies and investors.
Uzoije said he has advised the Economic Community of West African States (ECOWAS) to examine the intricacies of MiCA and how the legal framework is systematically and uniformly deployed across the EU region.
The ECOWAS region consists 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, leaving other nations in a quandary.
Uzoije reportedly proposed to the ECOWAS countries to reach a middle ground regarding crypto activities so that they can at least be used to raise the financial status of those countries. The uniform rules for virtual assets, according to Uzoi, will not only attract companies looking for crypto-friendly regions to ECOWAS, but will also diversify investment opportunities for those countries as well as their citizens, the report added.
In addition, specific cryptocurrency legislation could subsequently curb cases of misuse of cryptocurrencies for criminal activities such as money laundering and terrorist financing emanating from the West African region. The ECOWAS Commission headed by Imar Alieu Touray has so far not reacted to Uzoi’s proposals.
MiCA explained
The MiCA — or Markets in Crypto Assets — framework was given the green light by EU regulations back in October 2022. The rules that are part of this legislation cover preventive and risk mitigation steps associated with activities based on crypto assets such as insider trading, illegal disclosure of insider information and market manipulation.
Under these laws, any Web3 company that wants to do business in the EU will first need to secure a license from at least one of the EU’s 27 national financial regulators. Crypto-related businesses have also been mandated to publish white papers of the products and services they offer along with clear warnings about risk and financial consequences.
Earlier in June, the European Banking Authority (EBA) finalized the technical standards that Web3 companies must meet before they can do business in the EU under the MiCA regulation. The EBA addressed a number of issues in its final draft technical standards for MiCA, including those relating to liquidity requirements, the stress test programme, asset reserves and recovery plans. The law also strengthens oversight of asset-linked tokens (ARTs) — which includes stablecoins, while increasing oversight of e-money tokens (EMTs) like CBDCs.
