MiCA & TFR: Why you should pay attention to new EU regulations

Has the latest EU regulatory news caught your eye yet?

If not, it’s time to start paying attention. Together, two pieces of legislation are set to transform the global crypto landscape.

Recently Transfer of Funds Regulation (TFR), the EU implementation of the Financial Action Task Force (FATF) Travel Rule was approved by the EU Parliament, which requires crypto operators to identify their customers to alleviate money laundering.

Also making headlines at the same time was the European Council’s adoption of the world’s first comprehensive set of rules, called Markets in Crypto-Assets (MiCA). Now that it has proceeded through this vote, MiCA is scheduled to be implemented in 2024.

What is TFR?

The EU Parliament voted to enact TFR, or Transfer of Funds Regulation, which will apply to crypto transactions. Information about the source of the digital asset and its recipient, for example name, account numbers, date of birth and address, must travel with the transaction and be stored on both sides of the transfer. 

The law will also cover transactions above €1000 from self-hosted wallets when they interact with hosted wallets managed by crypto-assets service providers. The rules do not apply to peer-to-peer transfers conducted without a provider or among providers acting on their own behalf.

What is MiCA?

MiCA is the most comprehensive framework for crypto assets globally. Spurred by a confusing regulatory patchwork system, the failure of Meta’s Diem, and the desire to burnish its reputation as a world leader, the EU has finally succeeded in passing landmark crypto-asset legislation. MiCA aims to protect consumers and provide a framework for business development in the sector.

MiCA outlines rules for those issuing and trading crypto assets, including topics such as transparency, disclosure, authorization and transactions. Importantly, disclosures to consumers around risks, costs and operational charges will be required. The legislation is also designed to promote financial stability and market fairness in public offerings of crypto assets, regulate stablecoin issuance, establish a licensing protocol for service providers, prevent money laundering and counter terrorism financing. It also recommends a public registry for non-compliant crypto asset service providers operating in the EU without authorization.

Notably, MiCA does not include rules around smaller NFT collections, but it may eventually apply to larger collections, such as BAYC or CryptoPunks.

Will TFR and MiCA requirements apply to my business?

If your company interacts with other companies or people within the EU, then your business will likely need to comply with TFR and MiCA regulations.

How is Civic helping businesses address these new regulations?

Civic offers an open, privacy-preserving, cross-chain platform that allows crypto asset service providers to meet regulations with minimal disruption. We work with businesses to help them meet their compliance goals.

Interested in learning more? Visit our Pricing page or get in touch below. We’re here to help.


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