IMPLEMENTATION OF THE MARKETS IN CRYPTO-ASSETS REGULATION (MICAR)

The MiCAR aims to harmonize crypto regulations across member states and ensure a level playing field. It introduces licensing and supervision requirements for crypto businesses, and sets out measures to prevent market abuse.

MiCAR covers the following types of crypto assets: E-money tokens (EMTs); Asset-referenced tokens (ARTs); other crypto-assets, e.g., utility tokens.

The scope of MiCAR, however, does not include some other types of crypto-assets, such as: Digital Euro; tokenized stocks, bonds, and other financial instruments (regulated under MiFID); E-money, as defined in the E-Money Directive; Cryptocurrencies, such Bitcoin and Ethereum.

AML  REQUIREMENTS  IN CRYPTO  MARKETS

The revised Transfer of Funds Regulation extends existing financial regulations to crypto-asset transfers. It incorporates the FATF’s Travel Rule, requiring Crypto-Asset Service Providers (CASPs) — such as crypto exchanges, wallet providers, and others — to collect and share information on the originators and beneficiaries of crypto-asset transfers. This includes names,  addresses,  account details,  official identifiers.

Furthermore, the TFR integrates CASPs into the EU’s anti-money laundering framework (AMLD V). CASPs now must follow the same AML rules as traditional financial institutions, including know your customer (KYC) checks, monitoring transactions for suspicious activity, reporting suspicious transactions to authorities.

THE  AI  ACT:  IMPLICATIONS  FOR  FINTECH

The AI Act introduces a comprehensive regulatory framework for AI systems, significantly impacting the financial technology (fintech) sector. All AI applications are classified based on their risk levels – unacceptable, high, limited, and minimal – with high-risk systems subject to stringent requirements.

In fintech, AI systems used for credit scoring, fraud detection, and automated trading are likely to be deemed high-risk. When using them, businesses will need to comply with obligations related to data governance, transparency, human oversight, and robustness. Non-compliance can result in substantial penalties, including fines up to €35 million or 7% of global turnover.

Fintech companies must proactively assess their AI deployments, implement necessary compliance measures, and stay abreast of evolving regulatory guidance to navigate the complexities introduced by the AI Act.

INSTANT  EURO  PAYMENTS  IN  2025

The IPR aims to standardize instant payment capabilities across the Single Euro Payments Area (SEPA). In particular, it mandates that payment service providers (PSPs) offering standard credit transfers in euro must also provide instant credit transfer services. Such instant payment transactions must be settled within 10 seconds, operating 24/7.

The implementation timeline in the eurozone is as follows: 9 January 2025: PSPs must offer the service of receiving instant credit transfers; 9 October 2025: PSPs must offer the service of sending instant credit transfers.

For non-eurozone EU member states implementation stretches out for two more years, with January 2027 being the deadline for receiving, and July 2027 for sending instant credit transfers.

INTRODUCTION  OF  DIGITAL  IDENTITY  WALLETS

The eIDAS 2.0 requires the EU Member States to offer European Digital Identity Wallets to citizens and residents. This aims to provide a unified and secure method of online and offline identification across the EU.

 The digital wallets will allow individuals to authenticate their identity, access public and private services, and share personal data, such as age or professional qualifications, without disclosing unnecessary information.