This article discusses the EU’s approach to regulating crypto custody services under the Market in Crypto-assets (MiCA) Regulation against the background of asset diversions and misappropriations observed throughout the Crypto Winter. It seeks to identify whether MiCA meets its legislative objectives and whether it provides a sufficiently solid foundation for the future of the emerging crypto industry. We find that MiCA’s focus is on what we have called herein ‘institutional resilience’, ensuring that the custodian is soundly organized and governed and must not reuse clients’ assets on their own accounts. At the same time, MiCA lacks strength on ‘asset resilience’ (ie providing safeguards for cases where the custodian, third parties, the token-issuer or DeFi application, as the case may be, encounter difficulties).

U-AGR-7500 - NCER22/IS/16570468/NCER-FT_GEN.ORG_UL - FRIDGEN Gilbert

peer reviewed