Why Croatia is the latest European Union state to craft crypto rules ahead of landmark MiCA law – DL News

Now that the European Union has approved a landmark crypto law comes the hard part — implementing it across the trading bloc’s 27 member states.

That’s going to take time. The Markets in Crypto Assets Regulation, or MiCA, as the law is known, won’t go live until the end of 2024. But some EU nations are racing to get a jump on rival states by applying the law’s provisions to their respective markets.

Racing ahead of MiCA

France, for instance, is crafting its own laws in preparation for MiCA under the leadership of President Emmanuel Macron. And Croatia isn’t waiting around either.

On June 30, Croatian financial regulators adopted a rulebook directing crypto firms to register with officials in 60 days. The rulebook regulates the crypto registry that will be managed by an agency called Hanfa, while know-your-customer and anti-money laundering practices at financial firms are already regulated by the law on anti-money laundering.

“This rulebook is a very good introduction to MiCA,” Vlaho Hrdalo, attorney and president of the Blockchain and Cryptocurrency Association in Croatia, told DL News. “It is not MiCA nor is it trying to be, but I think it will serve as a unique transitional regime.”

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One of the key elements in MiCA is dealing with the practice of “passporting.” In the EU, finance firms have the right to base themselves in one member state and then extend their services to customers in other nations under the auspices of their home country’s rules.

Hrdalo said Croatian regulators are already working on passporting rules so companies may opt to base themselves in the Balkan nation and provide crypto services across the EU.

“In practice, this will mean greater security for service users and increased standards for service providers,” Hrdalo explained.

18 crypto companies

Ivan Čizmić, a lawyer and the general secretary of the StoneBlock Blockchain Association, said the passporting effort may draw the interest of major crypto firms seeking a home base in the EU.

It’s unclear just how big the crypto market is in Croatia, a nation of almost four million. The Blockchain and Cryptocurrency Association counts a few hundred people as members.

There are 18 crypto companies registered with the authorities in Croatia, according to a list of groups filed with regulators.

‘The current regulation of virtual property in Croatia can be more ambitious.’

—  Ivan Čizmić,

One of those companies is Electrocoin, an exchange that reported €72 million in revenue last year. Its leaders welcome the new crypto regulations despite the compliance process.

“This will certainly give us much-needed credibility regarding the services we provide,” Nikola Rečić, a spokesman for Electrocoin, told DL News. “And it will also help us differentiate ourselves from other potentially illegal and illicit companies and projects.”

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Even so, Čizmić said Croatian regulators have a long way to go in building a regime that will safeguard the industry and fit in with the EU’s larger MiCA regime.

In Croatia, there is still no law that directly regulates digital assets, which exists in some neighbouring countries like Serbia.

“The current regulation of virtual property in Croatia can be more ambitious,” Čizmić said. “It is necessary to adapt more often to technological developments and the growing demand for virtual assets as well as the needs of the industry.”

Getting ahead of MiCA is a good place to start, he said.

Ana Ćurić, based in Belgrade, covers the Balkans for DL News. Have a tip? Contact the author at [email protected].