Crypto as a parallel universe

The financial market is very broad. Technological developments have made the modern financial industry very accessible to almost anyone. The financial market is made up of many elements. Definitely more than the average person could name in the middle of the night. They are: investors; intermediaries (banks, brokers, investment companies, insurers etc.); consumers; supervisory authorities; companies whose shares are publicly traded on stock exchanges or which borrow money through regulated markets (stock and bond issuers); regulated market itself (exchange), that all forms a single modern financial industry.

With the entry into force of the Markets in Crypto-Assets Regulation (MiCAR) at the end of 2024, blockchain-based financial products and exchange platforms are officially entering the European legal space alongside the traditional financial market ecosystem. For some this could be a bit complicated to understand.

Think of it in analogies with the financial market elements mentioned beforehand where:

• investors and supervisory authorities more or less stay the same;
• instead of classical financial securities and/or commodities (such as stocks, bonds, gold, coffee beans, grain etc.) investors are able to trade: 1) asset-referenced tokens (ARTs); 2) electronic money (e-money) tokens (EMTs); 3) utility tokens – provide access to specific products or services through platforms or companies and 4) payment tokens – are used as mean of exchange (buy/sell goods) or for storage of value;
• instead of classical banks, brokerage firms and other investment firms that serve as intermediaries, MiCAR defines crypto-asset service providers offering the custody and administration of crypto-assets on behalf of third parties; operators of trading platforms, placing of crypto-assets, crypto-asset portfolio management services etc.

In essence MiCAR defines the blockchain technology-based ecosystem for exchanging crypto-assets safely, professionally and with certain ethical standards, hence providing modern day investor the options to invest in the parallel universe of classical financial industry.