MiCA, signed into law in June 2023, marked a significant milestone for the European Union's cryptocurrency landscape. However, its full implementation is a process that spans twelve to eighteen months, involving the development and refinement of numerous Level 2 and Level 3 measures, as indicated by the European Securities and Markets Authorities.

In 2024, we anticipate the EU transitioning towards enacting MiCA, followed by collaborative efforts and adaptations to extend its international influence. This includes EU financial institutions exploring partnerships with qualified sub-custodians.

Although having a unified framework for all EU jurisdictions will streamline operations for crypto exchanges and firms, unique characteristics of individual countries will still require careful navigation. For instance, companies licensed to offer crypto services in one EU country may need to address separate KYC and AML requirements when operating in another.

The year ahead will be characterized by governments ironing out details, generating extensive paperwork, and engaging in multilateral negotiations. As MiCA procedures unfold, proactive preparation by companies will pave the way for smoother compliance and the realization of MiCA's benefits.

Spot Bitcoin ETFs are poised for approval in the EU, with institutional access likely preceding retail availability in 2024. The ongoing bull market enhances the prospects of swift ETF applications and approvals, driven by a desire to capitalize on high trading volumes and cater to a crypto-savvy clientele.

Post-MiCA implementation, we anticipate customizations that democratize financial participation, potentially through bilateral agreements between the EU and smaller jurisdictions. Such agreements could empower smaller entities to leverage MiCA's benefits and enhance trading volume.

MiCA's adoption also elevates Europe's role in shaping international AML/CFT standards. While fully standardized global regulations are unlikely, common principles are emerging, fostering regulatory clarity and supporting crypto industry growth.

With MiCA in effect, EU banks and asset managers gain streamlined access to crypto custody licenses. Many institutions may opt for sub-custodians to manage digital assets, allowing them to focus on core functions while leveraging specialized expertise in asset security.

Navigating MiCA's implementation will require key stakeholders to make strategic decisions, including selecting sub-custodian partners. These decisions will shape the evolving landscape of crypto regulation and financial services in the EU.