Working paper

Crypto-Asset Market Abuse Under EU MiCA

co-authored with André de Gândara Gomes

The new EU Markets in Crypto-Assets Regulation (‘MiCA’) emphasizes the prevention of market abuse as one of its five main objectives. This paper critically analyzes MiCA’s provisions on market abuse (Title VI), applying the new rules to the primary categories of crypto-asset market integrity risks to provide a coherent interpretation. In doing so, we consider both the pre-existing legal framework for protecting market integrity, chiefly the Market Abuse Regulation (‘MAR’), and the unique features of crypto-asset markets. We find that by largely replicating MAR, MiCA presents ‘new wine in old bottles’ challenges, as crypto- assets introduce novel issues that the legislator attempts to address with a subset of existing tools. The extent to which ‘decentralized finance’ (DeFi) activities will incur liability under MiCA’s anti-market abuse provisions remains unclear, particularly regarding various blockchain network participants. Furthermore, classifying Maximum Extractable Value (MEV) strategies as market abuse may prove difficult. The absence of certain safe-harbor provisions present in MAR, such as those for self- insiders and buy-back and stabilization schemes, may create uncertainty and potentially chill legitimate market behavior under MiCA.