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EU: MiCA, DORA, Open Finance Framework, and Digital Euro

Regulation | May 23, 2024

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Key Digital Finance Legislation in the European Union

Digital finance in the EU refers to all financial services and instruments that rely on new Information and Communications Technology (ICT) from digital payment services and instruments to new market infrastructure for crypto assets using distributed ledger technologies. Below is an overview based on the European Parliament's briefing update on 'Digital Finance Legislation:  Overview and State of Play".  It is quite essential for the regulation and framework set upon by the EU to find a balance between innovation and digitization that will in turn provide an environment that is safe both for risk management and the consumers' protection.

2020 Digital Finance Package

Collectively, the digital finance regulations are called, "The 2020 package" and they are a foundational regulatory framework focusing on:

  1. Tackling market fragmentation
  2. Facilitating digital innovation
  3. Promoting a financial data space
  4. Addressing new digital finance challenges

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Overall, the package aims to improve market efficiency, strengthen consumer protection and support innovation by:

  • Streamlining digital finance regulations
  • Providing clear regulatory frameworks for digital finance innovations
  • Providing a supportive regulatory environment, fostering new financial technologies

Four (4) Key Digital Finance Regulations

1. Markets in Crypto-assets Regulation (MiCA)

MiCA regulation is set out in such a way that it safeguards consumers and firms using crypto-assets and facilitates innovation.  The regulation will secure a sound and transparent legal basis for crypto-assets market, harnessing the potential of innovation while ensuring financial stability.

The above regulation is going to achieve such factors:

  • A clear and robust legal framework of DLT-based crypto-assets.
  • Enhanced protections of consumers and investors' interests, and finally
  • Ensuring market integrity and promoting innovation

Status: Enforcement since June 2023

Key Dates: Measures under Level 2 should be applicable by December 2024

2. Digital Operational Resilience Act (DORA)

DORA regulation is designed to ensure the financial sector is resilient to ICT-induced disruptions and cyber-attacks.  It enhances operational resilience and cybersecurity in financial operations by requiring detailed documentation and management of risks.

DORA has the following objectives:

  • Effective ICT operation
  • Governance and control framework for ICT
  • Effective third-party risk management

Status: Enforcement by January 2023

Key Dates: The law will be applicable by 17 January 2025

3. Open Finance Framework

This is a framing of infrastructures that allow for access to financial data.  This will allow consumers and small and medium enterprises to share data securely with third-party service providers.  The legislation gives consumers control and access to their financial data, thereby enabling innovation in competitive financial services.

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This framework has the following objectives:

  • Access to data for businesses and consumers from institutions without any hindrance
  • A visionary protection of data under GDPR

Status: The legislative proposal for the same was put forth in June 2021.

Key Dates: The process is at the state of being in the legislative process.

4. Digital Euro

Digital Euro is a project through which ECB seeks to acquire a form of the digital euro which they seek to supplement with what is already physical currency.  This will pave the way for modernizing the EU payment infrastructure to allow secure and efficient digital transactions.

As per the ECB, Digital Euro would serve the following purposes:

  • Reduce dependency on non-EU payment service providers
  • Adapt to the growth in digital payment trends
  • Strengthen strategic autonomy of the European Union in the financial sector

See:  Open Banking: Revolutionizing Financial Data Sharing

Status: It has the same status—legislative proposals introduced in June 2021.

Key Dates: The adoption of the legislative mandates is pending.


EU digital finance legislation will be a foundational building block for a secure, innovative, and competitive financial ecosystem. The regulations will enhance market efficiency, ensure consumer protection, and foster technological advancements in the financial sector.

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