Crypto: ESMA opens debate on the MiCA law

The European Securities and Markets Authority (ESMA) opens a crucial consultation on the regulation of crypto-assets under MiCA. It is seeking the opinions of cryptography experts before April 29, 2024.

🔴 #ESMA publishes 2⃣ Consultations Papers on guidelines under Markets in Crypto Assets Regulation #MiCA:
📣 on reverse solicitation
📣 on the classification of crypto-assets as financial instruments

🗓️ Send your comments by 29 April 2024https://t.co/PEosx4t3UO pic.twitter.com/v31nWMUEcu

— ESMA – EU Securities Markets Regulator 🇪🇺 (@ESMAComms) January 29, 2024

Part 1: Consultation on Reverse Solicitation

ESMA’s first consultation focuses on the reverse solicitation exemption in the MiCA crypto law MiCA. Articulated in Article 61, it sets strict restrictions on third-country firms seeking to solicit clients in the EU.

According to ESMA’s latest data, this provision has sparked growing concerns about its potential use to circumvent MiCA authorization requirements. For example, last year, more than 30% of third-country crypto firms expressed concerns regarding the feasibility and clarity of this exemption.

Thus, ESMA aims to collect stakeholder expertise on:

• the conditions for applying this exemption,
• the necessary monitoring practices to prevent any circumvention.

Part 2: Classification of Crypto-Assets

The second part of the consultation focuses on classifying crypto-assets as financial instruments. This is a key issue to ensure consistency in crypto regulation throughout the EU.

The proposed guidelines by ESMA seek to align MiCA regulation with the MiFID II directive.

In practice, the goal of this consultation is to reduce misunderstandings and misinterpretations of political intentions. This initiative also aims to establish a balance between providing clear guidance, while avoiding imposing a one-size-fits-all approach.

What are the future prospects?

ESMA’s MiCA consultation represents a significant step towards clearer and more consistent crypto regulation in Europe. Stakeholders, particularly crypto service providers and financial entities, are called to contribute before April 29, 2024.

Once finalized, these guidelines will play a key role in establishing global standards for crypto regulation.

In any case, the open consultation offers a crucial opportunity to influence European crypto regulation and shape the future of the cryptographic asset markets.