Crypto: European Union launches Second Consultation on MiCA Regulation

Crypto regulation remains a subject that is both complex and controversial. The reason for this is that, at the current moment, there is still no clear and harmonized legal framework within the European Union. Indeed, the European Parliament has already adopted the MiCA crypto standard. However, some uncertainties persist. Hence the second consultation launched by ESMA, the European Securities and Markets Authority.

🟣The second consultation package under the Markets in #CryptoAssets Regulation (#MiCA) is out → https://t.co/0HbsPrLFps.

🔎 #ESMA seeks input on five sets of proposed rules.
⏳ Send your comments by 14 December. pic.twitter.com/zD3pVtNOcf

— ESMA – EU Securities Markets Regulator 🇪🇺 (@ESMAComms) October 5, 2023

Crypto regulation at the core of ESMA’s mission

ESMA is the regulatory authority for financial markets in the European Union. Since the emergence of the cryptocurrency market, it has shown a particular interest in it. In general, ESMA’s mission is to protect investors (crypto or non-crypto) and ensure the integrity, transparency, and proper functioning of financial markets.

In this context, ESMA has just launched a second consultation on the MiCA crypto regulations. This consultation aims to gather input from stakeholders on the proposed technical requirements for MiCA regulation. Recall that the MiCA crypto standards were promulgated in June 2023.

ESMA tackles the technical aspects of the MiCA law

The MiCA regulation is a legislative proposal aimed at creating a harmonized framework for cryptographic assets within the EU. Specifically, it aims to establish clear and uniform rules for services related to cryptocurrencies. This includes:

• Exchange,
• Custody,
• Transfer,
• Issuance.

The technical rules proposed by ESMA in this consultation specify the implementation details of MiCA crypto regulation. More explicitly, the consultation covers five areas:

• Sustainability indicators for distributed ledgers,
• Disclosure of privileged information,
• Technical requirements for whitepapers,
• Transaction transparency measures,
• Requirements for document retention and business continuity for providers of services on crypto-assets (PSCA).

A consultation open to the entire crypto community

The consultation is open until December 14, 2023. It allows players in the crypto industry to provide their input on the technical rules proposed by ESMA. The comments collected during this consultation will indeed help ESMA finalize its proposals for technical rules.

After December 14, the regulatory authority will publish a final report. Then, it will submit the crypto technical standards to the European Commission for approval, with a deadline set no later than June 30, 2024. It is also known that ESMA must publish a third consultation package in the first quarter of 2024.

Crypto regulation represents a significant challenge for the future of financial markets (not only in Europe). The consultation launched by ESMA thus offers stakeholders (especially market crypto players) a unique opportunity to participate in the development of this regulation.