The European Securities and Markets Authority (ESMA) has completed its first final report under the Markets in Crypto Assets Regulation (MiCA), currently under review by the European Commission.
These first rules regarding crypto asset service providers (CASP) are aimed at “[fostering] clarity and predictability,” as well as “[promoting] fair competition between crypto-asset service providers and a safer environment for investors across the Union”.
The proposals cover what information will be required to authorise a CASP and when financial entities notify intent to provide these services.
Further, the ESMA report includes what information will be required when it comes to instances of acquisitions of a qualifying holding in a CASP, and also how CASPs should address complaints.
Depending on feedback from the EC following submission of the report, ESMA confirmed that they would move to provide further advice and technical guidance in the area if required by the commission.
Read more: Evolving regulation expected to push crypto derivatives trading volumes onshore
MiCA covers crypto-assets that are not regulated by existing financial services legislation, based on the principle of passporting, requiring operators in the space to obtain a single licence to provide crypto-asset services across member states of the European Union.
Set to take effect this year, the regulation, developed by the EU, came off the back of a lack of uniform rules around the asset class despite the market seeing increased demand for crypto products. The goal is for a comprehensive regulators framework which effectively reflects the nuanced scope of trading in digital assets.
Also this week, ESMA has launched its third, and final, consultation package under MiCA. Specifically, the watchdog is seeking input on the proposed rules and guidelines across four areas: detection and reporting of suspected market abuse in crypto-assets, policies and procedures for crypto-asset transfer services, suitability requirements for certain crypto-asset services and portfolio management formats, and ICT operational resilience for certain entities under MiCA.
Read more: ESMA publishes first consultation on Markets in Crypto-Assets regulation
Feedback to the consultation is required before 25 June 2024, with a final report based on the feedback set to be submitted to the European Commission for endorsement by 30 December at the latest.
Speaking during the launch of the first consultation package, ESMA explained: “We are determined to ensure entities involved in crypto-asset related activities understand that the EU is not a place for forum-shopping. We also want to remind consumers that, even with the implementation of MiCA, there will be no such thing as a safe crypto-asset.”
Earlier this year, in January, the regulator released a specific consultation paper seeking feedback from the market on the classification of crypto assets under MiCA.
Through this initiative, the regulator is aiming to facilitate consistency across the European Union by bridging the gap between MiCA regulation and Mifid II.
According to ESMA: “The proposed guidelines aim at providing national competent authorities (NCAs) and market participants with structured but flexible conditions and criteria […] to do so, the draft strikes a balance between providing guidance and avoiding establishing a one-size-fits-all approach.”