The European and Securities Markets Authority (ESMA) has declared that it does not believe in the existence of a “safe crypto-asset”. This was published in its first consultation package on the Markets in Crypto-Assets (MiCA) regulation.
Titled ‘Technical Standards specifying certain requirements of the Markets in Crypto Assets Regulation (MiCA)’, the consultation paper lays out proposals for crypto-asset service providers (CASPs). It covers everything from authorisation, identification and management of conflicts of interests to how these firms should handle customer complaints.
The new regulation will fill the gap of uniform rules around the relatively new asset class whose demand increases day-by-day. The chair of ESMA, Verena Ross, called the package an important milestone in the implementation of the MiCA framework as it sets “high regulatory standards in the EU for crypto-asset related activities into concrete requirements”.
The chairwoman also warned consumers of the risk factor associated with cryptocurrencies. She extended her statement saying: “We are determined to ensure entities involved in crypto-asset related activities understand 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.”
ESMA has invited all interested stakeholders to respond to this consultation paper, particularly, crypto-assets issuers, crypto-asset service providers, financial entities dealing with crypto-assets as well as all stakeholders that have an interest in crypto assets.
The regulator will consider all comments and feedback received from stakeholders by 20 September 2023. It also aims to publish a final report and submit the draft technical standards to the European Commission for endorsement by 30 June 2024.
Once MiCA becomes a reality, it will empower wallet providers and exchanges to operate across the 27-nation bloc with one licence.
What is MiCA?
On Thursday 20 April 2023, the European Parliament voted 517 in favour and 38 against to pass the Markets in Crypto Act – also known as MiCA.
MiCA is a new regulation by the European Union aimed at providing a legal framework for crypto, Initial Coin Offerings (ICOs), and other digital asset-related services. The goal of MiCA is to establish a comprehensive, synchronised set of rules for crypto-assets and related service providers operating within the EU.
