The
European Securities and Markets Authority (ESMA), the EU’s financial watchdog, today
(Tuesday) issued statements urging member states and market participants to
prepare for the transition to the Markets in Crypto-Assets Regulation (MiCA).
The regulation aims to standardize crypto-asset activities across the EU,
enhancing consumer safeguards and market stability.
ESMA’s Chairwoman, Verena Ross has addressed a letter to the Economic and Financial Affairs
Council, urging Member States to promptly designate competent authorities for MiCA implementation. Ross also suggests limiting the optional
“grandfathering” period to 12 months for jurisdictions that choose to
offer it.
ESMA has
outlined expectations for national authorities and crypto-asset service
providers, encouraging them to align their supervisory practices for effective
regulation from day one.
MiCA aims
to create a unified regulatory framework for crypto-assets across the EU. The
regulation, officially approved in May 2023, is set to come into
force in December 2024, with a transitional period that could extend until July
2026, depending on the Member State.
During this
transitional period, entities already providing crypto-asset services can
continue to operate under existing laws if member states choose to apply the
“grandfathering” clause.
Risks and Safeguards
ESMA warned that crypto-assets will remain inherently risky even after MiCA’s implementation. The regulator advises consumers to be cautious when investing in crypto-assets
and to be aware of the regulatory status of their investments. ESMA also noted
that full MiCA protections will not apply until the regulation is fully
implemented, urging consumers to be aware of the risks and the limited
protections available during the transitional period.
“MiCA rules
on the provision of crypto-asset services will not enter into application until
December 2024. As such, holders of crypto-assets and clients of crypto-asset
service providers will not benefit during that period from any EU-level
regulatory and supervisory safeguards or recourse mechanisms built into the
Regulation,” ESMA commented in the official statement.
ESMA has encouraged market participants to prepare for MiCA by engaging in early
dialogue with relevant authorities and informing clients about the regulatory
status of their services. Entities are also urged to apply for MiCA
authorization as soon as possible to benefit from passporting rights within the
EU during the transitional period.
For
example, Malta’s Financial Services Authority has already taken steps to
align the island’s existing cryptocurrency regulations with MiCA regulations.
As a result, it has initiated public consultations in the country regarding the
proposed changes. ESMA has also issued a new consultation document on MiCA, published at the beginning of this month.
In the meantime, the pan-European regulator issued new guidelines to improve circuit breakers for market
stability.
The
European Securities and Markets Authority (ESMA), the EU’s financial watchdog, today
(Tuesday) issued statements urging member states and market participants to
prepare for the transition to the Markets in Crypto-Assets Regulation (MiCA).
The regulation aims to standardize crypto-asset activities across the EU,
enhancing consumer safeguards and market stability.
ESMA’s Chairwoman, Verena Ross has addressed a letter to the Economic and Financial Affairs
Council, urging Member States to promptly designate competent authorities for MiCA implementation. Ross also suggests limiting the optional
“grandfathering” period to 12 months for jurisdictions that choose to
offer it.
ESMA has
outlined expectations for national authorities and crypto-asset service
providers, encouraging them to align their supervisory practices for effective
regulation from day one.
MiCA aims
to create a unified regulatory framework for crypto-assets across the EU. The
regulation, officially approved in May 2023, is set to come into
force in December 2024, with a transitional period that could extend until July
2026, depending on the Member State.
During this
transitional period, entities already providing crypto-asset services can
continue to operate under existing laws if member states choose to apply the
“grandfathering” clause.
Risks and Safeguards
ESMA warned that crypto-assets will remain inherently risky even after MiCA’s implementation. The regulator advises consumers to be cautious when investing in crypto-assets
and to be aware of the regulatory status of their investments. ESMA also noted
that full MiCA protections will not apply until the regulation is fully
implemented, urging consumers to be aware of the risks and the limited
protections available during the transitional period.
“MiCA rules
on the provision of crypto-asset services will not enter into application until
December 2024. As such, holders of crypto-assets and clients of crypto-asset
service providers will not benefit during that period from any EU-level
regulatory and supervisory safeguards or recourse mechanisms built into the
Regulation,” ESMA commented in the official statement.
ESMA has encouraged market participants to prepare for MiCA by engaging in early
dialogue with relevant authorities and informing clients about the regulatory
status of their services. Entities are also urged to apply for MiCA
authorization as soon as possible to benefit from passporting rights within the
EU during the transitional period.
For
example, Malta’s Financial Services Authority has already taken steps to
align the island’s existing cryptocurrency regulations with MiCA regulations.
As a result, it has initiated public consultations in the country regarding the
proposed changes. ESMA has also issued a new consultation document on MiCA, published at the beginning of this month.
In the meantime, the pan-European regulator issued new guidelines to improve circuit breakers for market
stability.
