The European Securities and Markets Authority (ESMA), the European Union’s financial markets regulator, has released its first consultation package looking into MiCA(Markets in Crypto-Assets) regulation. The regulator also invited stakeholder comments that will take place until 20 September 2023.
The proposal is highlighted in the EU securities agency’s 160-page consultation with different subjects, including how crypto firms must handle user complaints and interest conflicts.
ESMA needs feedback on EU crypto regulation
ESMA is requesting feedback on draft regulations for crypto-asset service providers (CASPs) in its proposal, which is the first of three consultation packages. The specific pain points addressed are crypto authorization, conflict of interest management, identification, and CASPs solution to the complaints.
ESMA wants to gather more information from the public and gain more insight into its current and planned activities to understand the EU crypto-asset market and its prospects. The questions include the respondents’ anticipated turnover, the number of white papers they want to publish, and if they will employ on-chain or off-chain trade.
The feedback provided for the current consultation phase will be kept confidential and used to calibrate a few of the concepts included in the second and third consultation packages.
ESMA will continue to work on the remaining needs during this phase in preparation to release a second consultation package in October 2023. By 30 June 2024 at the latest, ESMA hopes to have published a final report and sent the proposed technical standards to the European Commission for approval after considering the comments received during this consultation.
According to ESMA chair Verena Ross, the move is a crucial milestone for ESMA in the MiCA framework implementation. She adds that the consultation translates to their ambition to set a high regulatory standard in the European Union regarding crypto and related activities.
MiCA regulation aims at protecting investors
MiCA, which goes into effect in 2024, establishes reserve requirements for stablecoins based on the value of other assets and grants crypto asset service providers, also known as CASPs, the authority to operate across the 27-nation bloc with a single license. Even though the legislation was largely agreed upon by June 2022, ESMA has been impacted by claims of insufficient security and governance in the cryptocurrency industry, such as those that came in the wake of the FTX exchange declaring bankruptcy in November.
MiCA seeks to safeguard investors by increasing transparency and developing a thorough framework for service providers and issuers. The new regulations apply to companies issuing so-called “stablecoins,” asset-referenced tokens, and utility tokens. They also cover service providers such as wallets holding crypto assets and trading avenues.
While the regulation strives to safeguard investors and protect financial stability, it also creates a chance for innovation and more crypto adoption. That’s not all. It also establishes a unified framework to enforce regulation in the European Union. Compared to the current regulation whereby only some nations regulate crypto, it is more effective as it covers member states.
