MiCA passed in 2022, but aspects of it are still being worked out. Defining a financial instrument is a big outstanding question.
The European Securities and Markets Authority (ESMA) released two consultation papers on Jan. 29 pertaining to its mandate to create standards and guidelines for the implementation of the Markets in Crypto-Assets (MiCA) regulation. The papers considered reverse solicitation and crypto assets qualifying as financial instruments.
Reverse solicitation is the name given by European regulators to the practice of a potential customer approaching a firm for crypto asset services. An exemption to the MiCA framework allows third-country crypto asset firms to service a European Union client through this mechanism alone.
“Third-country firms may not solicit clients in the Union as they are not authorised to provide CASP [presumably, crypto-asset service provider] services in the Union,” the report explains, unless “the client at its own, exclusive initiative contacted the firm and requested the service, the third-country firm may provide it.” ESMA sees reverse solicitation as only a narrow exemption for third-country firms:
