The European Securities and Markets Authority (ESMA), the regulatory body overseeing financial markets in the European Union (EU), has taken a significant step in regulating the burgeoning crypto-asset sector. On July 12, ESMA unveiled a consultative paper as part of its broader effort to implement the Markets in Crypto-Assets (MiCA) framework.
MiCA, approved by the European Parliament on April 20, represents a comprehensive legislative framework aimed at bringing crypto-assets and crypto-asset service providers (CASPs) under regulatory oversight. It sets out a series of rules and standards designed to ensure consumer protection, market integrity, and regulatory clarity in the fast-growing cryptocurrency market.
The recent consultative paper from ESMA is the first in a series of three packages, focusing on technical specifications for CASPs. Under MiCA, entities already holding licenses will be presumed capable of providing crypto-asset services. However, they will be required to furnish additional information through notifications to their respective national competent authorities (NCAs).
The consultative paper invites industry stakeholders and interested parties to provide feedback on various aspects of CASP regulation. These include regulatory and technical standards for CASP authorization applications, procedures for handling complaints, and the management and prevention of conflicts of interest. Additionally, ESMA seeks input on technical standards for disclosures to NCAs when entities intend to acquire shares in a CASP.
ESMA has set a deadline of September 20 for responses to the paper. Subsequently, the agency plans to draft finalized standards by June 30, 2024, in accordance with MiCA’s mandate. The second and third consultative packages are scheduled for release in October and the first quarter of 2024, respectively, aligning with the deadlines outlined in MiCA.
Apart from seeking specific feedback, ESMA has posed more general questions to respondents, aiming to gain a deeper understanding of the EU’s crypto-asset markets and their future development. These inquiries touch upon expected turnover, the number of white papers planned for publication, and the use of on-chain and off-chain trading.
MiCA is set to be implemented in stages, with full enforcement expected in 2024 and 2025. This legislative framework underscores the EU’s commitment to fostering a regulated and secure environment for crypto-assets, promoting investor confidence and market stability in the rapidly evolving world of cryptocurrencies.
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