ESMA Issues First Input To Give Feedback From Crypto Sector On New MiCA Law

Key Points:

• The European Securities and Markets Authority (ESMA) seeks feedback on the new crypto regulation (MiCA) through a consultation package.
• The EU’s financial markets regulator and supervisor wants to understand the crypto industry better by collecting information on stakeholders’ actions and preferences.
• MiCA allows single-license operation for wallet providers and exchanges in the EU, with reserve requirements for stablecoins.

The European Securities and Markets Authority (ESMA) is interested in learning what the cryptocurrency sector thinks about the newly implemented Markets in Crypto-Assets Regulation (MiCA).

As a result, ESMA has released its first consultation package and aims to release two more in the future. The EU’s financial markets regulator and supervisor are seeking stakeholder feedback on the newly agreed crypto rule by September 20, 2023.

ESMA will take into account the response obtained from this consultation and plans to produce a final report and submit draft technical standards to the European Commission for approval by 30 June 2024 at the latest.

The first of three consultation packages seeks feedback on draft guidelines for crypto-asset service providers (CASPs), especially concerning their authorization, conflict of interest detection and management, and complaint processing.

Moreover, ESMA intends to collect further information on respondents’ present and prospective actions as part of a fact-finding exercise in order to better understand the EU crypto-asset markets and their future growth.

This endeavor includes gathering data on stakeholders’ estimated turnover, white paper publishing plans, and preferences for on-chain vs off-chain trade.

ESMA Chairperson Verena Ross sees this initial consultation package as a crucial step toward adopting the MiCA framework.

“We are determined to ensure entities involved in crypto-asset-related activities understand that 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,” Ross stated.

MiCA, which goes into effect in 2024, allows organizations like as wallet providers and exchanges to operate throughout the bloc with a single license and establishes reserve requirements for stablecoins connected to the value of other assets.

Answers to these consultations will be kept private and will help ESMA fine-tune recommendations for the second and third consultation packages. ESMA will continue to work on its remaining mandates alongside this consultation, with the goal of publishing a second consultation package in October 2023.

ESMA anticipates publishing a final report and submitting draft technical standards for approval to the European Commission by 30 June 2024. Since the legislation was initially proposed in September 2020, its implementation might take up to four years. Of course, assuming no delays along the way.

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