ESMA Launches Key Consultations on Crypto-Asset Regulations under MiCA

The European Securities and Markets Authority (ESMA) recently published two significant consultation papers under the Markets in Crypto-Assets Regulation (MiCA), focusing on the reverse solicitation and the classification of crypto-assets as financial instruments.

One of the consultation papers addresses the guidelines on reverse solicitation, where ESMA is seeking insights on the conditions for the application of the reverse solicitation exemption and supervision practices to prevent its misuse. This exemption, as outlined by ESMA, is designed to be narrowly framed, limiting the provision of crypto-asset services by third-country firms to instances where the client is the exclusive initiator of the service. This move is an effort to prevent circumvention of the MiCA regulation by third-country firms.

The other consultation paper delves into the classification of crypto-assets as financial instruments. ESMA aims to establish clear conditions and criteria for this classification, bridging MiCA regulation with the Markets in Financial Instruments Directive II (MiFID II). The proposed guidelines are meant to provide National Competent Authorities (NCAs) and market participants with structured yet flexible criteria to determine whether a crypto-asset falls under the category of a financial instrument.

This initiative highlights ESMA's commitment to developing a consistent regulatory approach across the EU for crypto-assets and ensuring they align with global standards in crypto-asset regulation. The consultation period for these papers is set to close on April 29, 2024, with ESMA planning to consider the feedback in the second quarter of 2024 and expecting to publish a final report in the fourth quarter of the same year.

These consultations are a crucial step in clarifying the regulatory framework for crypto-assets within the EU, ensuring a harmonized approach and providing much-needed clarity to stakeholders in the rapidly evolving crypto market​​​​​​.