The European Securities and Markets Authority (ESMA) has published a consultation paper, seeking feedback from the market on the classification of crypto assets under the Markets in Crypto Assets Regulation (MiCA).
Comments from stakeholders are being received until 29 April, with ESMA specifically seeking input on establishing a clear line on the conditions and criteria for qualifying crypto assets as financial instruments.
The aim of MiCA – set to take effect this year – was developed by the EU to provide the market with a comprehensive regulatory framework which effectively reflects the nuances scope of trading in digital assets.
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Through this initiative, the regulator is aiming to facilitate consistency across the European Union by bridging the gap between MiCA regulation and Mifid II.
According to ESMA: “The proposed guidelines aim at providing national competent authorities (NCAs) and market participants with structured but flexible conditions and criteria […] to do so, the draft strikes a balance between providing guidance and avoiding establishing a one-size-fits-all approach.”
The final guidelines are set to contribute to the global standards of crypto-asset regulation.
In addition, ESMA is also consulting on guidelines around reverse solicitation of crypto assets – in particular the conditions for application of a reverse solicitation exemption.
Currently, the proposal is that the provision of crypto-asset services by a third-country firm be limited under MiCA to cases where the client is the exclusive initiator of the service – an exemption.
In a communication last October wherein ESMA addressed timelines for MiCA, the regulator made clear that though further guidance would be sought, the exemption “should be understood as very narrowly framed and as such must be regarded as the exception; and it cannot be assumed, nor exploited to circumvent MiCA”.
Following close of the consultation period in April, the regulator will consider comments during Q2 2024 before developing a final report, set to be published in the final quarter of this year.