EU regulator asks stakeholders to pull up their socks ahead of MiCA
- Member states should consider limiting the transitional period from 18 months to 12 months.
- MiCA is scheduled to come into force at the end of 2024.
The European Securities and Markets Authority (ESMA) has asked all stakeholders in the member states of the European Union (EU) to pull up their socks before the Markets in Crypto Assets (MiCA) regulation takes effect next year.
The ESMA is the regulator overseeing financial markets in the EU.
ESMA Chair Verena Ross wrote a letter to the Economic and Financial Affairs Council (ECOFIN). She asked that member states urge their respective authorities to carry out the functions and duties outlined in MiCA at the earliest.
Additionally, national regulators should allocate necessary resources to implement MiCA in respective jurisdictions.
Furthermore, Ross asked members to consider limiting the transitional period from 18 months to 12 months, given that they choose to offer it to crypto service providers in their jurisdictions.
The deadline, however, is 1 July 2026. It means that EU members can allow already active crypto service providers to continue providing those services until then.
Uniform implementation of MiCA critical
The ESMA also issued a statement addressed to national authorities and crypto service providers. It asked competent authorities to align their regulatory practices with those of their peers across the EU. This way, the bloc can begin effective supervision from the first day of enforcement.
The regulator urged crypto service providers to begin planning for a smooth transition at the earliest. They should also ensure their clients understand the regulatory status of their crypto offerings.
In addition, the statement cautioned customers in the EU about the risks associated with crypto trading until and even after MiCA comes into force.
The regulatory body emphasized the practice of regulatory arbitrage or venue shopping. As different countries have different crypto regulations, crypto service providers often pick and choose which country to apply for a license in. The body therefore urged regulators to implement the latest rules uniformly across the EU.
ESMA seeks comments ahead of MiCA implementation
In July, the ESMA released a consultation paper, asking for comments on regulatory and technical standards of MiCA from all stakeholders. Ross had warned even at that point of time that,
“There will be no such thing as a safe crypto-asset.”
?️ ESMA Chair, #VerenaRoss: This […] is an important milestone for ESMA in the implementation of the #MiCA framework. It translates our ambition to set high regulatory standards in the EU for crypto-asset related activities into concrete requirements. https://t.co/MD2tdKi8v9 pic.twitter.com/5rNXGdjrQT
— ESMA – EU Securities Markets Regulator ?? (@ESMAComms) July 12, 2023
Early this month, the ESMA released its second consultative paper. The second time, it sought input and feedback from stakeholders on other technical aspects of the regulation.
The body will release a third consultation paper in the first quarter of 2024.
MiCA is scheduled to come into force at the end of 2024.