Adapting To MiCA: ESMA’s Recent Publications For The Crypto Industry – Fin Tech

Introduction

The European Securities and Markets Authority
(ESMA) has kept up the momentum ahead of the
implementation of the Markets in Crypto-Assets Regulation
(MiCA) this year.

On 25 March 2024, the EU watchdog published:

1. a final report on the first package of measures
   under MiCA;




2. a final report on the cooperation between
   various authorities in relation to MiCA; and




3. a consultation document on the third package of
   measures under MiCA.

MiCA will establish uniform rules across the European Union
(EU) for crypto-assets. ESMA has been busy
finalising several aspects under MiCA, which will be implemented in
two phases. The provisions of MiCA will generally apply from 30
December 2024, except Titles III (Asset-Referenced Tokens) and IV
(E-Money Tokens) which will apply from 30 June 2024.

ESMA issues a Final Report for the First Package of Measures
under MiCA

MiCA requires ESMA to prepare draft regulatory technical
standards (RTS) and implementing technical standards (ITS) on a
variety of topics. In July 2023, ESMA issued its first consultation package with a raft of
measures – under 5 RTSs and 2 ITSs – in respect of the
following:

1. the notification by certain financial entities of their
   intention to provide crypto-asset services;




2. the authorisation of crypto-asset service providers
   (CASPs);




3. complaints handling by CASPs;




4. the identification, prevention, management and disclosure of
   conflicts of interest; and




5. the proposed acquisition of a qualifying holding in a
   CASP.

ESMA’s final report covers the topics listed in points 1, 2,
3 and 5 above. The final report on the RTS for conflicts of
interest will be published by ESMA at a later stage.

In most cases, the respondents were broadly supportive of
ESMA’s proposals. On this basis, ESMA did not introduced
substantial changes in its final report – particularly in
relation to the notification and authorisation of crypto-asset
services. The European Commission, the executive arm of the EU,
must decide whether to adopt ESMA’s final report within three
months.

ESMA issues a Final Report for the Cooperation between
Competent Authorities under MiCA

ESMA also issued a final report specifying the requirements for
cooperation, exchange of information and notification between
competent authorities, European Supervisory Authorities, and
third-country authorities under MiCA.

ESMA will now submit the RTSs and ITSs to the European
Commission for adoption. ESMA did not consult publicly on these
matters since the standards are not addressed to market
participants.

Third Consultation Package under MiCA

ESMA’s third consultation package seeks public scrutiny on
four new topics, namely:

• detection and reporting of suspected market abuse in
  crypto-assets (RTS);




• suitability requirements for certain crypto-asset services and
  the format of the periodic statement for portfolio management
  (Guidelines);




• policies and procedures, including the rights of clients, for
  crypto-asset transfer services (Guidelines); and




• ICT operational resilience for certain entities under MiCA
  (Guidelines).

Stakeholders are encouraged to provide their feedback by 25 June
2024.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.