The European Securities and Markets Authority (ESMA ) is curious what the cryptocurrency industry thinks about the recently introduced Markets in Crypto-Assets Regulation (MiCA). Accordingly, it has published its inaugural consultation package and plans to publish two more in the future. Stakeholders are invited to submit their comments by the end of September 2023.
ESMA Wants to Know the Industry's Opinion on Crypto Regulation in Europe
This consultation package, the first of three, seeks input on proposed rules for crypto-asset service providers (CASPs), specifically concerning their authorization, conflicts of interest identification and management as well as handling complaints.
ESMA also intends to gather more insights on stakeholders' current and future activities as part of a fact-finding exercise to better understand the EU's crypto-asset markets and their evolution. This initiative includes gaining information about stakeholders' expected turnover, planned white paper publications, and preferences for on-chain versus off-chain trading.
Verena Ross, the Chairwoman of ESMA, considers this first consultation package a significant step towards implementing 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 commented.
Responses to these consultations will remain confidential and assist ESMA in fine-tuning proposals for the second and third consultation packages. Alongside this consultation, ESMA will continue working on its remaining mandates with a view to publishing a second consultation package in October 2023.
ESMA expects to publish a final report and submit the draft of technical standards to the European Commission for endorsement no later than 30 June 2024. The regulation was first presented in September 2020, So its implementation could take four years. Of course, if there are no delays along the way.
The EU brings #CryptoAssets, crypto-assets issuers and service providers under a regulatory framework.
— ESMA - EU Securities Markets Regulator 🇪🇺 (@ESMAComms) May 16, 2023
🥇 Setting an EU level legal framework for this sector for the first time, @EUCouncil today adopted a regulation on markets in crypto-assets #MiCA.https://t.co/Yx4a5ETMI4 pic.twitter.com/4xvOWO9U91
MiCA to Change the European Crypto Landscape
The European Union's council gave a thumbs up to MiCA, which the European Parliament first approved in late April. This is the first time the local regulators made a Europe-wide law specifically for cryptocurrencies like Bitcoin.
The Council has just adopted the first-ever EU rules on markets in crypto-assets and services.
— EU Council (@EUCouncil) May 16, 2023
The new regulation aims to improve transparency, preserve financial stability and increase consumer protection while fostering innovation. #DigitalFinanceEU #MiCA
This MiCA law is the first of its kind in the world. It is designed to keep people in Europe safe when they are dealing with cryptos. It also wants to make sure that digital assets are not harming the environment or being used for illegal activities like money laundering.
To do this, companies that run digital money exchanges and digital wallets must have a license to do business in any European country. In addition, companies that issue stablecoins, a certain type of cryptocurrency, must have enough backup funds.
Meanwhile, the UK, which is no longer part of the EU because of Brexit, can make its own cryptocurrency rules. Recent events show that they are headed in this direction. Just last week, the UK passed a law called the Financial Services and Markets Bill. This law now recognizes cryptocurrencies and stablecoins as financial activities that must be regulated. Consequently, these digital currencies are now legally treated like other financial instruments.
Europe Regulates, While the US Fights Crypto
While European regulators try to adopt safe crypto rules, their United States peers have started an open war against popular crypto exchanges. According to the US SEC, platforms like Coinbase and Binance offer services illegally without proper authorization.
The SEC's actions have led to a lawsuit against Binance and Coinbase, thus bringing havoc to the cryptocurrency industry. The Commission filed a total of 13 charges against Binance, its two affiliates, and the CEO, Changping Zhao, which include operating illegal trading platforms, offering unregistered crypto asset securities, and mixing customers' funds.
In the meantime, Coinbase was charged with operating an illegal trading platform that offered unregistered crypto asset securities. Additionally, the securities watchdog accused the platform of running a digital asset staking-as-a-service program without authorization.
