The European Securities and Markets Authority (ESMA), the EU's financial watchdog, today (Tuesday) issued statements urging member states and market participants to prepare for the transition to the Markets in Crypto-Assets Regulation (MiCA). The regulation aims to standardize crypto-asset activities across the EU, enhancing consumer safeguards and market stability.

ESMA's Crypto Call to Action

ESMA's Chairwoman, Verena Ross has addressed a letter to the Economic and Financial Affairs Council, urging Member States to promptly designate competent authorities for MiCA implementation. Ross also suggests limiting the optional "grandfathering" period to 12 months for jurisdictions that choose to offer it.

ESMA has outlined expectations for national authorities and crypto-asset service providers, encouraging them to align their supervisory practices for effective regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term from day one.

🔴 #MiCA rules will enter into application in Dec. 2024. Until then, holders of crypto-assets and clients of crypto-asset service providers will not benefit from any EU-level regulatory and supervisory safeguards or recourse mechanisms.https://t.co/HPcqw96QmA pic.twitter.com/mDJKUnygU9

— ESMA - EU Securities Markets Regulator 🇪🇺 (@ESMAComms) October 17, 2023

MiCA aims to create a unified regulatory framework for crypto-assets across the EU. The regulation, officially approved in May 2023, is set to come into force in December 2024, with a transitional period that could extend until July 2026, depending on the Member State.

During this transitional period, entities already providing crypto-asset services can continue to operate under existing laws if member states choose to apply the "grandfathering" clause.

Risks and Safeguards

ESMA warned that crypto-assets will remain inherently risky even after MiCA's implementation. The regulator advises consumers to be cautious when investing in crypto-assets and to be aware of the regulatory status of their investments. ESMA also noted that full MiCA protections will not apply until the regulation is fully implemented, urging consumers to be aware of the risks and the limited protections available during the transitional period.

@ESMAComms published a new document regarding #MiCA #crypto #regulations and is warning consumers that they will not be safeguarded until at least Dec 2024! pic.twitter.com/DNCHSA0kFj

— Damian Chmiel (@ChmielDk) October 17, 2023

“MiCA rules on the provision of crypto-asset services will not enter into application until December 2024. As such, holders of crypto-assets and clients of crypto-asset service providers will not benefit during that period from any EU-level regulatory and supervisory safeguards or recourse mechanisms built into the Regulation,” ESMA ESMA European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t Read this Term commented in the official statement.

ESMA has encouraged market participants to prepare for MiCA by engaging in early dialogue with relevant authorities and informing clients about the regulatory status of their services. Entities are also urged to apply for MiCA authorization as soon as possible to benefit from passporting rights within the EU during the transitional period.

For example, Malta's Financial Services Authority has already taken steps to align the island's existing cryptocurrency regulations with MiCA regulations. As a result, it has initiated public consultations in the country regarding the proposed changes. ESMA has also issued a new consultation document on MiCA, published at the beginning of this month.

🟣The second consultation package under the Markets in #CryptoAssets Regulation (#MiCA) is out → https://t.co/0HbsPrLFps.

🔎 #ESMA seeks input on five sets of proposed rules.
⏳ Send your comments by 14 December. pic.twitter.com/zD3pVtNOcf

— ESMA - EU Securities Markets Regulator 🇪🇺 (@ESMAComms) October 5, 2023

In the meantime, the pan-European regulator issued new guidelines to improve circuit breakers for market stability.