Nikolas Sargeant
Last year marked a significant milestone for the European Union with the unanimous approval of the Markets in Crypto Assets (MiCA) bill. Regarded as the pioneering comprehensive legislation addressing the entire crypto industry, MiCA is a vital component of the broader financial laws collectively known as DORA.
Several Adjustments to The MiCA Bill
Published in June 2023, MiCA has undergone two consultation sessions, with another scheduled for April, preceding the initial implementation phase in June 2024. Additional provisions are set to take effect in December 2024.
🔴 #ESMA publishes 2⃣ Consultations Papers on guidelines under Markets in Crypto Assets Regulation #MiCA:
📣 on reverse solicitation
📣 on the classification of crypto-assets as financial instruments
🗓️ Send your comments by 29 April 2024https://t.co/PEosx4t3UO pic.twitter.com/v31nWMUEcu
— ESMA - EU Securities Markets Regulator 🇪🇺 (@ESMAComms) January 29, 2024
The proposed exceptions within MiCA aim to grant European customers more freedom while safeguarding those less technologically inclined.
Allowing "Reverse Solicitation"
The European Securities and Markets Authority (ESMA) has submitted a paper acknowledging previous feedback and proposing exceptions for companies operating outside the EU. Contrary to the initial intention of barring non-EU firms from providing crypto assets and services to EU citizens, the new provision permits such activities if initiated through "reverse solicitation." This occurs when an EU citizen explicitly requests crypto assets or services from a non-EU provider.
This adjustment enables experienced crypto investors seeking specialized offerings to legally invest while simultaneously protecting less-experienced investors from potential risks associated with dealing with businesses where legal recourse may be challenging.
ESMA emphasizes the narrow framing of the exemption, cautioning against exploitation to circumvent MiCA. The regulator and national competent authorities pledges to take necessary measures to protect EU-based investors and MiCA-compliant crypto-asset service providers from undue incursions.
Investors are encouraged to review the document and submit requests or feedback by April 29, when regulators will discuss the proposed amendments further.
Additionally, ESMA seeks feedback on the potential classification of crypto assets as financial instruments, qualifying them as monetary contracts. Such qualification would exempt these assets from MiCA, placing them under the regulatory umbrella of another bill known as MiFID II.
