European regulatory body recommends revisions to MiCA cryptocurrency framework.
The European Securities and Markets Authority (ESMA), responsible for overseeing financial markets in the EU, has responded to a proposal from the European Commission (EC) concerning amendments to the regulation of crypto-assets under the Markets in Crypto-Assets Regulation (MiCA).
While ESMA acknowledges the legal concerns highlighted by the Commission, it stresses the importance of maintaining the rules’ original objectives.
In its statement, ESMA evaluated the proposed changes, which impact the information financial companies must provide if they wish to offer crypto services, and the requirements for companies seeking authorization as crypto-asset service providers.
ESMA’s primary concern is ensuring that these rules enable a thorough assessment of companies before they enter the market. This is critical for enhancing the stability of the crypto market and safeguarding investors.
Additionally, ESMA recommends that the Commission incorporate new rules into MiCA. These include mandating companies undergo an external cybersecurity audit and conducting more comprehensive background checks on crypto companies’ management teams.
This measure would ensure that leaders have a clean record in business and areas such as money laundering, fraud, or financial crime.
The Markets in Crypto-Assets Regulation (MiCA) came into force on June 29, 2023. It was adopted by the European Parliament on April 20, 2023, and ratified by the EU’s Economic and Financial Affairs Council on May 16, 2023.
Check out: Ireland set to boost its digital asset economy with MiCA implementation.
MiCA aims to establish a clear and unified regulatory framework for cryptocurrencies across the European Union. It seeks to enhance transparency and security in the crypto market. The rules will be rolled out in stages, with provisions for stablecoins starting on June 30, 2024, and the full regulation taking effect by December 30, 2024.
Initially, ESMA submitted its first set of proposals for MiCA rules to the European Commission in March 2024. By September, the Commission adopted two of these rules with modifications, requesting ESMA to revise them accordingly.
ESMA has now provided its feedback to the Commission, the European Parliament, and the European Council. The Commission will decide whether to accept or reject the revised rules. Additionally, the Parliament and Council have three months to object if they disagree with any adopted rules.
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