16 Jun 2023 Jane Whitmoore
MiCA Is Around The Corner; ESMA Pushes Out A Three-Phased Consultation Plan
A recent notice claims that the European Union's (EU) financial regulator is eager to start a consultation on the organization's primary cryptocurrency legislation. According to reports, the consultation procedure for the EU's Markets in Crypto Assets (MiCA) would be introduced in three stages.
European Securities and Markets Authority (ESMA), the regulatory body for the EU, stated in the official notice that the consultation packages would address the authorization, governance, conflicts-of-interest, and complaint-handling procedures of MiCA, which is set to begin in July of this year. The European Commission, European Parliament, and European Council must all approve the measures.
The notification further describes the strategy, stating that the initial consultation package will contain technical requirements for the use of crypto asset service providers in the EU as well as processes for managing complaints and disclosing possible conflicts of interest. The second stage, which is anticipated to begin in October, would then address investor disclosures, necessary rules for crypto businesses' governance, and "sustainability indicators and negative climate impacts."
ESMA states that the final consultation, which is anticipated in the first quarter of 2024, may take investor protection and regulations to stop market misuse into consideration. The MiCA framework predicted that all requirements will start to apply in December of next year, after an anticipated 18-month transition period.
The Level 2 and Level 3 measures with the tightest deadlines are being released first by ESMA in the MiCA consultation packages. These cover policies on authorization, administration, conflicts of interest, and complaint management.
In July 2023, the first bundle will be released. By October 2023, ESMA intends to release the second bundle. The MiCA directives with an 18-month deadline are included in the third and final consultation package, which will be released (probably) in Q1 2024. A sequential approach will enable better utilization of resources (for respondents, NCAs, and ESMA). Each consultation's duration will be specified as soon as it is published.
The MiCA law was approved by the Economic and Financial Affairs Council of the European Union in May of this year, following its initial proposal by the European Commission in September 2020. While regulators and lawmakers appear to be considering ideas aimed at guaranteeing a seamless implementation of the crypto-focused legislation, ESMA claims that the framework had "entered into force" as of June.
Following a number of delays, the European Parliament officially approved the MiCA law on April 20. This was followed by the passage of MiCA legislation by the European Council. With a massive margin of 517-38 and 18 abstentions, the bill was approved. Notably, the coordinated efforts of the institutions and member states of the EU have resulted in a robust regulatory framework that strives to safeguard investors, fight financial crime, and promote a safe and open crypto market.
However, while the crypto industry and other countries outside of Europe have praised MiCA, some EU members have also criticized it as being insufficient and needing addition.
Nevertheless, regulatory clarity of digital assets is frequently at the forefront of conversations at a time when crypto firms are looking for suitable countries to conduct business. In this situation, MiCA strives to harmonize the legal framework for cryptocurrencies across all EU member states.