ESMA has answered the European Commission’s proposed amendments to the Markets in Crypto-Assets Regulation (MiCA). To this, ESMA highlighted several legal concerns of the Commission while citing the previous policy goals of the regulation. Others are restrengthening the legislation governing CASPs and protecting consumers in the European market.
ESMA’s feedback included two main aspects arising from the proposed RTS. First, it sets out the requirement for financial enterprises to disclose more information whenever they want to convey their intentions of offering crypto-asset services. Second, it is concerned with the appraisal of applications of CASPs for authorization, with these standards aiming to develop an open procedure for reconsidering CASPs seeking to enter the European market.
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ESMA’s Recommendations for Strengthening MiCA
In its response, ESMA recommended further revisions to the MiCA regulation, suggesting that CASPs and financial entities be required to disclose the results of external cybersecurity audits. To ESMA, providing such disclosures will enhance the stability and clarity of the sector and protect investors.
Moreover, ESMA suggested expanding background checks for the members of CASP management. Such checks should include financial services law, anti-money laundering, fraud, and professional liability. These measures would help build capacities for only trustworthy individuals to provide crypto-asset services, enhancing market credibility.
These recommendations refer to the ESMA’s final report on the draft RTS issued in March 2024. The European Commission notified ESMA in September that it planned to implement two standards with amendments. ESMA has now forwarded its feedback to the Commission, the Parliament, and the Council of the European Union.
In addition to these regulatory discussions, the European Union is working to reduce the securities settlement cycle from two days (T+2) to one day (T+1). ESMA is collaborating with the European Central Bank to address the technical and financial challenges involved in the transition.
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