Today, the EU regulators responsible for implementing the Crypto Asset Market (MiCA) regulations published documents. The European Securities Markets Authority (ESMA) published a consultation document related to crypto markets. And the European Banking Authority (EBA) encouraged institutions to prepare for stablecoin activities now, with the relevant legislation applicable from June 30, 2024.

The key benefits of MiCA for crypto asset service providers (CASPs) is that they can register in one jurisdiction, which entitles them to perform services throughout the European Union.

ESMA Crypto Consultation

ESMA is seeking feedback on its crypto proposals by September 20. This is the first of three consultations, and there will be another one in October.

Although the document runs to 158 pages, it only covers a subset of the MiCA topics.

Existing regulated entities do not require any authorization to perform crypto asset services. However, they must notify their local regulator, so the document outlines what is expected from the notification. It also provides the procedures for currently unregulated CASPs to apply for authorization.

Other topics covered include CASPS’ handling of complaints and conflicts of interest. Recent history has shown massive conflicts of interest in the sector. While the legislation requires prominent disclosure of conflicts, it emphasizes that these “are not an alternative to preventing or managing conflicts of interest.”

While some of the events exposed by the crypto crash looked more like fraud, the examples provided by ESMA are extremely common in the crypto world. For example, executing orders (brokerage) and also operating a trading platform. Or by providing a token placement service where the placement is with your own clients.

EBA call to action on stablecoins

Meanwhile, the EBA issued a statement on electronic money and asset-referenced tokens, which are commonly known as stablecoins. It encourages institutions and others involved in stablecoin activities to contact their local regulator to communicate detailed plans. It provides a template, although local regulators may require additional details.