ESMA Calls for Opinions on Crypto Regulation Game Changer


The
European Securities and Markets Authority (ESMA) published two consultation
papers today (Monday) seeking input from stakeholders on guidelines regarding reverse
solicitation and the classification of crypto-assets as financial instruments
under the Markets in Crypto Assets Regulation (MiCA).

ESMA Seeks Input on Regulations
under MiCA

The first
consultation paper covers proposed guidance on the conditions and supervision
of the reverse solicitation exemption under MiCA. Reverse solicitation refers
to situations where a client independently seeks out and initiates services
from a third-country crypto-asset service provider that is not authorized under
MiCA
.

“This
exemption should be understood as very narrowly framed and must be regarded as
the exception. A firm cannot use it to bypass MiCA,” ESMA explained.

Reverse solicitation refers to situations where a client independently seeks out and initiates services from a third-country crypto-asset service provider that is not authorized under the EU’s MiCA regulation.

The second
consultation focuses on formulating clear criteria for determining when a
crypto-asset should be classified as a financial instrument under existing
European financial regulations. Creating consistency between MiCA and other
financial services directives like MiFID II is intended to support the
development of the EU crypto asset market.

“The
proposed guidelines aim at providing NCAs and market participants with
structured but flexible conditions and criteria to determine whether a
crypto-asset can be classified as a financial instrument,” ESMA added.

Interested
groups have until 29 April 2024 to provide feedback on the draft guidelines.
ESMA expects to review responses in Q2 2024 and issue final reports in Q4. The
consultations are part of ESMA’s broader work in establishing regulatory
clarity and standards around crypto-assets in line with MiCA and other EU
financial services legislation.

MiCA Slashes Crypto Fraud, but It Is “No Safe Haven”

The MiCA regulation
was published in the Official Journal of the European Union on June 2023,
establishing a harmonized EU framework to regulate crypto-assets and related
services. The goals of MiCA are to protect investors, prevent misuse of
crypto-assets, preserve financial stability, and support innovation in the
sector.

Since the
implementation of MiCA, fraudulent activities have shifted away from
cryptocurrencies, with attacks declining 51%. Fraudsters are finding it
increasingly difficult to operate due to tightening regulations, so they have
turned their focus to exploiting vulnerabilities in payments instead.

However, ESMA
has warned that MiCA does not completely safeguard investors
. The regulation is
being introduced in phases, with the first packages covering critical areas
like transparency and consumer protection. As the consultation process
continues, market participants anticipate the clarity and certainty that MiCA
will provide, though full implementation is between 12 and 18 months away.

At the
recent Finance Magnates London Summit
, crypto experts discussed the challenges of
industry regulation. The panel, moderated by Erwin Voloder of the European
Blockchain Association, emphasized how regulations like MiCA aim to protect
consumers while allowing ethical crypto innovation.

Participate in Our Fraud Survey: Your Opinion Matters!

We invite you to participate in our joint survey conducted by FXStreet and Finance Magnates Group, which explores prevalent online financial fraud types, platforms used for fraudulent activities, effectiveness of countermeasures, and challenges faced by companies in tackling such fraud. Your valuable insights will help inform future strategies and resource allocation in combating financial fraud.

Social Media Scams: Help Shape the Fight with Your 2024 Survey Participation

The
European Securities and Markets Authority (ESMA) published two consultation
papers today (Monday) seeking input from stakeholders on guidelines regarding reverse
solicitation and the classification of crypto-assets as financial instruments
under the Markets in Crypto Assets Regulation (MiCA).

ESMA Seeks Input on Regulations
under MiCA

The first
consultation paper covers proposed guidance on the conditions and supervision
of the reverse solicitation exemption under MiCA. Reverse solicitation refers
to situations where a client independently seeks out and initiates services
from a third-country crypto-asset service provider that is not authorized under
MiCA
.

“This
exemption should be understood as very narrowly framed and must be regarded as
the exception. A firm cannot use it to bypass MiCA,” ESMA explained.

Reverse solicitation refers to situations where a client independently seeks out and initiates services from a third-country crypto-asset service provider that is not authorized under the EU’s MiCA regulation.

The second
consultation focuses on formulating clear criteria for determining when a
crypto-asset should be classified as a financial instrument under existing
European financial regulations. Creating consistency between MiCA and other
financial services directives like MiFID II is intended to support the
development of the EU crypto asset market.

“The
proposed guidelines aim at providing NCAs and market participants with
structured but flexible conditions and criteria to determine whether a
crypto-asset can be classified as a financial instrument,” ESMA added.

Interested
groups have until 29 April 2024 to provide feedback on the draft guidelines.
ESMA expects to review responses in Q2 2024 and issue final reports in Q4. The
consultations are part of ESMA’s broader work in establishing regulatory
clarity and standards around crypto-assets in line with MiCA and other EU
financial services legislation.

MiCA Slashes Crypto Fraud, but It Is “No Safe Haven”

The MiCA regulation
was published in the Official Journal of the European Union on June 2023,
establishing a harmonized EU framework to regulate crypto-assets and related
services. The goals of MiCA are to protect investors, prevent misuse of
crypto-assets, preserve financial stability, and support innovation in the
sector.

Since the
implementation of MiCA, fraudulent activities have shifted away from
cryptocurrencies, with attacks declining 51%. Fraudsters are finding it
increasingly difficult to operate due to tightening regulations, so they have
turned their focus to exploiting vulnerabilities in payments instead.

However, ESMA
has warned that MiCA does not completely safeguard investors
. The regulation is
being introduced in phases, with the first packages covering critical areas
like transparency and consumer protection. As the consultation process
continues, market participants anticipate the clarity and certainty that MiCA
will provide, though full implementation is between 12 and 18 months away.

At the
recent Finance Magnates London Summit
, crypto experts discussed the challenges of
industry regulation. The panel, moderated by Erwin Voloder of the European
Blockchain Association, emphasized how regulations like MiCA aim to protect
consumers while allowing ethical crypto innovation.

Participate in Our Fraud Survey: Your Opinion Matters!

We invite you to participate in our joint survey conducted by FXStreet and Finance Magnates Group, which explores prevalent online financial fraud types, platforms used for fraudulent activities, effectiveness of countermeasures, and challenges faced by companies in tackling such fraud. Your valuable insights will help inform future strategies and resource allocation in combating financial fraud.

Social Media Scams: Help Shape the Fight with Your 2024 Survey Participation





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