Markets in Crypto-Assets Regulation (MiCA)
The Markets in Crypto-Assets Regulation (MiCA) institutes uniform EU market rules for crypto-assets. The regulation covers crypto-assets that are not currently regulated by existing financial services legislation. Key provisions for those issuing and trading crypto-assets (including asset-reference tokens and e-money tokens) cover transparency, disclosure, authorisation and supervision of transactions. The new legal framework will support market integrity and financial stability by regulating public offers of crypto-assets and by ensuring consumers are better informed about their associated risks.
MiCA Implementing Measures
The Markets in Crypto Assets Regulation (MiCA) entered into force in June 2023. The regulation includes a substantial number of Level 2 and Level 3 measures that must be developed before the entry into application of the new regime (within a 12-to-18-month deadline depending on the mandate).
During the implementation phase of MiCA, ESMA (in close cooperation with EBA, EIOPA, and the ECB) is consulting with the public on a range of technical standards that will be published sequentially in three packages. The aim is to deliver draft level 2 and 3 measures that incorporate feedback from the public as soon as possible. The date for the entry into application of the measures is subject to their adoption by the European Commission and approval by the European Parliament and the Council of the EU.
ESMA is releasing the MiCA consultation packages in sequence starting with the Level 2 and Level 3 measures with the shortest deadlines. These include those related to authorisation, governance, conflicts of interest, and complaint handling procedures.
The first package will be launched in July 2023. ESMA plans to publish the second package by October 2023. The third and final consultation package, which includes the MiCA mandates with an 18-month deadline, will be published (tentatively) in Q1 2024. A sequential approach will allow for better use of available resources (for ESMA, for NCAs, and for respondents).
Details on the duration of each consultation will become available as they are published.
The first consultation package will be published in July 2023. This package includes technical standards for the following mandates:
- Article 60(13): RTS on content of notification from selected entities to NCAs
- Article 60(14): ITS on forms and templates for notification from entities to NCAs
- Article 62(5): RTS on the content of the application for authorisation for CASPs
- Article 62(6): ITS on forms and templates for CASP authorisation application
- Article 71(5): RTS on complaint handling procedure
- Article 72(5): RTS on management and prevention, disclosure of conflict of interest
- Article 84(4): RTS on intended acquisition information requirements
The second consultation package is expected to be published by October 2023. This package will likely cover all those remaining mandates with a 12-month deadline, including:
- Sustainability indicators
- Business continuity requirements
- Trade transparency data and order book record-keeping
- Record keeping requirements for CASPs
- Classification and templates and format of crypto-asset white papers
- Public disclosure of inside information
The third and final consultation package is expected to be published in Q1 2024. This package will likely cover all those remaining mandates with an 18-month deadline, including:
- Qualification of crypto-assets as financial instruments
- Monitoring, detection, and notification of market abuse
- Investor protection:
- Reverse solicitation
- Suitability of advice and portfolio management services to the client
- Policies and procedures for crypto-asset transfer services, including clients' rights
- System resilience and security access protocols
Supervisory Convergence in the MiCA Transitional Phase
In parallel to the drafting of technical standards, ESMA is working with the national competent authorities (NCAs) on a convergent approach to authorisations of crypto-asset service providers (CASPs) during the transitional phase.
The purpose of this supervisory convergence work is to ensure alignment on supervisory expectations related to entities offering crypto-asset services across EEA jurisdictions in the transitional period of MiCA and to promote, from the outset, consistent practices to be used after the entry into application of MiCA, starting with the authorisation regime.
Member States will have the option of implementing ‘transitional measures’ (Article 143 of MiCA) that would allow entities or undertakings already providing crypto-asset services under applicable law in their jurisdictions to continue doing so during the transitional phase of MiCA (i.e., the period of 18-months after full application in December 2024). These transitional measures include:
- A ‘grand-fathering’ clause Art. 143 (3) – allowing entities providing crypto-asset services in accordance with national applicable laws before 30 December 2024 to continue to do so until 1 July 2026 or until they are granted or refused a MiCA authorisation.
- A simplified authorisation procedure Art. 143 (6) – for entities that were already authorised under national applicable law on 30 December 2024 to provide crypto-asset services.
During the transitional phase, a mix of regimes (e.g., MiCA or existing bespoke regimes) will coexist across Member States, which may result in disparate levels of protection for consumers of crypto-asset services. To overcome these challenges, ESMA is promoting supervisory convergence between Member States in three ways:
- Providing a forum where supervisors from the NCAs can exchange views on practical cases in their jurisdictions, as well as identifying best practices to promote convergence.
- Mapping the current landscape for entities providing crypto-asset services among Member States and surveying how each jurisdiction intends to approach the optional transitional measures.
- Engaging in ongoing consultations with the Commission to provide the basis for a common understanding (as early as possible) on MiCA provisions that might require further clarity.