European Regulator Unveils Draft Framework for Crypto Asset Service Providers under MiCA Guidelines

Today, the European Securities and Markets Authority (ESMA), the regulatory body overseeing financial markets in the European Union, unveiled a consultative paper introducing the regulatory requirements and technical specifications for crypto asset service providers (CASPs) under the Markets in Crypto-Assets (MiCA) framework. This release marks the first of a series of three consultative packages that ESMA plans to issue.

Under the MiCA guidelines, CASPs that are already licensed will be presumed to possess the necessary capabilities to offer crypto-asset services. However, they will be obliged to provide additional information through notifications to the national competent authorities (NCAs) in their respective countries. The consultative paper seeks feedback on the regulatory technical standards and implementing technical standards for these CASP notifications.

ESMA’s consultative paper also invites comments on regulatory and technical standards pertaining to CASP authorization applications, complaint handling procedures, and the management and prevention of conflicts of interest. Furthermore, ESMA is seeking input on its technical standards for disclosures to NCAs by entities intending to acquire shares in a CASP.

Interested parties and stakeholders are encouraged to submit their responses to the consultative paper by September 20. Following the feedback collection period, ESMA plans to draft finalized standards, which will then be submitted to the European Commission no later than June 30, 2024, as mandated by MiCA. The second consultative package is expected to be released in October, while the third will follow in the first quarter of 2024, aligning with the specific timelines outlined in the MiCA framework.

In addition to the specific topics addressed in the paper, ESMA included four broader questions to gather insights from respondents. The agency aims to gain a comprehensive understanding of current and planned activities in the EU crypto-asset markets, furthering their knowledge of these markets’ dynamics and future development. The questions encompass various aspects, including projected turnover, the number of white papers respondents anticipate publishing, and the utilization of on-chain and off-chain trading.

MiCA, which received approval from the European Parliament on April 20, is set to be implemented in stages between 2024 and 2025, marking a significant step toward regulating the crypto asset ecosystem in the European Union.

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