ESMA Rolls Out Second Consultative Paper on MiCA

Jimmy Aki
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Europe’s premier market regulator, the European Securities and Markets Authority (ESMA), has released its second consultative paper regarding cryptocurrencies.

Five Key Areas Considered for MiCA Regulation

In an October 5 release, the European Securities and Markets Authority (ESMA) introduced its second set of consultations on Markets in Crypto Assets (MiCA) to the world.

According to the 307-page document, ESMA is seeking feedback across five distinct proposed rules regarding MiCA.

These areas include sustainability indicators for distributed ledgers, disclosures of inside information, technical requirements for white papers, trade transparency measures, and record-keeping and business continuity requirements for crypto asset service providers (CASPs).

Regarding sustainability indicators, ESMA wants feedback on the quantitative energy use in crypto transactions, the carbon footprint generated, renewable energy, natural resources, and waste production.

Concerning the disclosure of inside information, the European market regulator stipulated that all crypto-related businesses must uniformly divulge relevant inside information to the public.

This is aimed at curbing market abuse and fostering confidence in the crypto asset marketplace.

The regulator stated that these businesses must enable fast access and a complete, correct, and timely assessment of the information by the public.

The disclosed information will be publicly accessible on their website for a period of five years.

However, it didn’t stop there and spoke on the need for transparency in trading practices across the board.

According to ESMA, all crypto asset service providers (CASPs) are mandated to report trading information like the digital asset that is traded, time, pricing information, amount, platform the trade is executed through, as well as the transaction ID.

Record-keeping is also touched on, but the markets regulator gives an open check on this.

However, it mandates that CASPs must store information in a format that can be converted to the one it might need from them.

This way, there will be easy accessibility by authorities to enhance tracking and monitoring of activities in the emerging marketplace.

For this set of consultations, stakeholders have until December 14, 2023, to send in their responses.

After the stated date, ESMA will commence working on its third consultative package scheduled for publication in the first quarter of 2024.

Subsequently, ESMA will prepare a final report, to be submitted to the European Commission on June 30, 2024, for further deliberation and potential legislation.

MiCA Creating Legal Certainty

ESMA published its first consultative paperback in July and sought feedback on how CASPs should handle complaints and conflicts of interest management.

The European Banking Authority (EBA) also chipped in and added technical draft templates for ARTs (or asset-referenced tokens), including application templates, complaint handling, or the assessment of qualified holders of ARTs.

The initiative was roundly applauded when it was announced in July, and many people said it provided much-needed legal certainty the emerging industry has been lacking for years.

Moreso, MiCA is viewed as a template that will aid innovation in blockchain and a viable means for the policy to attract the right talents into the European landscape.

While the European Union (EU) has taken the discourse route, its counterpart in the North American region has plied the regulation route by enforcement.

In the United States, the lack of regulatory clarity has forced several crypto-facing businesses and infrastructure to seek safety elsewhere.

Regulatory bodies like the Securities and Exchange Commission (SEC) have added top trading platforms like Binance, Coinbase, and several others to its black book, citing the violation of securities laws and providing access to unregistered financial products.

The affected platforms have called for a proper regulatory framework in the region, but a solution is still out of sight.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.