The European Financial Regulator Plans to Review Crypto Regulations Again
The European Securities Market Agency (ESMA) has announced its intention to revisit and review the regulations governing cryptocurrencies this summer. ESMA aims to propose additions to the existing Markets in Crypto-Assets Regulation (MiCA) law to further enhance its effectiveness and address certain issues.
Addressing Compliance Issues and Preventing Conflicts of Interest
The proposed additions to the MiCA law aim to establish new regulations for handling complaints, ensuring that crypto exchanges adhere to the prescribed standards. Additionally, ESMA has developed new rules specifically designed to prevent conflicts of interest within the crypto industry.
Filling the Regulatory Gaps Before June 2024
In the coming month, ESMA will present various options for implementing the MiCA law in practice. Although the law has already been enacted, significant work remains to be done to effectively apply its provisions. ESMA has acknowledged the presence of regulatory gaps that need to be filled before the 12 to 18-month deadline. Crypto companies must comply with the regulations outlined in MiCA within this timeframe.
ESMA’s urgent additions to the law encompass several important aspects, including:
1. Reporting Information to Judicial Authorities
Providers of crypto-asset services will be required to pass on relevant information to judicial authorities as part of their compliance obligations.
2. Obtaining Licenses
Crypto asset service providers will need to apply for licenses to operate legally in the industry.
3. Customer Data Collection
Crypto companies will be responsible for requesting and maintaining accurate data from their new customers as part of their KYC (Know Your Customer) procedures.
4. Addressing Climate Impact
In an effort to combat the negative environmental impact of the crypto industry, ESMA aims to promote the adoption of sustainable alternatives and encourage responsible practices that minimize the carbon footprint.
ESMA plans to introduce these additional measures into the MiCA law by the first quarter of 2024.
MiCA Law: Enhancing Security in the Crypto Industry
One of the primary objectives of the MiCA law is to establish clear and comprehensive regulations for the cryptocurrency industry in Europe. According to ESMA, MiCA serves as a unifying framework for crypto asset rules within the European Union.
On its official website, ESMA describes the purpose and benefits of the MiCA law as follows:
“The regulations cover crypto assets that are not regulated by existing financial services laws. The new regulatory framework will support market integrity and financial stability by regulating digital currency offerings and ensuring that consumers are better informed about the risks associated with investing in digital currencies.”
ESMA’s review and proposed additions to the MiCA law signify the regulator’s commitment to addressing compliance issues, preventing conflicts of interest, and establishing comprehensive regulations for the cryptocurrency industry in Europe. By filling existing regulatory gaps and implementing additional measures, ESMA aims to enhance security and stability within the crypto market.
Tags: Crypto, ESMA, EU, MiCA