ESMA to Flag Crypto's Risks Ahead of MiCA?

The European Securities and Markets Authority (ESMA) is going to implement a wide-ranging plan to flag risks associated with cryptocurrency as it goes ahead with the Markets in Crypto-Assets (MiCA) regulation.

The ESMA, the financial regulator of the European Union (EU), has regularly cautioned consumers in the continent about the risks of cryptocurrency.

On January 16th, the body reiterated that MiCA provides “no safe harbour” as cryptocurrency remains “highly volatile and speculative.”

 

https://twitter.com/ESMAComms/status/1747197424198615488

MiCA institutes uniform EU market rules for cryptocurrencies that are currently not regulated by existing financial services legislation. It will regulate public offerings of crypto assets and by ensuring consumers are better informed about their associated risks.

Transparency, disclosure, authorisation and supervision of transactions are the goals of the regulation, as per the ESMA.

• The European Parliament approved MiCA in April 2023.

• The EU Council passed it unanimously in May 2023.

• The regulation will get implemented, beginning December 2024.

• There is a transition period of 18 months for MiCA to be fully implemented in the EU.

• The deadline is July 1st, 2026.

 

Source: ESMA

The ESMA, along with the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA), and the European Central Bank (ECB), decided to seek comments from all the stakeholders in three phases before MiCA gets fully implemented.

• July 2023
• October 2023
• Q1 2024 (yet to be issued)

It isn't the first time that the EU’s financial regulator has issued a warning to consumers about the risks related to cryptocurrency.

When the first set of consultation package was released in July 2023, the ESMA Chair Verena Ross was quick to warn consumers,

“We also want to remind consumers that, even with the implementation of MiCA, there will be no such thing as a safe crypto-asset.”

 

Source: ESMA

https://twitter.com/ESMAComms/status/1679054309567111168

Once implemented, MiCA will let crypto exchanges and wallet providers operate across the 27-nation bloc with one license.

MiCA is being hailed as the trendsetter for other global regulators to follow so that the crypto sector can be governed efficiently.