ESMA and EBA issue Inaugural Consultation Packages under MICA

Introduction

The Markets in Crypto-assets Regulation (MiCA), the first European framework for cryptoassets, was published in the Official Journal on 9 June 2023 and entered into force on 29 June 2023.

MiCA will include the development of various Level 2 and Level 3 measures before the new regime applies across the European Union (EU). Under MiCA, both the European Securities and Markets Association (ESMA) and the European Banking Authority (EBA) have been empowered to develop technical standards and guidelines.

ESMA’s First Consultation Package for CASPs

ESMA aims to release three consultation packages under MiCA. The first consultation package has now been published by ESMA. This represents a significant step towards establishing concrete rules for crypto markets in the EU. It covers 5 draft Regulatory Technical Standards (RTS) and 2 Implementing Technical Standards (ITS) on the following topics:

1. the notification by certain financial entities of their intention to provide crypto-asset services;
2. the authorisation of crypto-asset service providers (CASPs);
3. complaints handling by CASPs;
4. the identification, prevention, management and disclosure of conflicts of interest; and
5. the proposed acquisition of a qualifying holding in a CASP.

ESMA asked the industry to provide feedback in respect of its first consultation package by 20 September 2023. Interestingly, market participants may now start gathering insight on the proposed licensing regime under MiCA – including the overall process with the home EU regulator, required documentation, governance arrangements, and internal procedural requirements.

ESMA also requested stakeholders to provide information on current and future activities. This fact finding exercise should enable ESMA to better understand the EU jurisdictions that will (likely) be chosen for authorisation/ passporting activities, the type of crypto-asset services offered, expected turnover, intended white paper publications, and preferences for on-chain versus off-chain trading.

The second and third consultation packages will be released by ESMA in October 2023 and Q1 2024 respectively.

EBA’s Consultation Package for ARTs

The EBA has also published a consultation package focusing on issuers of art reference tokens (ARTs), namely:

• draft RTS on handling complaints;
• draft RTS on the assessment of the acquisition of qualifying holdings in designated ARTs; and
• draft RTS/ ITS on the authorisation of public offerings, issuance and admission to trading ARTs

The consultations run until 12 October 2023.

Furthermore, the EBA issued an official statement encouraging financial institutions and other undertakings intending to pursue activities concerning ARTs and e-money tokens (EMTs) to take timely preparatory steps towards the application of the MiCA regime.

Previous Publications

You may access our previous publications on MiCA at the links below:

• The Classification of Crypto-Assets under the new Markets in Crypto-Assets Regulation
• The Regime for Crypto-Asset Service Providers under the Markets in Crypto-Assets Regulation
• MiCA – Landmark crypto regulation approved by EU Parliament
• MiCA obtains Green Light from European Council

This article was co-authored by Dr Mark Caruana Scicluna (Senior Associate, Investment services & funds), and Dr James Debono (Associate, Banking & finance, fintech & blockchain).