 regulation in July 2023; the first package is recently published by ESMA.){kind=link}
- ESMA & EBA published the first consultation package following the MiCA timeline.
- MiCA will be fully implemented across E.U. on December 30, 2024.
E.U. proposed a consultation package for the Market in Crypto Asset (MiCA) regulation in July 2023; ESMA recently published the first package. European Union’s pioneering and comprehensive regulatory framework for the crypto industry was published in the Official Journal of the European Union (OJEU) on June 9, 2023. It will be fully effective by December 30, 2024.
ESMA Published First Consultation Package for MiCA
Some regulations of MiCA became effective on June 29, 2023. The statute would include developing multiple Level 1 and Level 2 measures before the legislation is applied across the member countries of the E.U. The regulations will empower European Securities and Market Association (ESMA) and the European Banking Authority (EBA) to develop guidelines and technical standards.
The publishing foreshadows the establishment of concrete rules for crypto industry operations in the European Union. It extensively covers five drafts of Regulatory Technical Standards (RTS) and two for Implementing Technical Standards (ITS) and covers the following topics:
- Any entity wishing to provide services for the digital asset should notify the authorities.
- Focuses on authorization of Crypto-Asset Service Providers (CASPs) in the market.
- Highlights how CASPs would handle the complaints.
- Throws light on the identification, management, prevention, and disclosure of conflict of interest.
- Clarification regarding holdings in CASPs.
By September 20, 2023, ESMA demanded feedback from the industry regarding the first consultation package. At the same time, market participants were busy gathering insights regarding the proposed licensing regime under MiCA. They are also engulfed in analyzing the procedure with required documentation, governance arrangement, and international procedural requirements in accordance with E.U. regulators.
ESMA also asked the stakeholders and market participants to provide the agency with information on current and proposed activities. This fact-finding exercise would allow ESMA to understand the E.U. jurisdictions in a clear light.
EBA’s Consultation Package
The European Banking Authority also published a consultation package revolving around the issuers of art reference tokens (ARTs) including the draft regulatory technical standards (RTS) for handling complaints. The other draft concerns RTS regarding assessing the acquisition of qualifying holdings in designated ARTs.
Additionally, the draft RTS/ implementing technical standards (ITS) is regarding authorization of public offerings, issuance, and admission to trading ARTs. This consultation project should run till October 12, 2023.
The multi-step consultation procedure for MiCA was published on the ESMA website on June 12, 2023. With the first package recently released by ESMA, the next package will be published in October 2023. The process of further publications is expected to be completed within 12 months. The third package will be published in the first quarter of 2024 but its specifics are yet to be determined.
MiCA is yet to be fully implemented with the first regulatory framework but the authorities are planning for MiCA 2.0. During the Paris Fashion Week in early June 2023, Francois Villeroy de Galhau, the governor of the Bank of France, suggested that lawmakers start preparing for MiCA 2.0.
However, it’s still more than a year for its implementation, and additional time would be needed to assess the implication and find loopholes. But Galhau thinks that by being proactive, lawmakers could address the loopholes better and would be ready with required counteractions.
