A Step Towards Crypto Regulation Across the EU
The European Securities and Markets Authority, the EU’s main financial markets regulator, today published its final regulatory technical standards and guidelines under the Markets in Crypto Assets Regulation. The new regime will start applying from 30 December 2024 and is expected to create a single market for crypto markets across all 27 member states of the EU.
ESMA Chair Verena Ross underlined the importance of the framework, but warned investors. “The new regime will not eliminate the inherent uncertainty and volatility in the crypto-assets market. Investors must fully understand the risks before engaging in this space,” Ross said.
Market Abuse, Investor Protection, and Resilience in Focus
MiCA lays the basic framework for how to address some of the main challenges, such as market abuse, investor protection, and operational resilience. ESMA has been working with the EBA during the last 18 months to develop more than 30 technical standards and guidelines necessary for the smooth application of the framework.
Some areas specifically covered are:
Market Abuse Detection: Systems and procedures for detecting and preventing abusive practices in crypto markets.
- Incident Reporting: Templates for reporting suspected market abuse.
- Cross-Border Enforcement: Coordination guidelines to address enforcement challenges across EU jurisdictions.
- These measures aim to standardize practices, reduce vulnerabilities, and bolster investor confidence in the emerging crypto sector.
Industry Experts Call for Broader Scope
Yet, analysts say MiCA does not fill some of the gaps. In this regard, Tom Kiddle, the co-founder of Palisade and former executive at Ripple, recently shared his thoughts. According to Kiddle, MiCA is a milestone, but it may not be enough, especially for emerging sectors such as NFTs and DeFi.
While MiCA’s clarity is laudable, more needs to be done. NFTs and DeFi remain largely unregulated, leaving investors in these spaces exposed,” Kiddle said. He further stressed that international cooperation will be critical in managing cryptocurrency’s role amid rising geopolitical tensions and financial scrutiny.
A Competitive Edge for the EU?
While the EU takes a lead with MiCA, global regulatory approaches remain fragmented. Indeed, countries worldwide are wrestling with crypto regulation, especially as digital assets come under increasing scrutiny over their potential use in illicit activities.
Conclusion
The finalized MiCA guidelines from ESMA are a pivotal step for EU crypto regulation. While the framework, in turn, enhances transparency and confidence through the addressing of market abuse and investor protection, ongoing efforts will be required moving forward to close gaps in the evolving crypto landscape toward global regulatory alignment
