The European Securities and Markets Authority (ESMA) has published its final report on the Markets in Crypto-Assets (MiCA) Regulation, marking a significant step in the regulation of the crypto-asset market within the European Union. This report, the culmination of extensive stakeholder consultation and analysis, outlines several critical areas that will shape the future of crypto-asset regulation. Below, we delve into some of the key highlights from the report.
Executive Summary
The MiCA regulation, adopted by the European Parliament and the Council on May 31, 2023, mandates ESMA, in cooperation with the European Banking Authority (EBA), to develop regulatory and implementing technical standards across various areas. The final report provides a comprehensive overview of ESMA’s proposals and the feedback received during the consultation process, which included 141 responses from stakeholders.
Sustainability Indicators
One of the critical aspects of the report is the emphasis on sustainability indicators related to climate and other environmental impacts. These indicators will be part of the regulatory technical standards (RTS), ensuring that crypto-asset service providers (CASPs) align their operations with broader sustainability goals.
Business Continuity Measures
The report also outlines business continuity measures for CASPs. Respondents to the consultation highlighted the need for proportionality in applying these requirements, suggesting exemptions for microenterprises and a flexible approach to the resources dedicated to business continuity. The consensus was that while resources should be allocated to ensure continuity, a specific management function for this purpose may not be necessary for all CASPs.
Pre- and Post-Trade Transparency
Transparency in trading activities is another crucial area addressed in the report. ESMA proposes specific requirements for pre- and post-trade transparency to ensure that all market participants have access to essential trading information. This includes the publication of order details and transaction information to prevent market manipulation and ensure a level playing field.
Record-Keeping Obligations
CASPs will also have to comply with stringent record-keeping requirements. These obligations include maintaining records that can distinguish assets held for different clients and ensure that these records can serve as an audit trail. Such measures are designed to enhance the security and reliability of crypto-asset custody services.
Machine Readability of White Papers
In line with the Open Data Directive and the Regulation on the establishment of a European Single Access Point (ESAP), the report specifies that crypto-asset white papers must be made available in a machine-readable format. This requirement aims to improve the accessibility and transparency of information provided to investors and regulators.
Technical Means for Public Disclosure
Public disclosure of inside information is essential to mitigate the risks of insider trading and ensure that investors receive timely, non-discriminatory access to price-sensitive information. The report discusses the technical means for appropriate public disclosure and delaying the public disclosure of inside information. Standardized approaches are necessary to maintain market integrity and prevent information asymmetry.
Conclusion
The final report on MiCA by ESMA represents a comprehensive effort to regulate the rapidly evolving crypto-asset market. By addressing sustainability, transparency, continuity, and disclosure, the report lays a robust foundation for the future of crypto-asset regulation in the European Union. These measures will not only enhance market stability but also protect investors and promote fair competition in the burgeoning crypto market.
This article provides an overview of the key areas covered in ESMA’s final report on MiCA, highlighting the importance of regulatory measures in ensuring the stability and transparency of the crypto-asset market. For a deeper dive into the specifics, stakeholders and interested parties are encouraged to read the full report available on the ESMA website.
