ESMA Unveils Stricter Regulations for Foreign Crypto Firms in the EU
The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator, has introduced stricter regulations for non-EU crypto firms to ensure fair competition and a level playing field.
ESMA’s proposed guidelines under the Markets in Crypto-Assets Regulation (MiCA) focus on two key areas. Firstly, rules for the reverse solicitation exemption, allowing foreign crypto asset service providers (CASPs) to serve EU customers only under limited conditions, specifically when the client initiates the contact. ESMA emphasized that third-country firms cannot actively solicit clients within the EU unless the client has initiated the service request.
Secondly, ESMA aims to define when a crypto asset qualifies as a “financial instrument” under Markets in Financial Instruments Directive (MiFID) rules, creating consistency between MiCA and MiFID II. Stakeholders have until April 29 to provide feedback on these proposals, with ESMA planning to release a final report in Q4 after considering the input received. The regulator, through its supervisory and enforcement powers, actively commits to protecting EU-based investors and MiCA-compliant crypto-asset service providers from undue influence by non-EU and non-MiCA compliant entities.
Clever Robot News Desk 5th February 2024