ESMA urges preparations for smooth transition to MiCA regulation.

The European Securities and Markets Authority (ESMA) has urged member states to designate competent authorities and limit the optional transitional period for crypto-asset services. They have also released a statement outlining expectations for entities providing crypto-asset services and national competent authorities.

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The European Securities and Markets Authority (ESMA), the financial markets regulator and supervisor of the EU, has issued a letter and a statement urging preparations for a seamless transition to the Markets in Crypto-assets Regulation (MiCA).

In the letter addressed to the Economic and Financial Affairs Council (ECOFIN), Verena Ross, ESMA Chair, emphasises the need for Member States to promptly designate the competent authorities responsible for implementing the functions and duties outlined in the EU regulation. This is crucial to ensuring effective regulation and supervision of the crypto-asset market.

Furthermore, ESMA has released a statement addressing entities that provide crypto-asset services and the national competent authorities that will be responsible for their supervision. The statement sets out the expectations for both parties during the transitional period of MiCA. The EU’s financial watchdog urges the competent authorities to allocate resources and align their supervisory practices with those of their EU counterparts, in order to establish effective supervision from the start.

Market participants are strongly encouraged to initiate preparations for a smooth transition and ensure that their clients are informed about the regulatory status of their crypto-asset offerings. ESMA also emphasises the importance of market participants understanding the implications of the “grandfathered” status of their offerings and informing consumers about the risks associated with holding or investing in crypto-assets. This reminder aims to protect consumers and ensure they make informed decisions during the transitional period.

Why does it matter?

By taking these measures, ESMA aims to establish effective regulation and supervision of the crypto-asset market, safeguarding both market participants and consumers. The initiative reflects ESMA’s commitment to creating a well-regulated market for crypto-assets within the European Union.