Crypto Warnings from ESMA as It Gets Ready to Implement MiCA
The Markets in Crypto-Assets Regulation (MiCA) implementation schedule was clarified in a statement released on Tuesday by the European Securities and Markets Authority (ESMA). Along with many concerns related to crypto assets, ESMA also emphasized the fact that MiCA won't be fully operational until December 2024.
"The entry into force of MiCA is a fundamental development for the establishment of a single rulebook for the regulation and supervision of crypto-asset issuance, trading, and service provision," according to ESMA. Such activities are not yet covered by the common financial services regulation of the European Union (EU).
But ESMA has emphasized that "MiCA does not address all of the various risks associated with these products," warning cryptocurrency owners and clients of crypto service providers:
Numerous cryptoassets are inherently quite speculative. Additionally, there are new operational and security issues that can affect crypto-assets. Retail investors need to be informed that there won't be any "safe" crypto-assets even when MiCA is put into place.
According to ESMA, "full MiCA rights and protections will not apply in the MiCA implementation phase." Until December 2024, "MiCA rules on the provision of crypto-asset services will not come into effect."
Market participants were also asked by ESMA to "make adequate preparations" in order to ensure a smooth transition to MiCA. The regulator continued, "These preparations should also involve early engagement between firms already offering crypto-asset services in the EU and the pertinent competent authorities of the jurisdictions in which they operate to notify them of their transition plans.
Additionally, ESMA issued a warning: "Even after MiCA becomes applicable to crypto-asset service providers, member states have the option of granting entities already providing crypto-asset services in their jurisdictions up to an additional 18-month 'transitional period' during which they may continue to operate without a MiCA license." ESMA explained:
This implies that until as late as 1 July 2026, owners of cryptoassets and customers of cryptoasset service providers may not enjoy all of the rights and protections provided to them under MiCA.
What do you think of ESMA's preparations for implementing MiCA and its crypto warnings? Comment below with your thoughts and let us know.