
The European Securities and Markets Authority has been designated by the Parliament of the EU as the EU’s top crypto regulator in accordance with the Markets in Crypto Assets Regulation (MICA). This European body would be responsible for licensing exchanges and institutions related to crypto, as well as putting the national regulators under their authority.
ESMA Receives Crypto Regulatory Authority in the Latest MiCA Draft
MiCA (Markets in Crypto Assets) regulation has made major changes in how organizations get their cryptocurrency licenses approved. The EU Parliament approved the draft. It assigns the role of ESMA to the European Securities and Markets Authority. This undermines institutions such as the Bafin (Germany) or the CNMV (Spain).
The draft is a copy of the EU system used to approve banking licenses for the region. In this system, the European Central Bank can only grant or cancel banking licenses to the entities within the system. This task was performed by national regulators in the previous versions of this draft. The reason for the shift in focus on this part of the law has not been revealed.
Furthermore, a new directive gives ESMA the ability to determine which crypto assets are under the scope of the law, and which aren’t. The directive states ESMA will issue “guidelines that reduce legal uncertainty and guarantee fair competition conditions between market operators.”
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The new draft also introduces a new classification for a kind of crypto assets called “e-money tokens,” which are stablecoins linked to legal tender currencies. Because these tokens can be used as payment methods, they are important to MiCA. To issue these tokens, the issuers should have a valid banking license. NFTs and traditional assets are exempted from the laws, so they would be administered by each country’s regulators.
The changes are subject to approval. However, the entire text may be approved in Q3. There have been many disputes over the inclusion of clauses within the draft. The ban on proof of work-based cryptocurrency due to sustainability issues was dropped.
The Transfer of Funds Regulation is another European cryptocurrency law that has been criticized. It seeks to impose strict controls on all crypto transactions including those made from unhosted wallets.
How do you feel about the MiCA draft designating ESMA the leading crypto regulator in Europe? Comment below.
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