The European Securities and Markets Authority (ESMA) has published final guidance on MiCA, assisting member states in implementing the regulation before 30/12/2024.
On December 17, the European Securities and Markets Authority (ESMA) released the final guidance report for EU member states on the implementation of the Markets in Crypto-Assets Regulation (MiCA). This regulation is expected to come into effect in June 2024 and be fully implemented by the end of 2024, marking an important step forward in the regulation of the rapidly evolving digital asset market.
However, the report also highlights the challenges that member states are facing during the transition, especially the lack of clarity in the initial MiCA documents.
The issuance of this final guidance occurs amidst the strong growth of the stablecoin market under the MiCA guidance framework. Nevertheless, as of December 10, 2024, at least 6 EU member states, including Belgium, Italy, Poland, Portugal, Luxembourg, and Romania, reported difficulties in meeting the requirements ahead of the year-end deadline. The main reason identified is the lack of clarity in the initial MiCA documents, complicating the interpretation and application of the regulations.
Challenges in achieving a unified understanding of MiCA
ESMA has conducted a consultation process with member states and other stakeholders, receiving feedback from dozens of countries and organizations. Stakeholders generally appreciate the clarity of the draft guidelines and ESMA's comprehensive approach.
However, some opinions suggest that more details are needed regarding specific criteria and conditions, while others are concerned about the administrative burden that the guidelines may impose. As a result, ESMA has issued guidelines addressing 12 separate issues, mainly related to clarifying asset classification and their legal use.
One of the top concerns is the potential for member states to interpret MiCA regulations differently due to the lack of specific interpretations. ESMA acknowledges this risk, warning that legal ambiguity could lead to differing understandings among member states.
To address this issue, ESMA has provided a series of illustrative scenarios to clarify various aspects of the regulation. However, since MiCA does not provide practical examples, the guidelines cannot provide a viewpoint on the specific classification of each type of cryptocurrency or similar assets.
Furthermore, the report also addresses concerns related to the guidance under the Markets in Financial Instruments Directive II (MiFID II), which was implemented after the global financial crisis of 2008. Member states are calling for an update to MiFID II to include a clear definition of crypto assets as financial instruments.
In response, ESMA proposes to provide additional clarity on MiFID II regulations without changing the current definition of financial instruments. This approach aims to balance the identification of the conditions and criteria for classifying crypto assets with the application of a flexible approach in management.
Additionally, member states have also expressed concerns about the lack of specific guidance in MiCA to determine which assets can be legally transferred, how to promote and ensure 'technological neutrality' under current regulations, as well as how classifications such as 'securities,' 'derivatives,' and 'emissions quotas' apply to various types of crypto assets.
Although this is the final guidance report before the deadline of 30/12/2024, ESMA affirms that it will continue to cooperate with legislators and stakeholders to further clarify the regulations without changing the content of the law.