Adan responds to ESMA Consultations on technical standards of Markets-in-Crypto Assets (MiCA) Regulation

In January 2024, the European Securities and Markets Authority (#ESMA) launched two public consultations as part of the third package of consultations on the Regulatory Technical Standards (RTS) of the European Markets in #Crypto Assets (#MiCA) regulation. The first consultation by ESMA, titled "Qualification of Crypto-Assets as Financial Instruments," aimed to clearly define which types of crypto-assets should be treated as financial instruments within the EU, a crucial issue for market participants and market surveillance. The second consultation, on the other hand, focused on "reverse solicitation," an exception allowing entities outside the EU to offer services on crypto-assets or products to EU clients without having to comply with all European regulatory requirements (including MiCA), provided that the initial request is exclusively at the initiative of the European client.

  • Adan's contributions to the consultation on Reverse Solicitation:

In the context of the consultation on reverse solicitation, Adan acknowledged ESMA's efforts to protect investors and prevent the circumvention of MiCA regulation. However, the Association warns ESMA about the threats to level playing field and investor protection if the "reverse solicitation" concept remains too broad and vague. Adan advocates for the exemptions from reverse solicitation to remain strictly defined to ensure clarity and consistency in the rules governing interactions between entities outside the EU and European clients. Additionally, Adan proposed enhancements to current coercive measures, such as the application of "name and shame" principles and the use of geoblocking for non-compliant actors.

  • Adan's contribution to the consultation on Qualification of Crypto-Assets as financial instruments:

Regarding the qualification of crypto-assets as financial instruments, Adan supports the "case-by-case" approach proposed by ESMA. This position recognizes the diverse and evolving nature of crypto-assets while supporting harmonization and fostering a competitive market environment within the EU.
Adan recommends maintaining a balance that avoids overly rigid criteria that could quickly become obsolete. Then, Adan recommends specific guidelines to differentiate between #NFTs and unique crypto-assets from traditional financial instruments to avoid unnecessary regulatory burdens on non-financial use cases. Regarding hybrid tokens, Adan proposes a hierarchical evaluation method to prioritize the token's main function, thereby ensuring a proportional regulatory approach.

Adan thanks the European Securities and Markets Authority for enabling industry stakeholders the opportunity to provide their opinion on the MiCA Regulation. The Association's objectives are ensure the European Union sets up a framework that allows the development and innovation in the crypto assets industry.