#ESMA #crypto #MiCA #EU #regulation #consumerprotection #financialmarkets #cryptobrokerage
The European Securities and Markets Authority (ESMA) recently made a significant step by sharing an Opinion on the process of authorizing global cryptocurrency firms under the comprehensive Markets in Crypto Assets (MiCA) Regulation. This Opinion is pivotal as it directly challenges the operational structures of global crypto firms seeking European Union (EU) authorization for their brokerage services. These services often entail routing orders to execution venues outside of the EU, which poses a risk to transparent and fair market practices.
ESMA’s concerns revolve around the complexities and the potentially evasive structures that global crypto firms might employ to capitalize on less stringent regulations outside the EU. This can result in an unequal playing field for EU-authorized execution venues, potentially compromising consumer protection. In light of these risks, ESMA advises National Competent Authorities (NCAs) to be vigilant and thorough during the authorization evaluations. They are encouraged to dissect the business models of these global entities to prevent any circumvention of the stringent obligations laid out by MiCA. These recommendations underscore ESMA’s commitment to safeguarding consumer interests and fostering an orderly crypto market environment.
Alongside pinpointing risks, ESMA’s Opinion also outlines detailed criteria for a case-by-case assessment of global crypto firms. This includes ensuring best execution practices, managing conflicts of interest, and fulfilling the obligations of acting in the best interests of their clients. Furthermore, ESMA places considerable emphasis on the custody and administrative handling of crypto assets on behalf of clients, stressing the need for transparency and accountability in these operations. MiCA itself is crafted to provide a clear regulatory framework for trading platforms and execution venues for crypto assets, emphasizing consumer protection and market integrity.
ESMA has also published a second Final Report, detailing eight draft technical standards under MiCA, aimed at enhancing transparency and providing a framework for sustainable business continuity for Crypto-Asset Service Providers (CASPs). The draft standards are devised to improve clarity for service providers, ensure trade transparency, and establish protocols for efficient supervision by NCAs. These advancements signal a significant move towards a more regulated and secure crypto-asset market, leading to better protection for retail investors and a level playing field for all market participants.
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