EU Securities Watchdog Warns Firms to Register Crypto Products Ahead of MiCA
Despite MiCA’s passage, both ESMA and Europe’s Systemic Risk Board want to ensure crypto is regulated and investors are protected
Vadim Sazhniev/Shutterstock modified by Blockworks
The European Securities and Markets Authority warned firms that they should register their crypto products, even as the Markets in Crypto-Assets Regulation looms over the EU.
Last month, the European Union passed the Markets in Crypto-Assets (MiCA) legislation, mandating that crypto companies register in an EU-member state. While the extent of regulation under MiCA is not yet fully known, it also includes provisions for monitoring the environmental impact of crypto assets. Meanwhile, compliance oversight is entrusted to the European Securities and Markets Authority, or ESMA, and the European Banking Authority.
Despite MiCA being “close to adoption, crypto assets offered by investment firms will continue to be unregulated in most jurisdictions until MiCA applies. Some Member States have domestic legislation and specialist regimes in place which can provide protections for investors in relation to investment firms selling unregulated products and/or services.”
Essentially, the ESMA aims to ensure that investors are wholly educated on products that are not regulated so that they understand the differences – primarily the risks – that come with investing in speculative products such as crypto assets.
“Unregulated products such as cryptoassets or non-transferable securities may present a higher level of risk for clients,” the authority said. “Where clients lose their initial investment and find out that they do not benefit from the protections afforded to them under financial regulation, they may complain to the investment firm for not having provided clear information about the products they were investing in.“
The ESMA’s warning comes a day after Europe’s Systemic Risk Board warned that MiCA isn’t enough, and that more work needs to be done to properly regulate crypto.
Systemic “risks could materialize if, for example, interconnectedness with the traditional financial system increases over time,” it said.
Get the news in your inbox. Explore Blockworks newsletters:
- The Breakdown: Decoding crypto and the markets. Daily.
- 0xResearch: Alpha in your inbox. Think like an analyst.
- Empire: Crypto news and analysis to start your day.
- Forward Guidance: The intersection of crypto, macro and policy.
- The Drop: Apps, games, memes and more.
- Lightspeed: All things Solana.
- Supply Shock: Bitcoin, bitcoin, bitcoin.
