The European Securities and Markets Authority (ESMA) has released its final guidance report for member states making the final transition to the Markets in Crypto-Assets (MiCA) regulation.
Laws formed under MiCA regulations began taking effect in June 2024 with final implementation scheduled for Dec. 30. The latest and final guidance from ESMA is meant to help member states still seeking regulatory clarity with their final implementations ahead of the deadline.
As Cointelegraph reported, the stablecoin market has surged under MiCA guidance. However, as recently as Dec. 10 at least six EU member states, Belgium, Italy, Poland, Portugal, Luxembourg, and Romania, were reporting difficulties in meeting the end-of-year-deadline due to uncertainty and a lack of regulatory clarity in the initial MiCA documents.
Per the ESMA’s final guidance report:
“Stakeholders generally appreciated the clarity of the draft guidelines and the comprehensive approach taken by ESMA. Several respondents highlighted the need for further clarity on specific criteria and conditions, while others expressed concerns about the potential administrative burden the draft guidelines might impose.”
Regulatory uncertainty
Member states and industry stakeholders were active in the commentary period between association reports with participation from dozens of member states and stakeholders. The feedback resulted in EMSA guidance on 12 distinct concerns, the majority of which were related to clarifying classifications for specific assets and their legal use.
Chief among the concerns were that member states would arrive at different interpretations of many MiCA laws due to insufficient explanations.
“Several respondents highlighted the potential for legal uncertainty due to the scope of the guidelines and the way the conditions and criteria detailed in the guidelines could be understood by NCAs,” wrote the EMSA, adding that this could lead to “diverging interpretations across member states.”
Related: EU markets watchdog urges amendments to MiCA crypto regulations
To address these concerns, the ESMA included a series of explanatory scenarios covering various aspects of digital asset regulation under MiCA. However, according to the report, MiCA has declined to provide “real world” examples because the guidelines cannot express an opinion on the classification of specific cryptocurrencies or similar assets.
The report also addressed concerns over the EU’s MiFID II guidance. MiFID II was rolled out after the 2008 global financial crisis to standardize financial practices across the Union.
Member states are calling for an update to the regulation to include a clear definition of crypto assets as financial instruments. In response, the ESMA’s guidance suggests providing additional clarity on MiFID II rules without changing the definition of financial instruments. This would presumably strike a balance between determining the conditions and criteria used to classify crypto-assets and enabling a “one size fits all” approach to regulation.
Member states also worried that there wasn’t enough clarity in the MiCA laws for them to make determinations on which assets were legally transferable, how to promote and ensure “technology neutrality” under the current rules, and how classifications such as “securities,” “derivatives,” and emission allowances applied across different crypto-asset types.
Despite this being the Final Guidance Report ahead of the Dec. 30 deadline, the ESMA wrote throughout the 49-page document that it would continue to work with lawmakers and stakeholders to develop further clarity without changing the letter of the laws.
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