The European Security and Market Authority (ESMA), the European Union’s market regulator, has recently revealed its second consultative paper on the Market in Crypto-Assets (MiCA), in a comprehensive report. This move signals the regulator’s commitment to engaging with stakeholders on crucial aspects of the crypto market.
ESMA’s consultation invites input on five key areas with the MiCA
Sustainability indicators
The ESMA’s authorities are looking to establish Sustainability indicators for a distributed ledger, including greenhouse gas emissions, energy consumption, and waste production. Qualitative assessments on the environmental impact of blockchain network nodes will also be considered.
Inside information disclosure
MiCA proposes enhanced disclosure requirements for crypto companies, focusing on inside information. This measure aims to provide transparency and investor protection.
Technical requirements for white papers
ESMA is also exploring technical prerequisites for white papers issued by crypto-asset service providers (CASPs). This measure aims to ensure the quality and reliability of information presented to the investor.
Trade transparency measures
CASPs might soon be mandated to report detailed trading information including date and time of transactions, crypto-assets identification, pricing data, quantity, transaction ID, and many more. This detailed information enhances the transparency in the realm of cryptocurrency.
Record-Keeping for CASPs
ESMA is contemplating record-keeping requirements for CASPs to facilitate regulatory oversight and improve accountability within the crypto industry. Notably, ESMA is open to flexibility regarding data storage, allowing CASPs to maintain transaction data in their preferred formats, provided they can convert it into a specified format upon regulatory request.
ESMA intends to compile feedback from stakeholders and release a final report. Draft technical standards will be submitted to the European Commission by June 30, 2024, signifying a significant milestone in the regulatory process. Furthermore, a third consultation package is scheduled for release in Q1 2024.
ESMA’s proactive approach to regulating the crypto market is in response to recent developments, including the Terra Luna crash in May 2022 and the subsequent crash of FTX.
These events prompted the EU to take steps to safeguard investors and establish clear guidelines for decentralized financial firms. MiCA’s mandates aim to strike a balance between fostering innovation and ensuring investor and market integrity, ultimately shaping the regulatory landscape for crypto assets in the European Union.