The European Union’s markets watchdog has called for crypto companies and national regulators to start preparing to meet the bloc’s new industry rules, rather than rely on a lengthy transitional phase.
(Bloomberg) — The European Union’s markets watchdog has called for crypto companies and national regulators to start preparing to meet the bloc’s new industry rules, rather than rely on a lengthy transitional phase.
The European Securities and Markets Authority said on Tuesday that digital asset firms should apply for authorization with national regulators under the EU’s incoming Markets in Cryptoassets (MiCA) regime as soon as possible and talk to watchdogs about how the new rules will govern their current activities.
Approved by EU lawmakers earlier this year, MiCA is a wide-ranging package of EU measures governing digital finance that will require crypto providers seeking to offer services in the bloc to register with a local regulator in at least one member state. While the measures are set to come into force in January 2025, national authorities are permitted to take advantage of a grandfathering clause that would allow firms registered before that date to continue operating under an 18-month transitional period — extending de-facto implementation until mid-2026.
Read: How Europe Wants to Impose Some Order on Crypto World: QuickTake
It’s “probable that a significant number” of crypto companies already servicing EU customers will seek to take advantage of this clause, among them some providers that exploit their large size to operate between borders and arbitrage regulatory differences between friendlier jurisdictions, the watchdog said in a statement. It warned consumers that any use of crypto services will continue to be unprotected beyond existing local rules until MiCA’s arrival.
National regulators should dedicate adequate resources to MiCA’s implementation and establish a regime for authorizing crypto firms “as soon as possible,” ESMA said. They should also make sure any simplified version of authorization cannot be “used as a tool to gain a competitive advantage vis-a-vis other jurisdictions,” it added.
Paris-based ESMA is presently developing technical standards under MiCA, which national authorities will need to enforce against firms who register with them locally. International standards bodies such as the Financial Stability Board and the International Organization of Securities Commissions have warned of potential loopholes that could be created by regulators not implementing MiCA uniformly — a significant factor when overseeing a global industry like crypto.
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