The European Securities and Markets Authority, the EU’s financial markets regulator and supervisor, its final package of reports on Tuesday 17 December 2024, containing regulatory technical standards (RTS) and guidelines ahead of the full implementation of the markets in crypto assets regulation (Mica), scheduled for 30 December 2024.

Esma’s work, conducted over the past 18 months, includes more than 30 technical standards and guidelines, many of which were developed in collaboration with the European Banking Authority. These documents reflect the complexity of the regulatory framework that is being established to govern the rapidly evolving crypto market within the EU.

Verena Ross, Esma’s chairperson, in a press statement highlighted that the launch of the Mica regime represents a significant milestone in the development of a regulatory framework for crypto assets. However, she cautioned that the introduction of the regime would not completely eliminate the inherent risks, uncertainty and volatility in the crypto market. Ross stressed that investors must have a full understanding of these risks before engaging in crypto-asset investments. Looking ahead, she noted that Esma would continue its work with national competent authorities to ensure the smooth implementation of Mica, while supporting supervisory convergence to maintain a level playing field across jurisdictions.

The final package of reports published by Esma includes a series of key components. First, the regulatory technical standards on market abuse set out systems and procedures for preventing and detecting market abuse in crypto-assets. These include a template for reporting suspected market abuse and coordination procedures between authorities for handling cross-border market abuse cases. These regulations will allow supervisors to take swift action in the event of market abuse and pursue enforcement where necessary.

Esma also published guidelines on reverse solicitation, which confirm its previous stance that the reverse solicitation exemption under Mica should be applied very narrowly. The exemption allows crypto-asset service providers (Casps) to offer services without adhering to Mica regulations, but only in cases where the client is the exclusive initiator of the service. Esma emphasised that this exemption should not be used to circumvent Mica’s broader requirements.

In addition, Esma issued guidelines on suitability, which set out how Casps providing advice or portfolio management services must ensure that their recommendations or investment decisions are suitable for their clients. These guidelines are aligned with the requirements of Mifid II, meaning that Casps will face similar obligations under both Mifid II and Mica when providing advice on or managing crypto-assets.

Another set of guidelines issued by Esma focuses on crypto-asset transfer services. These guidelines are aimed at ensuring investor protection when clients are transferring crypto-assets and specify the policies and procedures that Casps should have in place to safeguard their clients during these transactions.

Esma also published guidelines on the qualification of crypto-assets as financial instruments, outlining the conditions under which crypto-assets can be classified as such. These guidelines are designed to provide clarity about the delineation between Mica and other regulatory frameworks, particularly Mifid II, to ensure a consistent regulatory approach across the EU.

Finally, Esma issued guidelines on ICT systems and security access protocols. These apply to offerors and entities seeking admission to trading who are not subject to the same operational resilience standards under Mica and the digital operational resilience act (Dora) as Casps and issuers. These guidelines offer a streamlined set of principles for managing ICT risks within these entities.

Looking forward, Esma said its priority will be to continue collaborating with national authorities during the transitional period to ensure the full implementation of Mica and to adapt the regulation as the crypto-asset market evolves. The guidelines will come into effect three months after their translation into the official languages. The final reports, including the draft RTS, have already been submitted to the European Commission for adoption.