In a significant move towards regulating the rapidly expanding cryptocurrency sector, the European Securities and Markets Authority (ESMA) has released its second consultative paper on Markets in Crypto-Assets (MiCA) regulations. This 307-page document represents a crucial step in the European Union’s ongoing efforts to bring clarity and structure to the evolving crypto landscape.
The ESMA’s consultation paper, released on October 5th, invites input and feedback from stakeholders on five essential aspects of MiCA regulations. These areas of focus encompass sustainability indicators for distributed ledger technologies (DLTs), disclosures of inside information, technical requirements for white papers, trade transparency measures, and record-keeping standards for crypto-asset service providers (CASPs).
Sustainability indicators, as proposed by the ESMA, include both quantitative metrics and qualitative assessments, addressing environmental concerns related to blockchain network nodes, such as energy consumption, greenhouse gas emissions, and waste production. This reflects the EU’s commitment to addressing the environmental impact of cryptocurrency operations.
Regarding post-trade transparency, the ESMA outlines requirements for CASPs to report critical details, including trading timestamps, crypto-asset identification, pricing information, transaction quantity, execution venue, and transaction ID. This comprehensive reporting framework aims to enhance market transparency and investor protection within the crypto sphere.
The ESMA introduces flexibility by allowing CASPs to store transaction data in a format of their choice but mandates the capability to convert this data into a standardized format when requested by regulatory authorities. This provision accommodates diverse data management approaches while ensuring regulatory access and oversight.
The ESMA has set a clear timeline for these regulatory developments, with plans to publish a final report, incorporating stakeholder feedback, and submit draft technical standards to the European Commission by June 30, 2024. In anticipation of this milestone, the ESMA will issue a third consultation package in the first quarter of 2024, providing additional opportunities for industry input.
In a previous consultation paper released in July, the ESMA proposed that crypto companies registered under MiCA would need to provide additional information through notifications to the national competent authorities in their respective countries.
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