Originally published on: October 16, 2024
The European Union’s financial regulator, ESMA, has emphasized the need for amendments to the Markets in Crypto-Assets Regulation (MiCA), the bloc’s existing cryptocurrency regulatory framework. In an official opinion released on Oct. 16, ESMA urged the European Commission to consider updating various aspects of MiCA to enhance cybersecurity measures and compliance requirements.
ESMA acknowledged the legal constraints surrounding the Commission’s proposal but stressed the importance of the underlying policy objectives of the initial framework. Specifically, ESMA highlighted the amendments proposed for two regulatory technical standards (RTS) concerning data disclosures related to the provision of crypto asset services and the authorization process for crypto asset service providers (CASPs).
One key recommendation put forth by ESMA is the inclusion of results from external cybersecurity audits as part of the application process for CASPs. This would entail assessing the integrity and reputation of the management team of CASPs seeking authorization. Additionally, ESMA proposed thorough background checks on CASPs to ensure a clean record in various legal domains, including financial services laws, Anti-Money Laundering, and Counter-Terrorist Financing regulations.
The overarching goal of these regulatory technical standards is to establish a rigorous assessment process for prospective CASPs and financial entities intending to offer crypto asset services within the EU. ESMA has shared its opinion with the European Commission, Parliament, and Council, noting that the Council has the authority to approve the RTS with the proposed amendments or reject them.
The call for enhancements to MiCA regulations comes at a crucial time as the EU gears up for the impending deadline set for Dec. 30. With the global crypto landscape evolving rapidly, regulatory updates are essential to address emerging risks and ensure the stability of financial infrastructures.
As discussions continue on the potential impact of MiCA amendments, it is evident that cybersecurity and compliance will remain key priorities for regulators and industry players alike. Stay tuned for further developments as Europe navigates the evolving crypto regulatory landscape.
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