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The European Securities and Markets Authority (ESMA) released its second consultation on MiCA. - 2
The draft aims to gather feedback from service providers and crypto users. - 3
It also specifies some regulations that the crypto firms will have to adhere to.
On Oct 5, the European Securities and Markets Authority (ESMA) tabled its second consultation on MiCA. For the uninitiated, Markets in Crypto-Assets (MiCA) is a legal framework that regulates cryptocurrencies in European Union nations. The regulator released the first consultative paper on 12 July 2023. Reportedly, ESMA will release one more paper later. All these drafted proposals aim to gather feedback from the crypto users and service providers in the space.
The Significance of Consultations on MiCA
The objective of MiCA is to make crypto more accessible and secure for people. It aims to turn the digital assets into a mainstream fintech solution. But doing that is easier said than done, especially when there’s a wide gap in the understanding of the technology. So, the European Union decided to involve more people in the drafting process. With these consultative papers, they could know how the rules will impact the markets.
The second paper is a 307-page document. It seeks inputs from the market participants on 5 areas. They are:-
- Sustainability indicators for distributed ledgers
- Disclosures of inside information
- Technical requirements for white papers
- Trade transparency measures
- Record-keeping for crypto-asset service providers
Besides these points, the draft also talks about quantitative metrics on eco-friendly measures. It highlights the production of waste, greenhouse gas emissions, and consumption of energy. The paper discusses the effect of mining equipment on natural resources. Furthermore, the ESMA lays out some guidelines for maintaining the transparency of blockchain.
It stipulates the crypto asset service providers (CASPs) to report the key details of transactions. It includes transaction ID, execution venue, pricing information quantity, asset identification, and publication date and time. The body also advises the CASPs to store transaction data in a befitting format. However, the firms must provide the data to authorities in whichever format the latter requires.
The regulator is expected to publish a final report on feedback by June 30, 2024. And by the end of Q1 2024, it would publish the third consultation paper too. Before implementing the standards, the ESMA has to draft Regulatory Technical Standards (RTS) and Implementing Technical Standards (ITS) guidelines. Since it is a lot of work, the incumbent body had to divvy up the work in three stages.
The second set of proposals contains the following:
- A white paper comprising methodologies and content for crypto-asset issuers and CASPs. It would also consist of sustainability indicators.
- It would delineate the measures to maintain the continuity of CASPs’ services.
- It also mandates record-keeping of orders of crypto trading platforms.
- The ESMA itself will guide the service providers on how to keep the data in registers. It would also ensure the machine-readability of the information.
- If any instance involves the technical means of public disclosure of inside information, it could be delayed.
Conclusion
The working of the government on crypto regulation is definitely a positive thing for the domain. However, their effectiveness is yet to be seen. While everyone is excited about it, they also hope that it doesn’t make the whole thing centralized. The crypto sphere will be able to see in 2024 when MiCA is implemented.
Source: https://www.thecoinrepublic.com/2023/10/08/the-second-consultation-on-mica-regulation-is-finally-on-board/