ESMA Sets Groundbreaking Rules for Crypto Companies Under New EU Framework

Consultations cover authorization and conflict-of-interest rules for crypto companies under the landmark digital assets regulation

The European Securities and Markets Authority (ESMA) has released a set of detailed proposals on how crypto companies within the European Union should be authorized under the new Markets in Crypto Assets (MiCA) law. The proposals address various aspects, including handling user complaints and managing conflicts of interest. ESMA has been influenced by recent incidents of poor governance and security in the crypto sector, such as the bankruptcy filing of FTX exchange. The agency is also seeking information on expected revenue, white papers, and trading methods. Further consultations will follow on sustainability and record-keeping, as well as determining when crypto counts as a security and how foreign companies can serve EU clients. Applicants will need to demonstrate the segregation of client funds, the security of their technology systems, and the management of conflicting interests.

Key points:
– ESMA has issued detailed proposals on the authorization of crypto companies under MiCA.
– The proposals address user complaints, conflicts of interest, and security concerns.
– Recent incidents of poor governance and security have influenced ESMA’s approach.
– The consultation seeks information on revenue, white papers, and trading methods.
– Further consultations will cover sustainability, record-keeping, and other aspects of the regulation.

Hot Take:
ESMA’s proposals for authorizing crypto companies under MiCA reflect the growing concerns surrounding the governance and security of the crypto sector. By addressing user complaints, conflicts of interest, and other key issues, ESMA aims to enhance the credibility and trustworthiness of crypto companies operating within the European Union. The agency’s consultations provide an opportunity for stakeholders to contribute to the development of robust regulations that will protect investors and promote the responsible growth of the crypto industry.