European Crypto Investors to Wait Longer for Regulatory Cover
The European Securities and Markets Authority (ESMA) has announced that the full provisions of Markets-in Crypto Assets (MiCA) will take longer than expected to come into effect. This means that crypto investors in Europe will have to wait until at least December 2024 for regulatory cover. As a result, they will not have access to EU-level regulatory and supervisory safeguards, including the ability to file complaints against service providers. The timeline for MiCA’s full launch may extend to July 2026. However, crypto trading firms will have an 18-month transitional period without proper regulatory oversight, subject to member states’ discretion.
NCAs Limited in Powers
The implementation of MiCA in the 27 member states of the EU will involve National Competent Authorities (NCAs) and European Supervisory Authorities (ESAs). Although NCAs will begin their operations by the end of 2024, their regulatory scope will be limited. They will only enforce existing anti-money laundering laws, which are less comprehensive compared to MiCA’s provisions. ESMA emphasized that no digital asset can be considered “safe” due to the volatile nature of crypto assets. Additionally, MiCA does not cover all the security and operational risks associated with cryptocurrencies due to the early stage of blockchain technology.
Encouragement for Crypto Asset Service Providers
ESMA encourages virtual asset service providers (VASPs) to inform relevant NCAs in their region about their intention to apply MiCA rules. This will help expedite the implementation phase and transition period. VASPs are also advised to apply for MiCA and inform their clients accordingly.
Hot Take: European Crypto Investors Face Delayed Protection
The European Securities and Markets Authority (ESMA) has announced that the full implementation of Markets-in Crypto Assets (MiCA) will be delayed, leaving European crypto investors without regulatory cover until at least December 2024. This means they will lack access to EU-level safeguards and the ability to file complaints against service providers. The timeline for MiCA’s launch may extend to July 2026, while crypto trading firms will have an 18-month transitional period without proper oversight. However, National Competent Authorities (NCAs) will have limited powers in enforcing existing anti-money laundering laws. ESMA highlights the volatile nature of crypto assets and the infancy of blockchain technology as factors limiting MiCA’s effectiveness. Crypto asset service providers are encouraged to inform NCAs and apply for MiCA to expedite the implementation process.
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