ESMA Consultation Paper on MiCA Regulation
The European Union financial markets regulator, the European Securities and Markets Authority (ESMA), has released its second consultation paper on the Markets in Crypto Asset (MiCA) regulation. The document, published on October 5, invites stakeholders from various sectors of the crypto market to participate in the implementation of MiCA in 2024. ESMA will consider all suggestions submitted by market participants before December 14 and plans to release the final draft with recommendations in Q1 2024. The paper highlights five key areas for input, including sustainability indicators, performance of CASP services, public access to pre-and post-trade data, order book records, machine readability of white papers, and public disclosure of inside information.
Proposals for Safer Regulations
ESMA is addressing concerns about blockchain sustainability by seeking quantitative metrics from stakeholders regarding the use of fossil fuels, energy intensity, equipment types used as nodes, and waste products generated by the sector. The authority aims to develop a framework on the sustainability of consensus mechanisms and their impact on the climate. ESMA has identified energy consumption, location, and devices used as factors affecting consensus mechanism sustainability. Additionally, ESMA will ensure continuity and regularity in the operations of crypto firms by implementing business continuity requirements specified by MiCA.
Transparency Addressed Head-On
Article 76 (16)(a) of MiCA focuses on trade pre and post-trade data transparency to the public. ESMA will develop regulatory technical standards to specify how transparency data should be presented. Pre-trade activities require crypto service providers to publicly display bid and ask prices, interests, and related information throughout the process. Post-trade requirements mandate firms to preserve transaction details such as time, price, and volumes on their platforms in real-time.
Hot Take: ESMA’s Efforts to Regulate Crypto Market
ESMA’s second consultation paper on the MiCA regulation demonstrates the regulator’s commitment to creating a safer and more transparent crypto market. By seeking input from various stakeholders and addressing key areas such as sustainability, continuity, and transparency, ESMA aims to establish effective regulations for the growing crypto industry. These efforts reflect the increasing recognition of cryptocurrencies and their potential impact on financial markets. As the implementation of MiCA approaches in 2024, it is crucial for market participants to actively engage with ESMA and contribute their expertise to shape the future of the crypto market within the European Union.
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