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ESMA has submitted recommendations to the European Commission’s review of MiCA, proposing stronger investor safeguards and supervisory powers alongside simpler procedures for some firms. Its proposals also address DeFi access, staking and lending, token classification and a longer-term framework for tokenised securities. They are recommendations, not rules already adopted.
The European Securities and Markets Authority (ESMA) has proposed changes to the EU’s Markets in Crypto-Assets Regulation, calling for clearer rules and stronger safeguards as crypto services expand into areas including DeFi, staking, lending and borrowing. The recommendations were submitted to the European Commission’s public consultation on MiCA’s review; they are proposals, not adopted changes to the law.
ESMA says the review should address investor risks it considers insufficiently covered by the current framework. Its proposals include stricter requirements for crypto-asset marketing, particularly promotions involving influencers and other third parties, as well as greater transparency about costs. For staking, lending and borrowing, it recommends proportionate requirements that would disclose risks, rewards, collateral arrangements and potential losses to customers.
The regulator also wants stronger powers to respond to unauthorised activity, online fraud and stablecoins that do not comply with MiCA. Suggested measures include expanding the EU’s ability to detect and disable fraudulent websites and freeze crypto assets in specified cases, such as suspected market abuse or terrorist financing. ESMA also calls for stronger tools to address third-country firms soliciting EU investors without MiCA authorisation.
For regulated crypto firms, ESMA proposes explicit rules to prevent them from offering services linked to stablecoins that fail to meet MiCA requirements. It also recommends clearer criteria for deciding whether activity is genuinely decentralised, a new regulated service category for firms that give users access to DeFi protocols, and common rules for classifying crypto-assets, including hybrid tokens. ESMA wants authority to issue binding opinions on classifications.
Tighter Safeguards for Crypto Customers
If adopted, the proposals could change how crypto firms market products, disclose costs and explain risks to customers across the EU. People using staking, lending or borrowing services could receive more information about how returns are generated, what collateral is involved and how much they could lose. The precise obligations would depend on the legislation or regulatory rules ultimately agreed.
ESMA’s suggested enforcement tools could also affect firms that operate from outside the EU but target its customers, as well as regulated companies dealing with stablecoins. Common token-classification rules and binding opinions could reduce differences in how national authorities treat similar products. At the same time, a new category for DeFi access providers could bring some services connected to decentralised protocols within a clearer supervisory framework.
The package combines more protection and oversight with proposed reductions in selected compliance burdens. ESMA says it wants to simplify white-paper notification procedures, reduce duplicate authorisation requirements for some regulated firms and make prudential requirements more consistent. That balance matters to firms planning EU services: the proposals could add controls in some areas while streamlining others.
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MiCA Review Covers New Services
MiCA is the EU framework for crypto-assets and related services. The European Commission opened a public consultation on reviewing the regulation, and ESMA’s response sets out recommendations for that process. The source material does not provide a submission date or a timetable for the Commission’s next steps.
ESMA frames its proposals around changes in crypto markets, including the growth of stablecoins and activity connected to DeFi. It also looks beyond the immediate MiCA review, arguing for a future framework covering tokenised securities and on-chain settlement. The stated aim is to support an integrated European tokenised capital market and cross-border activity, but ESMA presents this as a longer-term issue rather than an immediate MiCA amendment.
“ESMA’s recommendations aim to simplify the framework while improving investor protection and addressing innovative business models, such as decentralised finance (DeFi), staking, lending and borrowing.”
— European Securities and Markets Authority
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Proposals Await Commission Review
The source describes recommendations submitted to a consultation; it does not say that the European Commission has accepted them or that any proposed change has entered into force. The final shape of a MiCA revision, the process for turning recommendations into law and the timing of any decisions remain unclear from the material provided.
Several proposals also need further definition. ESMA calls for criteria to establish when a service is genuinely decentralised, but the source does not specify those criteria or explain exactly which DeFi access providers would fall into a new regulated category. Details on the scope of website-blocking and asset-freezing powers, the treatment of third-country firms and the proposed binding classification opinions are also not provided.
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Commission Weighs MiCA Revisions
The European Commission will consider consultation responses as part of its review of MiCA. The supplied material does not state when the Commission will publish its conclusions, whether it intends to propose legislation or which ESMA recommendations it may take forward.
Further steps would be needed before the proposals could become binding requirements. Readers should distinguish ESMA’s requested changes from rules currently in force: the consultation response signals the regulator’s priorities, but the outcome and implementation timetable have not been confirmed in the source.
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Key Questions
Has MiCA already been changed?
No. ESMA has submitted recommendations to the European Commission’s review consultation. The source does not report that the Commission has adopted them or that the law has changed.
What investor protections is ESMA proposing?
ESMA proposes stricter rules for crypto marketing, including influencer promotions, greater cost transparency and proportionate disclosures for staking, lending and borrowing about risks, rewards, collateral and possible losses.
What does ESMA propose for DeFi?
It recommends clearer criteria for identifying genuinely decentralised activity and a new regulated service category for firms that provide users with access to DeFi protocols. The details of the category are not specified in the source.
Would the proposals apply to firms outside the EU?
ESMA calls for stronger supervisory powers to address third-country firms that solicit EU investors without MiCA authorisation. The source does not set out the proposed powers’ precise scope or how they would be applied.
What happens next?
The European Commission will consider consultation responses as part of its MiCA review. The source does not give a decision date or confirm which proposals, if any, will be taken forward.
Source: primary
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