The European Securities and Markets Authority ( ESMA ) has published two Consultations Papers on guidelines under Markets in Crypto Assets Regulation. Specifically, the regulatory body overseeing financial markets in the EU has released two Consultation Papers regarding guidelines within the framework of the Markets in Crypto Assets Regulation (MiCA).

The first paper focuses on reverse solicitation, while the second addresses the classification of crypto-assets as financial instruments. According to the official release from the ESMA, stakeholders are invited to provide comments on these consultations by 29 April 2024. The ESMA will review the feedback received in Q2 2024 and plans to release a final report in Q4 2024.

The Consultation Paper on reverse solicitation seeks input on proposed guidance related to the conditions for applying the reverse solicitation exemption. Additionally, it explores the supervisory practices that National Competent Authorities (NCAs) may employ to prevent circumvention of this exemption. ESMA reiterates that the provision of crypto-asset services by a third-country firm under MiCA is restricted to instances where the client exclusively initiates the service.

This exemption is narrowly framed and cannot be exploited to bypass MiCA regulations. The second Consultation Paper focuses on guidelines for the classification of crypto-assets as financial instruments. ESMA aims to establish clear conditions and criteria for such qualification, aligning with both MiCA and the Markets in Financial Instruments Directive II (MiFID II) to ensure consistency across the EU.

The proposed guidelines aim to offer NCAs and market participants structured yet flexible criteria for determining whether a crypto-asset qualifies as a financial instrument. The draft strikes a balance between guidance and avoiding a one-size-fits-all approach, providing clarity without imposing overly rigid standards. Once finalised, these guidelines are expected to contribute to global standards in crypto-asset regulation.

More information about MiCA The MiCA regulation proposed by the European Parliament seeks to establish a comprehensive framework for crypto assets within the European Union (EU). The initiative addresses the absence of specific EU legislative coverage for these assets, aiming to introduce clear and consistent legal regulations. The primary goals of MiCA are to enhance consumer and investor protection, promote financial stability and innovation, and facilitate the adoption of crypto assets across the EU.

MiCA categorises three main types of crypto assets: asset-referenced tokens (ART), electronic money tokens (EMT), and other assets not previously covered by EU legislation. The regulation, introduced in June 2023, will be implemented in phases. Rules related to stablecoin issuers are set to take effect from June 2024, while the remaining regulatory provisions are scheduled for enforcement from December 2024, incorporating specific transitional measures .