Regulatory bodies in Italy, France, and Austria have put forth suggestions to modify the EU Markets in Crypto-Assets Regulation (MiCA) to address early inconsistencies in supervisory practices among member states. The proposed changes aim to standardize the oversight of crypto-asset service providers, enhance cybersecurity measures, and streamline the process of submitting white papers.
These changes could indirectly affect retail investors, as platforms intending to cater to EU clients must comply with MiCA or similar regulations. Additionally, the implications may extend to contract for difference (CFD) providers offering cryptocurrency derivatives via intermediaries authorized within the EU, ultimately fostering a more uniform regulatory environment and diminishing operational hazards.
Set to come into full effect on December 30, 2024, MiCA necessitates prior approval for market participants providing crypto-related services in Europe. Similar to highly regulated sectors, the financial services industry includes various frameworks and protocols to mitigate illicit behavior and manipulation. While regulatory oversight exists within multiple jurisdictions in foreign exchange, there is still an absence of a cohesive global framework.
Initial implementation efforts identified considerable discrepancies in how national authorities enforce the regulation. These inconsistencies could undermine investor protection and disrupt the European internal market’s functionality.
Further concerns have emerged regarding non-EU platforms offering services to European clients through intermediaries exempt from MiCA’s scope. This trend could pose unregulated risks for investors and create competitive disadvantages for service providers based in the EU.
In light of these issues, the regulatory bodies suggested several targeted enhancements. The recommendations draw on insights from the Financial Stability Board and the International Organization of Securities Commissions (IOSCO).
Among the key proposals is an initiative for the European Securities and Markets Authority (ESMA) to directly oversee significant crypto-asset service providers, ensuring consistent rule enforcement and potentially lowering supervision costs.
The suggestions also call for stricter protocols concerning non-EU platforms. It is proposed that intermediaries managing orders for European clients restrict their operations to platforms compliant with MiCA or similar regulations. Moreover, regulators have advocated for independent cybersecurity audits before granting authorization and on a regular basis. These audits should encompass asset protection, systems’ resilience against cyber threats, and incident management procedures.
Lastly, the regulators recommend refining the examination process for white papers while establishing a centralized access point for token offering management, with the exception of stablecoins. This is intended to bolster legal clarity for issuers and centralize documentation processes, thereby mirroring the pan-European scope of many offerings.
Ultimately, the intended measures are designed to ensure consistent oversight, minimize risks for investors, and enhance the competitive edge of participants in the European market.