The European Securities and Markets Authority (ESMA), the EU’s authoritative markets regulator released its second MiCA consultation paper on October 5. This comprehensive 307-page document is a bureaucratic exercise. Furthermore, it is a vital avenue for stakeholders to actively shape the evolving landscape of MiCA.

Key Focus Areas of MiCA: A Five-Pronged Approach

The ESMA’s second consultation is a strategic endeavor seeking valuable input from stakeholders on five pivotal aspects of MiCA. These areas include:

  1. Sustainability Metrics for Distributed Ledgers: Delving into the environmental impact of blockchain, the ESMA proposes both quantitative metrics (energy consumption, greenhouse gas emissions, waste production) and a qualitative assessment of the impact on natural resources.
  2. Inside Information Disclosures: Unraveling the transparency tapestry, stakeholders are invited to contribute insights on the disclosure of inside information concerning crypto-assets.
  3. Technical Requirements for White Papers: The ESMA aims to establish clear technical standards for white papers. This is to further ensure a standardized and comprehensive approach to information dissemination.
  4. Trade Transparency Measures: Post-trade transparency takes center stage, with the ESMA proposing stringent reporting requirements for crypto-asset service providers (CASPs). This includes details such as trading and publication date, identification of the crypto-asset, pricing information, quantity, venue of execution, and transaction ID.
  5. Record-keeping for CASPs: Recognizing the importance of robust record-keeping, the ESMA solicits input on the appropriate format for transaction data storage. This is with a caveat for conversion into a specified format upon regulatory request.

Looking Ahead: Timeline and Future Consultations

The ESMA, committed to a transparent and collaborative process, plans to crystallize the insights gathered into a final report. This report, based on the feedback received, is slated for release before June 30, 2024. Simultaneously, the draft technical standards will find their way to the European Commission for further scrutiny.

A screenshot from the second MiCA consultation poaper

But the journey doesn’t end here. Anticipating the dynamic nature of the crypto landscape, the ESMA is set to release a third consultation package in the first quarter of 2024. This iterative approach ensures that regulatory frameworks remain agile and responsive to the rapidly evolving world of crypto-assets.

ESMA’s Priorities and Previous Proposals

A noteworthy precursor to this second consultation was the release of a comprehensive paper by the ESMA in July. In that document, the regulator proposed compelling requirements for crypto companies under MiCA. This further emphasizes the need for additional information through notifications to the national competent authorities (NCAs).

This highlights the ESMA’s commitment to thorough regulatory oversight and proactive engagement with industry players.

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