The European Securities and Markets Authority (ESMA) is preparing to implement the Markets in Crypto-Assets Regulation (MiCA). The regulator has issued several crypto warnings that investors and users of crypto services providers should be aware of, particularly before MiCA is fully implemented. The regulator cautioned: “Even with the implementation of MiCA, retail investors must be aware that there will be no such thing as a ‘safe’ crypto-asset.”
ESMA Issues Crypto Warnings as It Prepares to Implement MiCA
The European Securities and Markets Authority (ESMA) published a statement on Tuesday clarifying the timeline for the implementation of the Markets in Crypto-Assets Regulation (MiCA). ESMA also highlighted several risks associated with crypto assets, noting that MiCA won’t be fully implemented until December 2024.
“The entry into force of MiCA is a fundamental development for the establishment of a single rulebook for the regulation and supervision of crypto-asset issuance, trading, and service provision,” ESMA explained. “Such activities are not currently regulated by existing common European Union (EU) financial services legislation.”
However, ESMA has reminded crypto holders and customers of crypto service providers that “MiCA does not address all of the various risks associated with these products,” emphasizing:
Many crypto-assets are by nature highly speculative. Moreover, crypto-assets are prone to novel operational or security risks … Even with the implementation of MiCA, retail investors must be aware that there will be no such thing as a ‘safe’ crypto-asset.
“Full MiCA rights and protections will not apply in the implementation phase of MiCA,” ESMA clarified. “MiCA rules on the provision of crypto-asset services will not enter into application until December 2024.”
ESMA also urged market participants to “make adequate preparations” to ensure a timely and orderly transition toward MiCA. “These preparations should also involve early dialogue between entities currently providing crypto-asset services in the EU and the relevant competent authorities of the jurisdictions in which they operate to inform them of their transition plans,” the regulator added.
Moreover, ESMA cautioned: “Even after MiCA becomes applicable to crypto-asset service providers, member states have the option of granting entities already providing crypto-asset services in their jurisdictions up to an additional 18-month ‘transitional period’ during which they may continue to operate without a MiCA license.” ESMA detailed:
This means that holders of crypto-assets and clients of crypto-asset service providers may not benefit from full rights and protections afforded to them under MiCA until as late as 1 July 2026.
What do you think about ESMA’s crypto warnings and its preparation to implement MiCA? Let us know in the comments section below.