European regulators are consulting on the implementation of new rules to govern the emerging crypto sector, with proposed guidance on specific aspects of the new regime.
The European Securities and Markets Authority (ESMA) launched a pair of consultations for its new crypto rules, known as the Markets in Crypto Assets Regulation (MiCA). The consultations pertain to guidance on classifying crypto assets as financial instruments and guidance on applying a key exemption from the new regime.
ESMA is seeking feedback on the application of its so-called “reverse solicitation” exemption — a provision that restricts foreign firms from serving European crypto investors unless the investor solicits the service.
“This exemption should be understood as very narrowly framed and must be regarded as the exception. A firm cannot use it to bypass MiCA,” the regulator said.
It also sets out guidance on supervisory practices for regulators to use to help detect and prevent efforts to exploit the exemption.
At the same time, ESMA is consulting on the criteria for determining when cryptoassets meet the definition of financial instruments and are subject to existing financial sector requirements, rather than the new crypto rules.
“Once finalized, these guidelines will provide much-needed clarity and contribute to the global standards in crypto-asset regulation,” the regulator said.
Both consultations close on April 29. ESMA aims to finalize its guidance by the end of 2024.