Certain Crypto May Be Recognized as Financial Instruments in EU

The European Securities and Markets Authority (ESMA) will draft a set of standards and guidelines for MiCA (Markets in Crypto-Assets) regulation. The main focus will be on reverse solicitation practices and the qualification of crypto-assets as financial instruments.

ESMA published two consultative documents on the regulation of crypto-assets under the MiCA bill. The first document addressed the issues of reverse solicitation and the second one concerned the qualification of crypto-assets as financial instruments.

The regulator is seeking public opinion on the possibility to control the reverse solicitation process when digital assets are involved. That is, when a potential client turns to a crypto-asset service provider (CASP), which isn’t located in the EU and doesn’t have the appropriate license, such transactions should be subject to the control of local regulators. Specifically, ESMA officials propose a set of guidelines for these types of transactions, based on the Markets in Financial Instruments Directive II (MiFID II), which contains similar regulations.

Moreover, ESMA representatives suggested discussing the conditions and criteria for qualifying cryptocurrencies as financial instruments. Those digital assets that will be officially recognized as securities or other financial instruments will have to be subject to the MiFID II regulation rather than MiCA. Therefore, ESMA intends to bring clarity to the classification before the MiCA officially comes into force.

ESMA officials proposed to make clear the criteria that will determine whether a particular cryptocurrency is a financial instrument. To be considered as such, a crypto-asset must be recognized as:

• a bill of exchange;
• a money market instrument (short-term securities, loans, repo agreements);
• an open-ended fund;
• a derivative;
• a trading instrument for emission allowances (carbon credits).

Public consultations on the two documents will last until April 24 and April 19, 2024, respectively.

The European Parliament officially adopted the draft law on crypto-asset markets in April 2023, and the MiCA regulation was published in the Official Journal of the European Union on June 9, 2023. The bill will enter into force at the end of 2024.

Сообщение Certain Crypto May Be Recognized as Financial Instruments in EU появились сначала на CoinsPaid Media.