The European Securities and Markets Authority (ESMA) has responded to the European Commission's proposal to amend the Markets in Crypto-Assets Regulation (MiCA) Regulatory Technical Standards (RTS).
In its response, ESMA acknowledges the legal limitations outlined by the Commission. It also emphasizes the importance of the policy goals stated in the proposal.
Proposed Amendments to MiCA Regulation
ESMA's Opinion recognizes proposed amendments to two RTS. These amendments detail the information required for notification by financial entities wishing to offer crypto-asset services.
They also specify what is needed for applications from entities seeking authorization as crypto-asset service providers (CASPs). ESMA states that these RTS aim to improve the assessment process for CASPs and financial entities looking to provide crypto-asset services in the European Union.
To support these goals, ESMA recommends that the Commission consider changes to the MiCA regulation (Level 1). Key suggestions include requiring applicant CASPs and notifying entities to submit results from an external cybersecurity audit.
ESMA also proposes checks on the good repute of management members, specifically regarding any penalties beyond certain laws.
Commission to Review RTS
On March 25, 2024, ESMA released its first final report on the draft RTS and sent it to the Commission for adoption. ESMA has now shared its opinion with the Commission, the European Parliament, and the European Council.
The Commission has the authority to adopt or reject the proposed RTS, while the European Parliament and the Council can raise objections within three months.
Meanwhile, the European Union is working to reduce the securities settlement cycle from two days (T+2) to one day (T+1), aligning with international trends. ESMA has noted challenges such as the need for harmonization and modernization of systems, as reported by Finance Magnates.
This upgrade will require substantial investments, and market participants are seeking amendments to the Central Securities Depositories Regulation for a smooth transition. ESMA is collaborating with the European Central Bank and other authorities to establish a governance structure that ensures an inclusive and coordinated approach for the T+1 transition across the EU.
This article was written by Tareq Sikder at www.financemagnates.com.
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