FameEX Hot Topics | European Regulator Clarifies MiCA Timeline and Warns About the Myth of 'Safe' Crypto Assets

The European Securities and Markets Authority (ESMA) is gearing up for the implementation of the Markets in Crypto-Assets Regulation (MiCA) and has issued a series of crypto warnings for investors and users of crypto service providers. MiCA is set to become a fundamental milestone for the regulation and supervision of crypto-asset issuance, trading, and service provision. These activities currently fall outside the scope of existing European Union (EU) financial services legislation.

Despite the impending regulation, ESMA stressed that MiCA does not comprehensively address all the risks associated with crypto-assets. It emphasized that many crypto-assets are inherently speculative and prone to novel operational and security risks. Even with MiCA in place, ESMA warned that there would be no such thing as a "safe" crypto-asset. ESMA clarified that full MiCA rights and protections would not be applicable during the implementation phase of the regulation. MiCA rules governing the provision of crypto-asset services are not slated to enter into force until December 2024.

To ensure a smooth and orderly transition to MiCA, ESMA called on market participants to make adequate preparations. This process should include early dialogues between entities offering crypto-asset services in the EU and the relevant competent authorities in their respective jurisdictions. The aim is to inform regulators about their transition plans. ESMA also issued a cautionary note regarding the timeline for MiCA's application. Even after MiCA becomes applicable to crypto-asset service providers, member states have the discretion to grant entities already offering such services an additional 18-month "transitional period." During this period, they may continue to operate without requiring a MiCA license.

This implies that holders of crypto-assets and clients of crypto-asset service providers may not fully enjoy the rights and protections afforded by MiCA until as late as July 1, 2026.

ESMA's comprehensive warnings underscore the need for individuals and entities involved in the crypto space to exercise caution and prepare diligently for the evolving regulatory landscape. The regulator's statements make it clear that crypto-assets will remain inherently speculative, even with MiCA in place, and therefore require careful consideration and risk management.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.