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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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