- The European Securities and Markets Authority (ESMA) has released two consultation papers relating to the implementation of the Regulation on Markets in Crypto-Assets (MiCA).
- The papers focus on the topics of reverse solicitation and the classification of crypto assets as financial instruments.
- Reverse solicitation refers to the practice of a potential customer approaching a firm for crypto asset services, allowing third-country firms to serve EU clients without authorization in certain cases.
- ESMA sees reverse solicitation as a narrow exemption for third-country firms and is seeking feedback on how to define and clarify its scope.
ESMA Consultation on Reverse Solicitation:
The first consultation paper released by ESMA focuses on reverse solicitation. Reverse solicitation occurs when a client approaches a firm to request crypto asset services, allowing third-country firms to serve clients in the EU without authorization. ESMA is seeking feedback on how to define, clarify, and potentially restrict the use of reverse solicitation to avoid abuse or circumvention of the MiCA framework.
ESMA Consultation on Classifying Crypto Assets as Financial Instruments:
The second consultation paper addresses the classification of crypto assets as financial instruments. MiCA provides a regulatory framework for crypto assets, but there is uncertainty regarding which crypto assets should be classified as financial instruments. ESMA is seeking input on the criteria and factors that should be considered in determining whether a crypto asset qualifies as a financial instrument.
The release of these consultation papers by ESMA shows that there are still important aspects of MiCA that need to be addressed and clarified. The definitions and guidelines for reverse solicitation and the classification of crypto assets as financial instruments will have significant implications for the regulation and oversight of crypto markets within the EU. Stakeholders and industry participants should provide feedback to ensure that these aspects are properly defined and implemented.