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Post: ESMA’s Consultation Papers on Reverse Solicitation and Financial Instrument Classification in MiCA Regulation

ESMA’s Consultation Papers on Reverse Solicitation and Financial Instrument Classification in MiCA Regulation

Key Points:

  • The European Securities and Markets Authority (ESMA) has released two consultation papers related to the implementation of the Markets in Crypto-Assets (MiCA) regulation.
  • The papers address 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, and the MiCA framework allows third-country firms to service EU clients through this mechanism.

ESMA’s consultation papers on reverse solicitation and financial instrument classification

The European Securities and Markets Authority (ESMA) has recently published two consultation papers concerning the implementation of the MiCA regulation. The first paper focuses on reverse solicitation, which is when a potential customer approaches a firm for crypto asset services. Under MiCA, third-country crypto asset firms are allowed to provide services to EU clients solely through reverse solicitation. ESMA sees this as a narrow exemption for third-country firms, meaning they cannot directly solicit clients in the EU unless the client contacted the firm independently and requested the service.

The second paper addresses the classification of crypto assets as financial instruments. One of the outstanding questions regarding MiCA is how to define a financial instrument in the context of crypto assets. The paper seeks input on this matter as ESMA works to establish standards and guidelines for the implementation of MiCA. Determining which crypto assets qualify as financial instruments is crucial for regulatory purposes.

Hot Take:

The release of ESMA’s consultation papers shows that the implementation of the MiCA regulation is still a work in progress. Addressing the issues of reverse solicitation and the classification of crypto assets as financial instruments is crucial for defining the regulatory framework for the crypto industry in the EU. These papers indicate that there are still ongoing discussions and deliberations to ensure a comprehensive and effective regulatory approach.

Original article: https://cointelegraph.com/news/eu-begins-sorting-mifid-regulated-securities-crypto-assets

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