In a bid to address concerns raised by various stakeholders, the European Union (EU) has drafted a paper proposing exceptions to certain provisions outlined in the Markets in Crypto Assets (MiCA) bill. The bill, which was unanimously passed by the EU last year, has been hailed as a landmark piece of legislation aimed at regulating the burgeoning crypto industry.
MiCA, a component of the broader Digital Operational Resilience for the Financial Sector (DORA) framework, has garnered attention for its comprehensive approach to regulating crypto assets and related services. However, concerns have emerged regarding its potential impact on innovation and market accessibility.
The proposed exceptions, outlined in the paper submitted by the European Securities and Markets Authority (ESMA), seek to strike a balance between regulatory oversight and market flexibility. One key provision of the paper pertains to allowing non-EU companies to offer crypto assets and services to EU citizens under certain circumstances.
Previously, MiCA aimed to restrict non-EU entities from providing such services within the EU jurisdiction. However, the proposed exceptions would permit these companies to cater to EU customers through a mechanism known as reverse solicitation. This entails the provision of services or assets to EU citizens only upon explicit request from the individual, thereby ensuring a degree of consumer choice while upholding regulatory standards.
Read more: European Commission Says MiCA Oversight Would Have Prevented FTX Collapse
The rationale behind these exceptions is twofold. On one hand, it seeks to accommodate experienced crypto investors who may seek specialized services not readily available within the EU. By allowing non-EU providers to offer such services under specific conditions, the EU aims to prevent market fragmentation and promote competition.
On the other hand, the exceptions also aim to safeguard less experienced investors from potential risks associated with dealing with non-EU entities. By requiring explicit solicitation from the consumer, the EU intends to mitigate the likelihood of individuals unknowingly engaging with entities operating outside its regulatory purview, where legal recourse may be limited.
The drafting of the paper follows two consultation sessions held earlier, with another scheduled for April, underscoring the EU’s commitment to engaging with stakeholders and refining regulatory frameworks in response to feedback. The provisions outlined in the paper are expected to be incorporated into MiCA, with the legislation set to take effect in phases starting June 2024.
Source: Crypto Potato
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