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ESMA has sent recommendations to the European Commission’s consultation on reviewing the EU’s Markets in Crypto-Assets Regulation (MiCA). The proposals address investor disclosures, supervision of unauthorised services, DeFi and token classification, while also seeking to simplify some requirements. They are recommendations, not adopted changes.
The European Securities and Markets Authority has called for changes to the EU’s Markets in Crypto-Assets Regulation (MiCA), proposing stronger investor safeguards, broader supervisory powers and clearer rules for services such as staking, lending and DeFi. The recommendations form ESMA’s response to a European Commission public consultation; they are proposals, not changes already in force.
For retail investors, ESMA wants tougher requirements for crypto-asset marketing, especially promotions involving influencers and other third parties, as well as greater transparency about costs. It also proposes proportionate requirements for staking, lending and borrowing, including disclosures about risks, rewards, collateral and possible losses before customers decide whether to participate.
On supervision, ESMA says authorities need stronger tools to respond to unauthorised services, online fraud and non-compliant stablecoins. Its recommendations include improving the EU’s ability to detect and deactivate fraudulent websites and, in specified circumstances, freeze crypto assets where market abuse or terrorist financing is suspected. It also seeks stronger powers concerning third-country firms that solicit EU investors without MiCA authorisation.
ESMA proposes explicit rules to prevent regulated crypto firms from offering services linked to stablecoins that do not meet MiCA requirements. For emerging business models, it calls for criteria to distinguish genuinely decentralised activity and proposes a new regulated crypto-asset service for firms that give users access to DeFi protocols. It also recommends common classification rules for crypto-assets, including hybrid tokens, and says ESMA should be able to issue binding opinions on token classification.
More Protection Across Crypto Services
The proposals could affect how crypto firms market products and explain their risks, and how regulators respond when services operate outside the EU framework. More consistent classifications and stronger oversight could reduce differences in how national authorities treat similar products, while the suggested action against unauthorised firms and non-compliant stablecoins is aimed at limiting gaps in investor protection.
For customers, the focus on costs, collateral and potential losses would make key information more visible before they commit funds to staking, lending or borrowing. The recommendations also reflect a regulatory challenge: services and products are changing, while rules need to distinguish between genuinely decentralised activity and firms providing an organised service. ESMA’s proposals indicate areas it believes the review should address, but their eventual impact depends on decisions by the European Commission and EU lawmakers.
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MiCA Review and Proposed Simplification
MiCA is the EU framework for crypto-assets and related services. The European Commission’s public consultation is reviewing the regulation, and ESMA’s response sets out changes it would like considered. The source material does not give a consultation deadline, a publication date for a final Commission proposal or a schedule for any legislative process.
ESMA’s response also includes a simplification agenda. It suggests streamlining white-paper notification procedures, reducing duplicate authorisation requirements for some regulated firms and making prudential requirements more consistent. Looking beyond the immediate review, the authority also says Europe needs a framework for tokenised securities and on-chain settlement to support a more integrated tokenised capital market and cross-border activity.
“The recommendations aim to simplify the framework while improving investor protection and addressing innovative business models.”
— European Securities and Markets Authority
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Proposals Await Commission Decisions
ESMA’s recommendations do not establish that the Commission will adopt them or indicate which proposals may appear in any formal legislation. The supplied material does not provide a Commission response, a timetable for decisions or details of how proposed powers—such as website deactivation, asset freezes and binding classification opinions—would be implemented. It also does not specify the exact disclosure rules or the proposed definition of a genuinely decentralised activity.
The recommendations describe possible directions for reform, not current obligations. The scope of any new DeFi service category, the firms it would cover and the treatment of particular hybrid tokens remain subject to further policy and legislative work.
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Commission Review Sets the Next Step
The European Commission will consider consultation responses, including ESMA’s recommendations, as it reviews MiCA. The next milestones would be the Commission’s decisions on whether to propose amendments and, if it does, the subsequent EU legislative process. No dates or outcomes for those steps are stated in the available source material.
Until any amendments are adopted and take effect, ESMA’s proposals should be read as recommendations. Crypto firms and investors will need to wait for further Commission announcements to learn whether the suggested disclosure, supervision, classification and simplification measures become part of EU rules.
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Key Questions
Has MiCA already been changed?
No. ESMA has made recommendations in response to the European Commission’s consultation. The source does not say that the Commission or lawmakers have adopted them.
Which crypto services could face new requirements?
ESMA proposes proportionate rules and disclosures for staking, lending and borrowing, and a new regulated service category for firms that provide users with access to DeFi protocols. The details would depend on decisions made during the review and legislative process.
What investor safeguards is ESMA proposing?
Its proposals include stricter rules for crypto promotions, greater cost transparency and disclosures about risks, rewards, collateral and possible losses for certain services.
ESMA seeks stronger supervisory powers concerning third-country firms soliciting EU investors without MiCA authorisation. It also proposes rules preventing regulated crypto firms from offering services linked to stablecoins that do not comply with MiCA.
When would any changes take effect?
No timetable is provided in the available material. The Commission must consider the consultation and decide whether to propose amendments; any proposed legislation would then need to proceed through the EU process.
Source: primary
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