As the European Securities and Markets Authority (ESMA) prepares for the enforcement of the Markets in Crypto-Assets Regulation (MiCA) it has further urged market participants to get ready for the transition.
MiCA is expected to establish a framework for the regulation and supervision of crypto-asset issuance, trading, and service provision. It is a legislative milestone for the crypto assets markets.
ESMA in a way of a reminder tells holders of crypto-assets and users who patronize crypto-asset service providers that the guidelines MiCA does not cover all of the various risks associated with crypto assets.
The body stated that “many crypto-assets are by nature highly speculative, and even with the implementation of MiCA, retail investors must be aware that there will be no such thing as a ‘safe’ crypto-asset.”
Additionally, ESMA expresses its commitment by saying that it is collaborating with National Competent Authorities (NCAs) of the Member States and the other European Supervisory Authorities (ESAs) to prepare the technical standards and guidelines that will specifically detail how the new rules will apply to issuers, offerors, and service providers of crypto-assets.
This collaborative effort will take place from the start of the new rule till full application. The full application is slated for December 2024, the body added that MiCA will not enter into full application until the stated time.
However, ESMA encourages crypto assets holders and clients to make do with the protection available within their jurisdiction before the guideline is implemented, and also be sure to bear or manage the risk associated with crypto assets before participating.
Furthermore, ESMA said that crypto asset providers can have up to 18 months to transition to the new rule after it has been implemented. “Even after MiCA becomes applicable to crypto-asset service providers, Member States have the option of granting entities already providing crypto-asset services in their jurisdictions up to an additional 18-month “transitional period” during which they may continue to operate without a MiCA license.” This immunity is also referred to as a ‘grand-fathering clause’.
This implies that there is a possibility of crypto-asset holders and clients of crypto-asset service providers not benefiting fully from MiCA until 1 July 2026.
ESMA continued to urge market participants to get ready for the guidelines, MiCA, and for the regulatory bodies involved to prepare to execute the rules therein
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