ESMA calls for changes to make MiCA clearer, safer and ready for emerging services

The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has responded to the European Commission’s public consultation on the review of Markets in Crypto-Assets Regulation (MiCA). ESMA’s recommendations aim to simplify the framework while improving investor protection and addressing innovative business models, such as decentralised finance (DeFi), staking, lending and borrowing. ESMA proposes new safeguards in areas where investors face risks that are not fully covered under the current framework, including:  stricter rules for the marketing of crypto-assets, particularly when they are promoted by influencers and third parties;  proportionate requirements for staking, lending and borrowing, including through disclosure obligations.  These measures would provide clearer information on costs, risks, rewards, collateral arrangements, and potential losses before investment decisions are made.  ESMA recommends strengthening supervisory powers and address the risks arising from unauthorised services, online fraud and non-compliant stablecoins, by:  enhancing the EU’s capacity to detect, block and deactiva...