On 17 October 2023, the European Securities and Markets Authority (ESMA) published a statement, clarifying the timeline for MiCA and encouraging market participants and Member State national competent authorities (NCAs) to start preparing for the transition.
The statement makes the following key points:
- MiCA rules on the provision of crypto-asset services will not enter into application until December 2024.
- Holders of crypto-assets and clients of crypto-asset service providers may not benefit from full rights and protections afforded to them under MiCA until as late as 1 July 2026.
- NCAs are encouraged to dedicate resources and align their supervisory practices with those of their counterparts across the EU to begin effective supervision from day 1.
- Market participants are encouraged to begin planning towards a smooth transition and ensure their clients are aware of the regulatory status of their ‘grand-fathered’ crypt-asset offerings.
- Consumers are reminded of the risks associated with holding or investing in crypto-assets until and even after MiCA enters into application.
The ‘grand-fathering period’ refers to the optional transitional measure under MiCA that grants Member States the ability to allow entities already providing crypto-asset services in their jurisdiction to continue providing those services from 30 December 2024 until as late as 1 July 2026 without a MiCA licence (depending on the duration chosen by Member States). This means that holders of crypto-assets and clients of crypto-asset service providers may not benefit from full rights and protections afforded to them under MiCA until as late as 1 July 2026. Most NCAs will have limited powers to supervise entities benefitting from the grand-fathering clause, depending on applicable local laws. In most cases, these powers are confined to those available under existing anti-money laundering regimes, which are far less comprehensive than MiCA.