On 17 October 2023, the European Securities and Markets Authority (ESMA) published a letter to Member State national competent authorities (NCAs), where it sets out its proposed approach to ensure a smooth transition towards the upcoming application of the Markets in Crypto-Assets Regulation (MiCA).
In its letter, ESMA flags the risks of “forum shopping”, whereby an inconsistent approach towards the application of MiCA and the enforcement of its rulebook across EU Member States, may reduce its effectiveness. In order to address it, ESMA and the NCAs promote “a stringent and pro-active approach to supervisory convergence at EU level”. ESMA is also of the view that coordinated action from EU Member States in two key areas is needed to further support ESMA’s and NCAs’ actions:
- NCAs need to establish as early as possible their supervisory procedures related to the authorisation regime set out in the MiCA, including simplified authorisation procedures for entities already authorised to provide crypto-asset services under national law. ESMA calls on Member States to designate without delay the NCAs responsible for carrying out the functions and duties provided for in MiCA, and to ensure these NCAs are granted adequate powers and resources to exercise their supervisory, investigative and enforcement responsibilities.
- ESMA is concerned that an extensive use of the grandfathering clause for entities already providing crypto-asset services would weaken the effectiveness of the MiCA rulebook. Pointing to the fact that this clause may allow these entities to continue operating for up to 18 months in accordance with applicable national laws, ESMA invites Member States to consider reducing the duration of the grandfathering clause to a maximum of 12 months, in particular with respect to entities that have not been through a fully-fledged authorisation process and that are not yet subject to effective supervision in the EU. It also calls on Member States to notify their approach to this grandfathering clause to the European Commission and ESMA well ahead of the 30 June 2024 deadline, and ideally by the end of 2023.