European crypto investors will have to wait a little longer for the full provisions of Markets-in Crypto Assets (MiCA) to kick in, according to the European Securities and Markets Authority (ESMA).
In an October 17 official release, ESMA stated that crypto investor protections would take longer than expected. This is putting the minimum time frame at December 2024 before regulatory cover takes effect.
In light of this, crypto holders and the customers of crypto asset providers will not have access to any European Union (EU) level regulatory and supervisory safeguards. This includes, but is not limited to, the ability to file formal complaints against service providers with relevant authorities.
With this frank admission, European crypto investors have little recourse if they lose their funds trading these digital assets.
Making a case for a protracted timeline for MiCA’s full launch, ESMA revealed that it might still take up to July 2026 before everything is in place.
According to ESMA, the December 2024 timeline is focused on crypto asset providers and not their clients. Therefore, MiCA’s provisions will come into full swing for these service providers.
Nonetheless, crypto trading firms will be granted an 18-month-long transitional period, allowing them to offer services without proper regulatory oversight.
However, this transitional period will be based on the discretion of its member states.
NCAs Are Still Limited In Powers
ESMA has revealed that National Competent Authorities (NCAs) and European Supervisory Authorities (ESAs) will play a role in aiding the implementation of MiCA in its 27 member states.
According to ESMA, while NCAs will kickstart their operations by the end of 2024, their regulatory purview will still be limited.
The securities authority said in the release that regional NCAs would be sidelined to only enforce existing anti-money laundering (AML) laws, which are far less comprehensive compared to what MiCA brings to the European crypto marketplace.
ESMA further stressed that given the volatile nature of crypto assets, there is no “safe” digital asset investors can rely on.
This underlying demerit, coupled with the highly speculative nature of blockchain-based digital assets, further limits the powers of MiCA.
According to the top global agency, MiCA does not cover all the inherent security and operational risks associated with cryptocurrencies due to the infantile stage at which blockchain technology is currently operating.
However, ESMA has encouraged crypto asset service providers to inform relevant NCAs in their region of operation of their intent to begin applying MiCA rules in their operations. This is to help fast-track the implementation phase of MiCA and the transition period.
These virtual asset service providers (VASPs) have also been encouraged to apply for MiCA and inform their clients.
Read the full article here