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The European Securities and Markets Authority has recommended changes to the EU’s Markets in Crypto-Assets Regulation, including stronger safeguards for investors and clearer rules for DeFi and token classification. The proposals were submitted to the European Commission’s consultation on reviewing MiCA; they are recommendations, not adopted changes.
The European Securities and Markets Authority (ESMA) has urged the European Commission to revise the EU’s Markets in Crypto-Assets Regulation (MiCA), recommending stronger investor safeguards, clearer supervision and rules for services such as decentralised finance (DeFi), staking and crypto lending. The proposals were sent in response to the Commission’s public consultation and are recommendations, not changes to law.
ESMA says its recommendations are intended to simplify the framework while improving investor protection and addressing business models that have developed around crypto markets. It proposes stricter rules for crypto-asset marketing, with particular attention to promotions by influencers and other third parties, and greater transparency about costs. For staking, lending and borrowing, it recommends proportionate requirements, including disclosures on risks, rewards, collateral and potential losses.
On supervision, the authority wants stronger tools to respond to unauthorised services, online fraud and stablecoins that do not meet MiCA requirements. Its proposals include greater capacity to detect and disable fraudulent websites, and to freeze crypto-assets in cases involving suspected market abuse or terrorist financing. ESMA also recommends reinforced powers concerning third-country firms soliciting EU investors without MiCA authorisation, alongside explicit rules to stop regulated crypto firms from providing services linked to non-compliant stablecoins.
For evolving services, ESMA proposes clearer criteria for deciding when activity is genuinely decentralised and a new regulated crypto-asset service category for firms that give users access to DeFi protocols. It also calls for common rules on classifying crypto-assets, including hybrid tokens, and says ESMA should be able to issue binding opinions on token classification. Other suggestions include simpler white-paper notifications, fewer duplicative authorisation requirements for some regulated firms and more consistent prudential rules.
Tighter Protections for Crypto Users
If the Commission and EU lawmakers take up the recommendations, users could receive clearer information before committing funds to crypto products involving promotion, staking or lending. Disclosures about fees, risks, rewards and collateral would help distinguish the terms of different offerings; they would not remove the possibility of losses or make a product safe.
More consistent supervision could also affect firms operating across national borders. ESMA argues that better tools against unauthorised providers and non-compliant stablecoins would help regulators respond more consistently and reduce opportunities for firms to exploit differences in oversight. The proposed DeFi category and classification rules could bring some activities into a clearer regulatory framework, while raising questions about how to distinguish genuinely decentralised protocols from services provided by identifiable businesses.
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MiCA Review Covers New Services
MiCA is the EU framework for crypto-asset markets. The development reported here is part of the European Commission’s public consultation on reviewing that regulation. ESMA, the EU’s financial markets regulator and supervisor, has provided recommendations to inform the review; the source material does not say that the Commission has accepted them.
The recommendations address both the operation of existing rules and services ESMA says need clearer treatment. Alongside proposals on marketing, supervision and crypto-asset classification, the authority points to a longer-term policy need: a framework for tokenised securities and on-chain settlement that could support an integrated European tokenised capital market and cross-border activity. ESMA presents that as a development beyond the immediate MiCA review.
“The recommendations aim to simplify the framework while improving investor protection and addressing innovative business models.”
— European Securities and Markets Authority
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Proposals Await Commission Review
The recommendations do not themselves amend MiCA. The available information does not establish which proposals the European Commission will adopt, whether lawmakers will make changes, or what any final rules would say. No implementation timetable is provided.
Some practical details are also unresolved in the supplied material, including how criteria for “genuinely decentralised” activity would be drawn, the scope and conditions of the proposed DeFi service category, and how new disclosure duties would apply across different staking and lending models. The extent of any new supervisory powers, including measures affecting third-country firms and crypto-asset freezes, is likewise not specified.
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Commission Review Sets Next Step
The next step described is the European Commission’s consideration of responses to its public consultation and its review of MiCA. ESMA’s submission gives the Commission proposals to weigh; it does not confirm a decision or legislative timetable. The Commission’s response and any subsequent proposals would show which recommendations, if any, are carried forward.
Readers should watch for further details on the treatment of DeFi access services, token classification, stablecoin-linked services and any changes to supervisory powers. Until the EU process produces and adopts new rules, ESMA’s recommendations remain proposals, and the current legal framework has not changed on the basis of this announcement.
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Key Questions
Has MiCA changed following ESMA’s recommendations?
No. ESMA has submitted recommendations to the Commission’s consultation. They are proposals, not adopted changes to MiCA.
What investor protections does ESMA propose?
ESMA recommends stricter rules for crypto-asset marketing, greater cost transparency and proportionate disclosures for staking, lending and borrowing. The information could cover risks, rewards, collateral and potential losses.
What does ESMA propose for DeFi?
It calls for clearer criteria to determine which activities are genuinely decentralised and proposes a new regulated service category for firms providing users access to DeFi protocols.
When could the recommendations take effect?
The source material gives no adoption or implementation date. The proposals must be considered through the Commission’s MiCA review, and any rule changes would depend on later EU decisions.
Source: primary
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