Cryptocurrencies remain “unregulated assets”, says European authority

The European Securities and Markets Authority (ESMA) and the National Competent Authorities (NCA) report that companies and service providers have yet to qualify the crypto assets they offer to the public in the region as “non-regulated assets”.

The clarification is made by both organizations in a statement on May 25, in which they express their concerns due to the way in which products with cryptocurrencies are being offered in Europeafter the approval of the Cryptoactive Market Regulation (MiCA) on April 20.

We have observed that investment firms offer products and/or services that are outside the scope of financial services regulation in the European Union, but are offered to investors as investment alternatives to instruments that are defined and regulated under MiFID. II” (Second Directive on Financial Instruments Markets).

European Securities and Markets Authority (ESMA)

In this sense, the authorities reiterate that the crypto assets offered by investment companies will remain unregulated in most eurozone jurisdictions until MiCA comes into effect. This, taking into account that until now the law only passed its approval phase.

Meanwhile, the European securities authorities express their concern about the protection of investors and the risks of “being deceived”, there is confusion about the products, and “deceptive sales” are made.

Accordingly, they recommend that companies ensure that customers are fully informed about the regulatory status of the product or service they are receiving, and that they clearly disclose when regulatory protections do not apply.

The statement adds that companies should be careful about using their regulatory status as a promotional tool, identifying “regulated from unregulated activities on their websites”.

It is worth remembering that, according to the precepts of the new regulation, cryptocurrencies such as bitcoin (BTC) and ether (ETH from Ethereum) are classified as financial instruments and will be regulated under MiFID. This, while crypto assets such as utility tokens and stablecoins will be governed by MiCA rules.

However, this classification of crypto assets only will be valid when MiCA goes into effect.

As reported by CriptoNoticias, after the approval of the European Parliament, the Council of the European Union (EU) adopted the Regulation on May 16. This is one of the steps prior to its publication in the official gazette.

Subsequently, different deadlines are foreseen for the full entry into force by MICA. First, the rules that apply to the stablecoin category will follow, in July 2024. Other requirements will not come into force until 2025. Then, companies will have up to 18 months to adapt, apply for and receive the license to operate in the EU. . During that time, the 27 member countries must advance in the transposition of their laws.