EU proposes new rules to strengthen restrictions on non-EU crypto companies
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EU proposes new rules to strengthen restrictions on non-EU crypto companies
According to Reuters, the European Securities and Markets Authority (ESMA) has proposed a new draft aiming to strictly limit the ability of non-EU crypto companies to directly serve consumers within the European Union, in order to prevent unfair competition. This proposal follows last year's adoption by the EU of the world's first comprehensive crypto market regulations—the Markets in Crypto-Assets (MiCA). In its statement, ESMA said the proposal primarily targets non-EU crypto-asset firms wishing to offer services directly to EU consumers. These firms would only be allowed to serve EU clients under very limited circumstances—specifically, when the customer is the sole initiator of the service (a concept known as "reverse solicitation"). This is a common principle in EU financial law, and EU policymakers have now strengthened rules in this area, increasing pressure on foreign firms to establish branches or subsidiaries within the EU. ESMA stated that it, together with national regulators across the EU, will take "all necessary measures" to protect investors within the EU and safeguard crypto-asset service providers complying with MiCA from improper encroachment by non-EU entities or those not conforming to MiCA requirements. The proposal is now open for public consultation and is expected to publish its final text by the end of 2024 at the latest. Additionally, ESMA has put forward a second set of guidelines outlining when crypto assets should be classified as "financial instruments," such as stocks or bonds, meaning they would also fall under another EU regulatory framework—MiFID.
Navigating Web3 tides with focused insightsTechFlow reports, citing Reuters, that the European Securities and Markets Authority (ESMA) has proposed a new measure to strictly limit cryptocurrency firms based outside the European Union from directly providing services to consumers within the EU, aiming to prevent unfair competition.
The proposal follows last year's adoption of the world’s first comprehensive crypto market regulations by the EU—the Markets in Crypto-Assets Regulation (MiCA). According to ESMA's statement, the proposal targets non-EU crypto asset companies wishing to offer services directly to EU consumers. These firms would only be allowed to serve EU clients under very limited circumstances—specifically, when the customer is the sole initiator of the service (a concept known as "reverse solicitation"). This is a common principle in EU financial legislation, and EU policymakers have tightened its application, thereby increasing pressure on foreign firms to establish local branches or subsidiaries within the EU.
ESMA said it, together with national regulators across the EU, will take "all necessary measures" to protect investors within the EU and ensure compliance by crypto asset service providers operating under MiCA, guarding against improper encroachment by entities outside the EU or those not compliant with MiCA rules. The proposal is now open for public consultation and is expected to publish its final text by the end of 2024.
In addition, ESMA has also put forward a second set of guidelines outlining when crypto assets should be classified as "financial instruments," such as stocks or bonds, and thus become subject to another EU regulatory framework, MiFID.
