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ESMA has sent the European Commission recommendations for reviewing the EU’s Markets in Crypto-Assets Regulation (MiCA). Its proposals include stronger investor disclosures and supervisory powers, clearer rules for DeFi and token classification, and streamlined compliance procedures; they are recommendations, not adopted changes.
The European Securities and Markets Authority has recommended changes to the European Union’s Markets in Crypto-Assets Regulation (MiCA), proposing stronger investor safeguards and clearer oversight of services including decentralised finance (DeFi), staking and crypto lending. ESMA submitted its recommendations to the European Commission as part of a public consultation on reviewing the rules; the proposals are not yet changes to EU law.
For investors, ESMA proposes stricter requirements for marketing crypto-assets, including when products are promoted by influencers or other third parties. It also calls for greater transparency about costs and proportionate disclosure requirements for staking, lending and borrowing. The intended disclosures would cover risks, rewards, collateral arrangements and potential losses before customers make decisions.
On supervision, ESMA recommends giving authorities stronger tools to address online fraud and services offered to EU investors by firms outside the bloc that are not authorised under MiCA. Its proposals include improving the capacity to detect and deactivate fraudulent websites and to freeze crypto-assets in cases involving suspected market abuse or terrorist financing. ESMA also calls for explicit rules to prevent regulated crypto firms from offering services linked to stablecoins that do not meet MiCA requirements.
For emerging business models, ESMA wants clearer criteria to determine when an activity is genuinely decentralised, alongside a possible new regulated service for firms that give users access to DeFi protocols. It also proposes harmonised rules for classifying crypto-assets, including hybrid tokens, and the ability for ESMA to issue binding opinions so the same products are treated consistently across the EU.
How the proposals could affect crypto users
The recommendations address gaps ESMA says remain in the rules as crypto services develop. Better disclosures could give customers more information about the costs and risks of staking, lending and borrowing, while clearer marketing requirements could make promotions by influencers and third parties subject to closer scrutiny. The proposals do not establish that every user currently lacks such information; they set out safeguards ESMA wants considered in the review.
Supervisory powers are another focus. If adopted, measures for dealing with unauthorised firms, fraudulent websites and non-compliant stablecoin-related services could support more consistent enforcement across EU countries. For businesses, the outcome could also define which DeFi-related activities and token types fall within regulated frameworks. Those boundaries matter for firms deciding what authorisation and disclosure obligations apply, and for customers seeking to understand who is responsible for a service.
ESMA also argues that parts of the framework could be made simpler. It proposes streamlined white-paper notification procedures, fewer duplicate authorisation requirements for some regulated firms and more consistent prudential rules. The aim is to reduce unnecessary compliance burdens without abandoning investor protection. The effect would depend on how the Commission and EU lawmakers turn the recommendations into specific legal text.
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MiCA review and wider market changes
MiCA is the EU framework for crypto-assets and related services. ESMA, the bloc’s financial markets regulator and supervisor, is responding to a European Commission consultation on reviewing that framework. Its submission addresses both the operation of existing requirements and activities that have grown or become more prominent, including DeFi, staking and stablecoin services.
The recommendations combine changes within MiCA with a longer-term policy issue. ESMA says Europe will also need a framework for tokenised securities and on-chain settlement to support an integrated tokenised capital market and cross-border activity. That point looks beyond the immediate MiCA review: the source presents it as a future framework need, not as a measure already agreed or part of an adopted reform package.
“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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Which recommendations may become law
ESMA’s submission is advice to the European Commission, not an enacted amendment to MiCA. The source does not say which proposals the Commission will accept, whether it will put forward legislative changes, or on what timetable. It also does not provide draft legal wording, implementation dates or a detailed account of how proposed powers—such as freezing assets or deactivating websites—would be applied in practice.
The precise scope of a new DeFi-access service, the criteria for genuine decentralisation, and the process for binding token-classification opinions remain unspecified in the report. The consultation response also does not identify particular firms or cases affected. Those details would be needed to assess the proposals’ practical effects on businesses and customers.
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Commission review and possible rulemaking
The immediate next step is for the European Commission to consider ESMA’s recommendations alongside other responses to its public consultation. The source does not announce a decision date or confirm that the Commission will adopt any specific proposal. If the review leads to proposed amendments, the details and timetable will depend on the Commission’s next steps and the subsequent EU legislative process.
Until then, the recommendations signal areas regulators want addressed: customer disclosures and marketing, oversight of unauthorised activity, stablecoin compliance, DeFi access, token classification and simpler procedures for firms. Further announcements would clarify which points advance and how any eventual changes are implemented.
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Key Questions
Has MiCA changed as a result of ESMA’s recommendations?
No. ESMA submitted recommendations to the European Commission’s review consultation. They are proposals, not adopted amendments to MiCA.
What investor protections does ESMA propose?
ESMA calls for stricter rules for crypto marketing, including influencer promotions, more transparency on costs and disclosures about risks, rewards, collateral and potential losses in staking, lending and borrowing.
What does ESMA propose for DeFi?
It recommends clearer criteria for deciding whether an activity is genuinely decentralised and a possible new regulated crypto-asset service for firms that provide access to DeFi protocols.
What happens to ESMA’s proposals next?
The European Commission will consider the recommendations as part of its MiCA review. The source does not give a decision timetable or confirm which proposals will move forward.
Source: primary
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