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The European Securities and Markets Authority has submitted recommendations to the European Commission for its review of the EU’s Markets in Crypto-Assets Regulation. In its consultation response, ESMA proposes changes involving investor disclosures, supervision of unauthorised services, DeFi access and token classification. The proposals are recommendations, not adopted changes.
According to ESMA’s response to the European Commission’s public consultation, the European Securities and Markets Authority (ESMA) has urged the Commission to clarify and amend the EU’s Markets in Crypto-Assets Regulation (MiCA), proposing new investor safeguards and stronger oversight as crypto services evolve. In that response, ESMA addresses marketing, costs, staking and lending, unauthorised firms, decentralised finance (DeFi) and token classification; these are proposals for the Commission’s review, not rules already in force.
In its response to the Commission’s public consultation, ESMA says the framework should be simplified while addressing risks that it considers insufficiently covered. For retail investors, ESMA proposes stricter rules for crypto-asset promotion, particularly where influencers or other third parties market products, and greater transparency about costs. It also recommends proportionate requirements for staking, lending and borrowing, including disclosures about risks, rewards, collateral and potential losses.
ESMA’s consultation response also calls for more supervisory capacity to address unauthorised services, online fraud and stablecoins that do not comply with MiCA. The authority proposes tools to detect, block or deactivate fraudulent websites and to freeze crypto-assets when market abuse or terrorist financing is suspected. It seeks stronger powers over third-country firms soliciting EU investors without MiCA authorisation, and explicit rules to prevent regulated crypto firms from providing services linked to non-compliant stablecoins.
For evolving business models, ESMA recommends clearer criteria for deciding whether an activity is genuinely decentralised and a new regulated crypto-asset service category for firms that give users access to DeFi protocols. Its recommendations also propose common rules for classifying crypto-assets, including hybrid tokens, and authority for ESMA to issue binding opinions on classifications. Separately, ESMA’s simplification proposals include streamlining white-paper notifications, reducing some duplicative authorisation requirements and making prudential requirements more consistent.
Safeguards for a Changing Crypto Market
If the Commission and lawmakers adopt ESMA’s recommendations, they could affect how crypto firms present products, disclose charges and structure services for customers in the EU. More information on costs and exposure to loss could help investors compare offers, while clearer requirements for staking, lending and borrowing could make risks easier to identify before committing assets.
ESMA says its proposals aim to make action against suspected fraud and unauthorised activity faster and more consistent across the bloc. The authority argues that powers covering offshore firms and non-compliant stablecoin services would help address gaps in oversight and reduce opportunities for firms to exploit differences in national approaches. These are ESMA’s stated aims; its consultation response does not establish what effect any eventual changes would have.
ESMA’s proposed classification and DeFi rules also concern which regulatory obligations apply to firms’ products. The authority recommends a shared approach across EU countries, which could reduce uncertainty for businesses operating across borders, and a defined service category for some DeFi access providers. The proposals therefore reach beyond investor notices to questions about who is supervised and under which rules.
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MiCA Review and Wider Market Plans
MiCA is the EU framework for crypto-assets and related services. The development reported here is part of the European Commission’s public consultation on a review of that regulation. ESMA, the EU financial markets regulator and supervisor, submitted recommendations in its consultation response; the source does not say that the Commission has accepted them or set out a final legislative text.
ESMA’s response combines proposed changes to current rules with proposals for newer activities, including DeFi access and hybrid tokens. The authority also looks beyond the immediate MiCA review: in its response, ESMA says Europe needs a framework for tokenised securities and on-chain settlement that could support an integrated tokenised capital market and future cross-border activity. The source presents this as a broader need, without giving a specific timetable or design.
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Which Proposals Will Become Law
The source describes ESMA recommendations submitted in response to the Commission’s consultation. It does not state which proposals the European Commission will take forward, whether legislative changes will be proposed, or when any revised rules might apply. The specific thresholds and obligations for marketing, disclosures, staking, lending, borrowing and DeFi access are also not set out in the material provided.
The source does not explain how any new supervisory powers would work in practice, including the process for blocking websites or freezing assets when suspicions arise. ESMA’s call for criteria on genuine decentralisation and binding token-classification opinions likewise leaves details to be determined. Those decisions could shape how firms and supervisors apply the framework, but the source does not give proposed criteria or procedures.
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Commission Review and Follow-Up
The immediate next step is the European Commission’s consideration of responses to its MiCA consultation, including ESMA’s recommendations. The supplied material gives no date for a Commission decision, legislative proposal or further consultation. Any formal rule changes would depend on the Commission’s next steps and the EU process for adopting them.
Investors and crypto firms can watch for Commission materials explaining which areas it plans to address, followed by any detailed proposals on disclosures, supervision, DeFi and classification. Until then, ESMA’s submission indicates the direction the regulator is requesting, while the existing framework remains the applicable rules described in the source.
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Key Questions
Has MiCA already changed because of ESMA’s recommendations?
No. ESMA submitted recommendations to the European Commission’s review. The source does not say that the Commission or EU lawmakers have adopted them.
What investor protections is ESMA proposing?
In its consultation response, ESMA proposes stricter rules for crypto-asset marketing, greater cost transparency and proportionate disclosures for staking, lending and borrowing. Those disclosures would cover risks, rewards, collateral arrangements and potential losses.
What does ESMA propose for DeFi?
ESMA recommends clearer criteria for deciding whether activity is genuinely decentralised and a new regulated crypto-asset service category for firms that provide users access to DeFi protocols.
When will the proposals take effect?
The source gives no timetable. The recommendations are part of the Commission’s review, and any rule changes would depend on subsequent EU decisions.
Source: primary
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