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The European Securities and Markets Authority has recommended changes to the EU’s Markets in Crypto-Assets Regulation, including stronger disclosures, broader supervisory tools and clearer rules for DeFi-related services and token classification. The recommendations were submitted to the European Commission as part of its MiCA review; they are proposals, not rules already in force.
The European Securities and Markets Authority (ESMA) has urged the European Commission to revise the EU’s Markets in Crypto-Assets Regulation, proposing stronger investor safeguards, expanded supervisory powers and clearer rules for services including decentralised finance, staking and crypto lending. The recommendations were submitted in response to the Commission’s public consultation and are proposals for the review, not changes that have already taken effect.
ESMA says its recommendations aim to make the framework simpler while addressing risks and business models it considers insufficiently covered by current rules. For consumer-facing services, it proposes tighter requirements for crypto marketing, particularly promotions involving influencers and other third parties, and better disclosure of costs. It also calls for proportionate requirements for staking, lending and borrowing, including disclosures that explain risks, rewards, collateral arrangements and possible losses before customers make decisions.
On supervision and enforcement, ESMA recommends improving the EU’s ability to detect and disable fraudulent websites and to freeze crypto-assets in cases involving suspected market abuse or terrorist financing. It also wants stronger powers to address third-country firms soliciting EU customers without MiCA authorisation, and explicit rules preventing regulated crypto firms from offering services linked to stablecoins that do not comply with MiCA. These are recommendations to the Commission; the source does not say that ESMA currently has all the powers it is seeking.
For emerging services and products, ESMA proposes clearer criteria for deciding when an activity is genuinely decentralised, alongside a new regulated crypto-asset service category for firms that give customers access to DeFi protocols. It also calls for common rules on classifying crypto-assets, including hybrid tokens, and for authority to issue binding opinions on token classification so equivalent products are treated consistently across the EU.
New Safeguards for Crypto Customers
The proposals address points at which customers may encounter risks that existing rules do not fully cover. Clearer information on fees, staking returns, lending risks and collateral could help people understand what they are agreeing to, while tighter marketing standards could make promotions easier to scrutinise. Those measures would not remove investment risk, but they could make key terms more visible before a customer commits funds.
Supervisory changes could also affect how quickly authorities respond to suspected fraud, unauthorised cross-border business and non-compliant stablecoin activity. Common classification rules matter for firms and regulators because the way a token is categorised can affect which requirements apply. If adopted, the proposals could support more consistent oversight across EU countries; the effect would depend on the final legislation and how it is implemented.
ESMA’s call for rules covering firms that connect users with DeFi protocols reflects a regulatory challenge: some crypto services are presented as decentralised, but customers may still rely on an identifiable intermediary to access them. Defining the boundary could clarify which businesses fall under supervision, though the proposed criteria and service category would need to be set out in law.
DeFi protocol access hardware wallet
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The Commission’s MiCA Review
MiCA is the EU regulation establishing rules for crypto-assets and related services. ESMA is the EU’s financial markets regulator and supervisor. The development reported here is ESMA’s response to the European Commission’s public consultation on reviewing the regulation, rather than a Commission decision to adopt a particular change.
Alongside stronger safeguards and oversight, ESMA recommends reducing some compliance burdens. Its suggestions include simplifying crypto-asset white-paper notifications, removing duplicative authorisation requirements for certain regulated firms and making prudential requirements more consistent. The authority also looks beyond the immediate review, saying a framework for tokenised securities and on-chain settlement is needed to support a more integrated European tokenised capital market and cross-border activity.
“The recommendations aim to simplify the framework while improving investor protection and addressing innovative business models.”
— European Securities and Markets Authority
Proposals Await Commission Decisions
The recommendations do not establish that the Commission will accept them, or that the proposed rules will become part of MiCA in their current form. No legislative timetable, final text or implementation date is provided in the source material. It is also unclear how any new requirements would define genuinely decentralised activity, which firms would qualify as DeFi access providers, or how ESMA’s proposed binding token-classification opinions would work in practice.
The source does not specify the precise scope or legal process for the proposed website-blocking and asset-freezing powers, or the safeguards that would apply when those powers are used. Nor does it set out which stablecoins or services would be affected by the proposed restrictions. These details would need to be clarified during any legislative and implementation process.
MiCA Review Moves Forward
The next step is for the European Commission to consider ESMA’s response alongside submissions to its public consultation as it reviews MiCA. The source does not give a date for the Commission’s next announcement or say when draft amendments may be published.
If the Commission advances changes, the proposals would need to be developed through the EU’s legislative process before they could take effect. Until then, ESMA’s recommendations signal the areas it wants addressed, but they do not themselves create new obligations for crypto firms or new protections for customers.
Key Questions
Has MiCA already been changed?
No. ESMA has made recommendations in response to the European Commission’s review consultation. They are not enacted amendments.
What investor protections does ESMA propose?
ESMA proposes stricter crypto marketing requirements, including for influencer and third-party promotions, clearer cost information, and disclosures on staking, lending and borrowing risks.
What does ESMA propose for DeFi?
It recommends clearer criteria for identifying genuinely decentralised activity and a new regulated service category for firms that provide users with access to DeFi protocols.
Would the proposals apply to all crypto firms immediately?
No immediate application date is specified. The recommendations would need to be considered by the Commission and, if taken forward, developed through the EU legislative process.
What is unclear about the proposed changes?
The final rules, timing and practical definitions remain unknown, including how decentralisation would be assessed and how proposed enforcement powers would operate. The Commission has not committed to adopting the recommendations in the source material.
Source: primary
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