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ESMA has submitted recommendations to the European Commission’s consultation on reviewing MiCA. The proposals cover investor disclosures, supervision of unauthorised services, DeFi access and token classification, alongside measures to simplify some requirements.
The European Securities and Markets Authority (ESMA) has urged the European Commission to revise the EU’s Markets in Crypto-Assets Regulation (MiCA), proposing clearer rules, stronger investor safeguards and provisions for services including DeFi, staking, lending and borrowing. The recommendations are ESMA’s response to a Commission consultation; they are proposals, not adopted changes to the law.
For investor protection, ESMA recommends stricter rules for crypto-asset marketing, particularly where influencers or other third parties promote assets. It also calls for greater cost transparency and proportionate requirements for staking, lending and borrowing. The authority says disclosures should help investors understand costs, risks, rewards, collateral arrangements and potential losses before deciding whether to use these services.
On supervision, ESMA proposes giving authorities stronger tools to address fraudulent websites and unauthorised services. Its recommendations include improving the EU’s capacity to detect and deactivate fraudulent sites, and to freeze crypto-assets in cases involving suspected market abuse or terrorist financing. ESMA also seeks reinforced powers over third-country firms that solicit EU investors without MiCA authorisation, and explicit rules to prevent regulated crypto firms from offering services linked to stablecoins that do not meet MiCA requirements.
For evolving business models, ESMA proposes clearer criteria for deciding whether an activity is genuinely decentralised and a new regulated crypto-asset service for firms that give users access to DeFi protocols. It also calls for common rules on token classification, including for hybrid tokens, and for authority to issue binding opinions on classification. Other recommendations would simplify white-paper notification, reduce some duplicative authorisation requirements and improve consistency in prudential rules.
How the Proposals Could Change Oversight
If the Commission and EU lawmakers adopt measures along these lines, crypto firms and investors could face a more consistent set of expectations across the bloc. Clearer cost and risk disclosures could help customers compare services and understand exposures tied to staking or lending. More consistent token classifications could also reduce the chance that similar products receive different regulatory treatment in different member states.
The supervisory proposals address risks ESMA identifies in services that may operate outside MiCA authorisation, including firms based outside the EU that solicit European customers. Tools to act against fraudulent sites and suspected illicit activity could support quicker responses, though the recommendations alone do not establish that those powers will be granted or how they would be used. The proposals therefore matter both to consumer protections and to the future responsibilities of regulators and crypto businesses.
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MiCA Review Covers New Crypto Models
MiCA is the EU framework for crypto-assets and related services. ESMA describes its response as part of the European Commission’s public consultation on a review of that regulation. The consultation provides a channel for recommendations; the source material does not say that the Commission has accepted ESMA’s proposals or set out a final legislative timetable.
ESMA links the review to changes in crypto markets, including activity around decentralised finance and stablecoins. Its recommendations span both targeted safeguards and simplification of existing procedures. Looking beyond the immediate review, the authority also says Europe needs a framework for tokenised securities and on-chain settlement to support an integrated tokenised capital market and cross-border activity. That broader proposal concerns future market infrastructure and is distinct from the specific MiCA changes set out in the consultation response.
“ESMA’s recommendations aim to simplify the framework while improving investor protection and addressing innovative business models.”
— European Securities and Markets Authority
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Commission Response Remains Pending
The source material does not state whether the Commission has responded to ESMA’s recommendations, which proposals it may take forward, or when any legislative changes could be made. It also does not give draft legal text, implementation dates or detailed thresholds for the suggested disclosure and prudential requirements. The proposed test for genuine decentralisation and the scope of a new regulated service for DeFi access remain unspecified in the report.
It is also unclear what process or criteria would govern ESMA’s proposed binding opinions on token classification, and how authorities would coordinate any new powers to block websites or freeze assets. These points would need further definition before firms and investors could know how the recommendations might apply in practice.
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MiCA Review Moves to the Commission
The next step described by the source is the European Commission’s review of MiCA, informed by its public consultation and responses such as ESMA’s. The Commission would need to decide whether to develop any recommendations into proposals for changes to EU rules. Until that process produces further decisions, ESMA’s recommendations do not themselves alter firms’ obligations under MiCA.
Readers should watch for Commission announcements or legislative proposals that clarify the review’s scope, timetable and treatment of DeFi, staking, lending, token classification and supervision. ESMA’s separate call for a framework for tokenised securities and on-chain settlement may also be considered in later work on European capital markets. The source gives no date for either a decision or a further milestone.
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Key Questions
Has MiCA changed following ESMA’s recommendations?
No change is confirmed in the source. ESMA submitted recommendations to the European Commission’s consultation; the recommendations are not adopted amendments.
What investor protections does ESMA propose?
ESMA calls for stricter crypto-asset marketing rules, including for influencer promotions, more cost transparency and proportionate requirements for staking, lending and borrowing. It says disclosures should cover costs, risks, rewards, collateral and potential losses.
What does ESMA propose for DeFi?
It recommends criteria for assessing whether activities are genuinely decentralised and a new regulated crypto-asset service for firms that give users access to DeFi protocols. The source does not provide draft rules or a final definition.
Could ESMA classify crypto tokens across the EU?
ESMA proposes common classification rules, including for hybrid tokens, and the ability for ESMA to issue binding opinions. These are recommendations, and the source does not describe how such opinions would work.
Source: primary
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