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The European Securities and Markets Authority has submitted recommendations to the European Commission’s review of MiCA, the EU’s crypto-asset regulation. Its proposals include stronger investor disclosures and supervision, clearer treatment of DeFi and token classifications, and simpler procedures; they are recommendations, not adopted rule changes.
The European Securities and Markets Authority (ESMA) has urged the European Commission to revise the EU’s Markets in Crypto-Assets Regulation (MiCA), proposing stronger investor protections, clearer rules for emerging services and changes to supervision. The recommendations were submitted as part of the Commission’s public consultation on MiCA’s review; they are proposals, not changes already in force.
ESMA says its recommendations seek to simplify the framework while addressing risks and business models that have developed across crypto markets. The areas it highlights include decentralised finance (DeFi), staking, lending and borrowing. For investors, it proposes stricter requirements for crypto-asset marketing, particularly promotions involving influencers and third parties, and greater transparency about costs.
The regulator also calls for proportionate requirements for staking and crypto lending and borrowing, including disclosures. Those disclosures, it says, should make costs, risks, rewards, collateral arrangements and potential losses clearer before customers make decisions. The source does not set out draft legislative wording or specify how such requirements would apply to particular products.
On supervision, ESMA proposes additional capacity to detect and disable fraudulent websites and to freeze crypto-assets in cases of suspected market abuse or terrorist financing. It also seeks stronger powers concerning 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 comply with MiCA. These are recommendations for the Commission to consider, not powers ESMA says it already has under the proposals.
New Safeguards for Crypto Customers
If taken forward, the proposals could change what crypto firms must disclose and how authorities respond to suspected misconduct. More detailed information about fees, collateral and possible losses could help customers compare services and understand risks before committing funds. Tighter marketing rules would also address promotions that can reach retail investors through influencers and other third parties.
The suggested supervisory tools are aimed at risks that cross borders or operate online, including unauthorised providers and fraudulent websites. ESMA argues that stronger and more consistent action across the EU could protect investors and reduce opportunities for firms to exploit differences between national approaches. The effect would depend on the final legal changes, their scope and how regulators implement them.
For firms, the proposals point in two directions: more oversight in areas ESMA considers insufficiently covered, alongside efforts to reduce duplicative authorisations and streamline paperwork. The balance between those aims—and any compliance costs for providers—will depend on the Commission’s review and subsequent decisions.
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MiCA Review and Emerging Services
MiCA is the EU framework for crypto-assets and related services. The Commission is reviewing the regulation through a public consultation, and ESMA’s response is a contribution to that process. The source material does not say that the Commission has accepted any recommendation or set out a timetable for legislative action.
ESMA says the framework needs clearer ways to distinguish genuinely decentralised activity and suggests creating a regulated crypto-asset service for firms providing access to DeFi protocols. It also calls for rules on classifying crypto-assets, including hybrid tokens, and for authority to issue binding opinions on token classification. The stated aim is to reduce uncertainty and encourage consistent treatment across EU markets.
Separately, ESMA proposes simplifying crypto-asset white-paper notifications, cutting duplicative authorisation requirements for some regulated firms and improving consistency in prudential rules. Looking beyond the immediate MiCA review, it also points to the need for a framework covering tokenised securities and on-chain settlement to support a more integrated European tokenised capital market.
“The recommendations aim to simplify the framework while improving investor protection and addressing innovative business models.”
— ESMA
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Proposals Await Commission Response
None of ESMA’s recommendations is described as adopted. It remains unclear which proposals the European Commission will include in any legislative changes, whether it will revise them, or when it may act. The source material also provides no detailed draft text, implementation schedule or assessment of the costs for crypto firms.
Several proposals would require further definition, including the test for genuinely decentralised activity, the scope of a new DeFi-access service and the circumstances in which authorities could block websites or freeze assets. The consultation response does not specify how these measures would operate in practice or how they would interact with existing powers.
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Commission Review Sets Next Step
The immediate next step is the European Commission’s consideration of responses to its MiCA review consultation. The Commission will determine whether to pursue legislative or other changes; ESMA’s submission alone does not alter the rules that firms must follow. Any proposed amendments would need to proceed through the EU’s applicable decision-making process before becoming binding.
For now, investors and crypto providers can treat the recommendations as an indication of issues ESMA wants addressed, rather than new requirements. Further details should become clearer if the Commission publishes its conclusions or proposes specific changes.
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Key Questions
Has MiCA changed because of ESMA’s recommendations?
No. ESMA has submitted recommendations to the Commission’s review. The source does not report that any changes have been adopted.
What investor protections does ESMA propose?
ESMA proposes stricter rules for crypto-asset marketing, more cost transparency and disclosures for staking, lending and borrowing. It says disclosures should cover risks, rewards, collateral and potential losses.
What does ESMA propose for DeFi?
It calls for clearer criteria to determine which activities are genuinely decentralised and suggests a new regulated service category for firms that provide users with access to DeFi protocols.
What happens to ESMA’s proposals next?
The European Commission must consider ESMA’s response as part of its MiCA review. The source does not provide a decision date or say which recommendations the Commission will take forward.
Source: primary
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