European Crypto Investors to Wait Longer for Regulatory Cover
European crypto investors will have to wait a little longer for the full provisions of Markets in Crypto Assets (MiCA) to kick in, according to the European Securities and Markets Authority (ESMA).
In an official release, ESMA stated that crypto investor protections would take longer than expected, pushing the estimated timeline for regulatory cover to December 2024.
Unfortunately, this means that crypto holders and customers of crypto asset providers will not have access to any European Union (EU) level regulatory and supervisory safeguards, including the ability to file formal complaints against service providers.
This poses a significant risk for European crypto investors who may lose their funds while trading these digital assets, as they will have limited recourse to seek justice.
Protracted Timeline for MiCA
ESMA revealed that the full launch of MiCA may still take up to July 2026, highlighting the complexities involved in implementing comprehensive regulatory measures for the crypto industry.
While the December 2024 timeline primarily focuses on regulating crypto asset providers, there is an 18-month-long transitional period granted to crypto trading firms, allowing them to offer services without proper regulatory oversight. However, the discretion of member states will determine the availability of this transitional period.
The implementation of MiCA in the 27 member states will involve National Competent Authorities (NCAs) and European Supervisory Authorities (ESAs) playing a pivotal role.
Despite the efforts of NCAs, their regulatory purview will be limited initially, with their focus mainly on enforcing existing anti-money laundering (AML) laws, which are less comprehensive compared to what MiCA intends to bring to the European crypto marketplace.
Limitations of MiCA
ESMA acknowledged that even with the introduction of MiCA, there is no “safe” digital asset that investors can fully rely on due to the volatile nature of crypto assets.
The agency also recognized the highly speculative nature of blockchain-based digital assets and the associated risks.
ESMA emphasized that MiCA does not cover all the inherent security and operational risks associated with cryptocurrencies, as blockchain technology is still in its early stages of development.
Nevertheless, ESMA encourages crypto asset service providers to inform NCAs of their intention to comply with MiCA rules and urges virtual asset service providers (VASPs) to apply for MiCA and inform their clients to facilitate a smoother implementation phase and transition period.
