EU imposes stricter regulations on third-country crypto firms
In a bid to safeguard the interests of local investors and ensure compliance with the Markets in Crypto-Assets (MiCA) framework, the European Union (EU) has announced plans to tighten its regulations on crypto companies operating outside the bloc.
The European Securities and Markets Authority (ESMA) unveiled a new set of proposals aimed at crypto asset firms seeking to provide services directly to EU customers without establishing a physical presence within the EU.
EU stricter oversight for third-country crypto firms
Under these proposed regulations, third-country crypto firms will face more stringent limitations when it comes to accessing EU customers. While EU-based customers will still have the option to engage with third-country crypto firms, there is a key exemption: the third-country firms must not be authorized to provide Crypto-Asset Service Provider (CASP) services within the European Union.
ESMA’s proposal introduces the concept of “reverse solicitation.” This means that if an EU-based customer initiates contact with a third-country crypto firm and explicitly requests their services, the firm may provide them.
However, this exemption comes with a crucial condition: the third-country firm is prohibited from offering the customer any additional crypto assets or services beyond the original solicited service, even if they are of the same type.
The significance of “Reverse Solicitation”
“Reverse solicitation” is a concept that has been embedded in other EU financial laws to exert pressure on third-country firms to establish a branch or subsidiary within the EU. This approach aims to ensure that such firms operate within the regulatory framework of the EU, providing greater protection to local investors and ensuring compliance with MiCA guidelines.
The proposed regulations are currently open for public consultation, allowing stakeholders and industry participants to provide feedback until the end of April.
Following this consultation period, ESMA will issue guidelines on supervision practices to detect and prevent any attempts to circumvent the proposed regulation. These guidelines are expected to play a crucial role in enforcing the new rules and maintaining the integrity of the EU’s crypto market.
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EU imposes stricter regulations on third-country crypto firms
In a bid to safeguard the interests of local investors and ensure compliance with the Markets in Crypto-Assets (MiCA) framework, the European Union (EU) has announced plans to tighten its regulations on crypto companies operating outside the bloc.
The European Securities and Markets Authority (ESMA) unveiled a new set of proposals aimed at crypto asset firms seeking to provide services directly to EU customers without establishing a physical presence within the EU.
EU stricter oversight for third-country crypto firms
Under these proposed regulations, third-country crypto firms will face more stringent limitations when it comes to accessing EU customers. While EU-based customers will still have the option to engage with third-country crypto firms, there is a key exemption: the third-country firms must not be authorized to provide Crypto-Asset Service Provider (CASP) services within the European Union.
ESMA’s proposal introduces the concept of “reverse solicitation.” This means that if an EU-based customer initiates contact with a third-country crypto firm and explicitly requests their services, the firm may provide them.
However, this exemption comes with a crucial condition: the third-country firm is prohibited from offering the customer any additional crypto assets or services beyond the original solicited service, even if they are of the same type.
The significance of “Reverse Solicitation”
“Reverse solicitation” is a concept that has been embedded in other EU financial laws to exert pressure on third-country firms to establish a branch or subsidiary within the EU. This approach aims to ensure that such firms operate within the regulatory framework of the EU, providing greater protection to local investors and ensuring compliance with MiCA guidelines.
The proposed regulations are currently open for public consultation, allowing stakeholders and industry participants to provide feedback until the end of April.
Following this consultation period, ESMA will issue guidelines on supervision practices to detect and prevent any attempts to circumvent the proposed regulation. These guidelines are expected to play a crucial role in enforcing the new rules and maintaining the integrity of the EU’s crypto market.
Read More
China Busts $20 Million Bitcoin Laundering Ring Tied to TikTok-Style App