EU Crypto Investor Protections Won’t Kick In Until Dec. 2024: ESMA

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Jimmy Aki

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Jimmy Aki

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Jimmy has nearly 10 years of experience as a journalist and writer in the blockchain industry. He has worked with well-known publications such as Bitcoin Magazine, CCN, and Blockonomi, covering news...

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October 23, 2023 04:22 EDT

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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 October 17 official release, ESMA stated that crypto investor protections would take longer than expected. This is putting the minimum time frame at December 2024 before regulatory cover takes effect. 

In its new statement on MiCA timelines, ESMA (EU supervisor) encourages both CASPs (crypto-asset service providers) and NCAs (national supervisors) to prepare for MiCA entering into application and the MiCA transition phase.

Importantly, ESMA emphasizes what I and many others… pic.twitter.com/hwotl560Hp

— Patrick Hansen (@paddi_hansen) October 17, 2023

In light of this, crypto holders and the customers of crypto asset providers will not have access to any European Union (EU) level regulatory and supervisory safeguards. This includes, but is not limited to, the ability to file formal complaints against service providers with relevant authorities.

With this frank admission, European crypto investors have little recourse if they lose their funds trading these digital assets. 

Making a case for a protracted timeline for MiCA’s full launch, ESMA revealed that it might still take up to July 2026 before everything is in place. 

🟢🟢🟢 Official Timeline set out by the #ESMA for the EU MiCA #crypto rules to be implemented

➡️ Full Application – December 2024
➡️ Full Benefits – July 2026

Link:https://t.co/ROvU9GFZKv pic.twitter.com/oViYw7PacF

— ĐΛRKHØRSΞ™ (@DarkhorseDNME4) October 17, 2023

According to ESMA, the December 2024 timeline is focused on crypto asset providers and not their clients. Therefore, MiCA’s provisions will come into full swing for these service providers. 

Nonetheless, crypto trading firms will be granted an 18-month-long transitional period, allowing them to offer services without proper regulatory oversight.

However, this transitional period will be based on the discretion of its member states.

NCAs Are Still Limited In Powers

ESMA has revealed that National Competent Authorities (NCAs) and European Supervisory Authorities (ESAs) will play a role in aiding the implementation of MiCA in its 27 member states.

According to ESMA, while NCAs will kickstart their operations by the end of 2024, their regulatory purview will still be limited.

The securities authority said in the release that regional NCAs would be sidelined to only enforce existing anti-money laundering (AML) laws, which are far less comprehensive compared to what MiCA brings to the European crypto marketplace. 

ESMA further stressed that given the volatile nature of crypto assets, there is no “safe” digital asset investors can rely on. 

This underlying demerit, coupled with the highly speculative nature of blockchain-based digital assets, further limits the powers of MiCA. 

The protectoooors

EU SECURITIES WATCHDOG ESMA SAYS CRYPTO INVESTORS WON'T BE PROTECTED UNDER NEW EU CRYPTO RULES UNTIL AT LEAST DECEMBER 2024

ESMA SAYS NO SUCH THING AS "SAFE" CRYPTO ASSET

— Fofty Pawlow (@FoftyPawlow) October 17, 2023

According to the top global agency, MiCA does not cover all the inherent security and operational risks associated with cryptocurrencies due to the infantile stage at which blockchain technology is currently operating. 

However, ESMA has encouraged crypto asset service providers to inform relevant NCAs in their region of operation of their intent to begin applying MiCA rules in their operations. This is to help fast-track the implementation phase of MiCA and the transition period.

These virtual asset service providers (VASPs) have also been encouraged to apply for MiCA and inform their clients.