EU agency says cryptocurrency firms can sometimes serve non-European users

Foreign clients may be able to activate the services of EU firms.

The European Securities and Markets Authority (ESMA) said on Jan. 29 that cryptocurrency firms in the European Union may be able to offer services to non-EU clients under certain circumstances.Bitcoin Miner

ESMA wrote in a statement:

“The proposed guidance confirms ESMA’s previous information that, under MiCA, the provision of crypto-asset services by third-country firms is limited to cases where the client is the exclusive originator of the services.”

ESMA also said that the allowance, known as the reverse solicitation exemption, is narrow and strictly an exemption.

It emphasized that firms cannot use the exemption to get around the Market Regulation for Crypto Assets (MiCA) rules. MiCA comes into force in June 2023 and sets out a number of new rules for members of the cryptocurrency industry in the EU.

ESMA has also released a consultation paper on exemptions today. While the guidance has not yet been finalized, the agency’s statement above implies that the rules are now broadly effective based on its previous information. Instead, the paper’s comments relate to specific applications of the rules and supervisory practices that authorities can use to prevent breaches.ETChash Miner

Other rules relate to the classification of crypto assets

ESMA added that it has issued a second consultation paper on guidelines for classifying crypto assets as financial instruments.

This will link the EU’s recent MiCA rules to the previous Markets in Financial Instruments Directive II (MiFID II), the agency said. MiCA provides the framework for regulating cryptocurrencies, while MiFID II provides the framework for regulating traditional financial instruments, including securities.

According to the agency’s statement, these rules are likely to be more lenient. ESMA said the proposed guidelines aim to find a middle ground between developing guidelines and “avoiding the establishment of a one-size-fits-all approach.”

Comments on the two consultation documents are due by April 29, 2024, and ESMA will consider feedback in the second quarter of 2024 and issue a final report in the fourth quarter of 2024, according to the agency.