The recommendations call for stronger investor protections and supervisory powers as crypto markets evolve and new services challenge existing MiCA rules.
The European Securities and Markets Authority (ESMA) has called for changes to the Markets in Crypto-Assets Regulation (MiCA), seeking to simplify the framework while strengthening investor protection and addressing emerging crypto activities.
In its response to the European Commission’s consultation, ESMA proposed tighter safeguards for crypto-asset marketing, including promotions by influencers and third parties, as well as greater cost transparency. It also recommended disclosure requirements for services such as staking, lending and borrowing, covering potential risks, rewards, collateral and losses.
ESMA also wants stronger supervisory powers to address unauthorised firms targeting EU investors, online fraud and stablecoins that do not comply with MiCA. The proposals include measures to tackle fraudulent websites, freeze crypto assets in certain cases, and prevent regulated firms from providing services linked to non-compliant stablecoins.
The regulator further called for clearer criteria for identifying genuinely decentralised activities and proposed a regulated service for firms giving users access to DeFi protocols.
It also recommended harmonised crypto-asset classification, including for hybrid tokens, alongside simpler white-paper procedures and reduced regulatory duplication. Looking beyond the MiCA review, ESMA said Europe also needs a framework supporting tokenised securities and on-chain settlement to develop an integrated tokenised capital market.
Why does it matter?
MiCA is entering a phase where its ability to accommodate new forms of crypto activity will be increasingly important alongside the rules already established for existing services. The treatment of DeFi, token classification and third-country firms could have lasting implications for how crypto businesses operate across Europe and how decentralised services interact with regulated markets. For Europe, the challenge will be to maintain a framework that provides regulatory clarity while remaining adaptable as the crypto sector continues to develop.
