The ABBL responds to ESMA’s MiCA consultations on Reverse Solicitation and Qualification of Crypto-assets as Financial Instruments

The ABBL responded to two public consultations by the European Securities and Markets Authority (ESMA) on policy mandates documents under the Markets in Crypto-Assets Regulation (MiCA) regulation. The consultations focused on reverse solicitation guidelines and the qualification of crypto-assets as financial instruments. ABBL’s responses provide insights and recommendations that aim to refine the regulatory framework for crypto-assets in the EU.

Consult the responses to the two consultations via this link

Reverse Solicitation Guidelines

In the response to the consultation on reverse solicitation, the ABBL supports ESMA’s approach to prevent the circumvention of MiCA authorisation requirements yet suggests several amendments:

• Additional clarification is requested for scenarios where EU-based credit institutions outsource crypto-related services to third-country entities, especially within the same group, to ensure consistent interpretation and application.
• The ABBL calls for a technology-neutral and harmonised definition of terms such as solicitation, advertisement, and promotion across EU Member States to avoid legal uncertainty and competitive imbalances.
• The ABBL emphasises the need for EU-wide consistency in applying reverse solicitation principles to prevent competitive disadvantages for EU firms compared to third-country firms.

Qualification of crypto-assets as financial instruments

The ABBL’s response to the consultation on the qualification of crypto-assets as financial instruments underlines the complexities and suggests a nuanced approach:

• The ABBL agrees with ESMA’s avoidance of a one-size-fits-all approach, recognising the dynamic nature of the crypto-asset space and the need for flexibility. However, the ABBL expresses concerns about potential legal ambiguity and high compliance costs due to case-by-case assessments.
• To help industry participants, the ABBL recommends that ESMA provides illustrative examples to clarify the criteria for qualifying crypto-assets as financial instruments. This would promote convergent practices and reduce interpretative discrepancies among national authorities.
• The ABBL advocates for the harmonisation of practices regarding the application of the financial instrument definition under MiFID II and stresses the importance of ensuring passportability across the EU. This would enable consistent recognition of asset classifications by all national authorities.
• The ABBL points out the challenges posed by hybrid tokens, which may exhibit features of both financial instruments and crypto-assets. The ABBL urges ESMA to provide clear criteria for these tokens to prevent regulatory arbitrage and ensure consistent treatment.

The ABBL’s responses to the ESMA consultations underscore the need for a balanced and flexible regulatory approach that addresses the unique characteristics of the crypto-asset market while ensuring legal certainty and competitive fairness. These proposals aim to enhance the MiCA framework what concerns its Level 2 policy documents, fostering a robust and harmonised regulatory environment for crypto-assets in the EU.

The ABBL continues the advocacy work on MiCA and will keep its members informed and engaged in the dialogue with regulators.