Final Report on the Technical Standards Requirements of the Markets in Crypto Assets Regulation (MiCA)


The European Securities and Markets Authority (ESMA) has recently released its conclusive report under the Markets in Crypto-Assets Regulation (MiCA).

This report follows a consultation period with relevant stakeholders concerning the technical standards that ESMA must present under MiCA. Its objective is to enhance clarity and predictability, foster fair competition among crypto-asset service providers (CASPs), and ensure a safer environment for investors across the Union. The report includes proposals on:

  • Information necessary for authorizing CASPs and for financial entities notifying their intention to offer crypto-asset services.
  • Information required to assess the intended acquisition of a qualifying holding in a CASP.
  • Procedures for CASPs to handle complaints.

Below is a summary of the key takeaways and requirements for each theme:

  1. Information Required for Authorization of CASPs and for Financial Entities Notifying Their Intent to Provide Crypto-Asset Services

MiCA mandates that financial entities intending to provide crypto asset services must submit a notification to the national competent authority (NCA) of the relevant member state. The notification should include:

  • A program of operations outlining the types of crypto-asset services the entity intends to provide and how they will be marketed.
  • Description of the entity’s internal control mechanisms for anti-money laundering and counter-terrorist financing obligations.
  • Procedure for segregating clients’ crypto-assets and funds.
  • Description of custody and administration policies if providing these services.
  • Documentation of ICT systems and security arrangements.
  • Description of execution policy for order execution services.
  • Description of commercial policy for crypto-asset exchange services.

During the consultation phase, some stakeholders found these requirements extensive. However, ESMA considers the unique nature of CASP advice and portfolio management services justifies the detailed information required during the notification phase. This is crucial as it is a novel area in the market and its first-time regulation. ESMA believes these requirements are essential for NCAs to identify conflicts of interest early and resolve them.

  1. Complaints Handling Procedures of Crypto Asset Service Providers

The regulation necessitates CASPs to have transparent, prompt, fair, and consistent complaint- handling procedures. In response to stakeholder feedback, ESMA has amended language requirements, allowing CASPs to publish complaint-handling procedures and standard templates in all languages used for marketing or client communication. However, CASPs must still accept complaints in any Union language, as well as in official languages of home and host Member States.

It is clarified that CASPs are not mandated to establish a separate complaints--handling function. Instead, they must allocate adequate resources to manage complaints, whether through a separate function or within an existing one.

During consultations, concerns arose about paper-based complaints submissions. ESMA maintains the obligation for CASPs to accept paper-based complaints to ensure effective communication with all client groups.

  1. Assessment of Intended Acquisition of a Qualifying Holding in CASP

MiCA requires any entity intending to acquire or increase a qualifying holding in a CASP to notify the relevant NCA in writing, providing specific information for assessment. Criteria for assessment include reputation, experience, financial soundness, and compliance of the proposed acquirer and the target CASP with MiCA requirements.

ESMA confirms the necessity of the information requirements for a comprehensive assessment of proposed acquisitions. Concerns regarding certain information requirements' relevance are addressed, and ESMA clarifies the need for audited financial statements only when externally audited.

ESMA has submitted the Final Report to the European Commission (EC) and stands ready to provide further advice and technical guidance if requested before the standards enter into force.

The content of this article is valid as at the date of its first publication. It is intended to provide a general guide to the subject matter and does not constitute legal advice. We recommend that you seek professional advice on your specific matter before acting on any information provided. For further information or advice, please contact Stephanos Ayiomamitis at Stephanos.ayiomamitis@kyprianou.com, Partner at Limassol Office Tel +357 25363685 or Lefteris Eleftheriou at Lefteris.Eleftheriou@kyprianou.com Legal Consultant at Nicosia Office Tel +357 22447777.