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The European Securities and Markets Authority has proposed changes to the EU’s Markets in Crypto-Assets Regulation, including clearer rules for DeFi and token classification, stronger investor safeguards and expanded supervisory tools. These are recommendations submitted to the European Commission’s MiCA review, not adopted changes to the law.
The European Securities and Markets Authority (ESMA) has urged the European Commission to revise the EU’s Markets in Crypto-Assets Regulation (MiCA), proposing clearer rules for emerging services such as decentralised finance, staking, lending and borrowing. The recommendations also call for stronger investor safeguards and supervisory powers, but they are proposals for the Commission’s review, not changes already in force.
In its response to the Commission’s public consultation, ESMA said the framework should be made simpler while addressing risks that it considers insufficiently covered under current rules. Its investor-protection proposals include tighter rules for crypto-asset marketing, particularly promotions involving influencers and other third parties, and more transparent information about costs. It also recommends proportionate requirements for staking, lending and borrowing, including disclosures about risks, rewards, collateral and possible losses.
On supervision, ESMA wants authorities to have stronger tools to respond to unauthorised services, online fraud and stablecoins that do not meet MiCA requirements. Its proposals include improving the EU’s ability to detect and disable fraudulent websites, and to freeze crypto-assets where market abuse or terrorist financing is suspected. ESMA also recommends stronger powers concerning third-country firms soliciting EU investors without MiCA authorisation, alongside explicit rules to stop regulated crypto firms from offering services linked to non-compliant stablecoins.
For evolving crypto businesses, ESMA proposes clearer criteria for deciding whether an activity is genuinely decentralised and a new regulated crypto-asset service category for firms that give users access to DeFi protocols. It also wants common rules for classifying crypto-assets, including hybrid tokens, and authority for ESMA to issue binding opinions on classifications. Separately, it suggests simplifying white-paper notification procedures, reducing some duplicative authorisation requirements and making prudential rules more consistent.
Stronger safeguards for crypto users
If adopted, the recommendations could change what information crypto firms must give customers and how authorities respond to risky or unauthorised activity. Disclosures on fees, potential losses and collateral could give users a clearer basis for comparing staking, lending and borrowing offers, while tighter marketing rules could affect promotions made through influencers and third parties.
The proposed supervisory measures could also matter beyond individual transactions. More consistent EU action against fraudulent sites and firms operating without authorisation could reduce opportunities for businesses to exploit differences in national enforcement. ESMA’s call for clearer treatment of DeFi access services and token classifications addresses areas where firms and regulators may face uncertainty about which rules apply. These are potential effects of the proposals; the source does not establish that the Commission will adopt them.
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MiCA review targets changing services
MiCA is the EU regulatory framework for crypto-assets and related services. ESMA describes itself as the EU’s financial markets regulator and supervisor. The current development is part of the European Commission’s public consultation on reviewing MiCA: ESMA has submitted recommendations, rather than announcing a final regulatory decision.
ESMA’s response also looks beyond the immediate review. It says Europe needs a framework for tokenised securities and on-chain settlement that can support an integrated tokenised capital market and cross-border activity. The source presents that as a longer-term direction, distinct from its proposed amendments to the current MiCA framework.
“The recommendations aim to simplify the framework while improving investor protection and addressing innovative business models.”
— European Securities and Markets Authority
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Commission response remains pending
The source confirms that ESMA submitted recommendations in response to the Commission’s consultation. It does not say which proposals the Commission will accept, whether they will result in draft legislation, or when any revised rules might take effect. No changes described in the recommendations are confirmed as law.
The source also does not set out the detailed design of the proposed DeFi service category, the criteria for identifying genuinely decentralised activity, or the specific scope of new powers over third-country firms. The proposed ability to freeze assets is described in relation to suspicion of market abuse or terrorist financing; the source gives no further procedural details. Those matters would require clarification as the review proceeds.
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MiCA review moves to the Commission
The next step identified in the source is the European Commission’s review of MiCA, informed by responses to its public consultation, including ESMA’s recommendations. Any move from recommendations to binding rules would depend on decisions and processes that the source does not specify.
Readers should watch for the Commission’s response and any subsequent proposals on marketing disclosures, supervision, DeFi services, stablecoins and token classification. ESMA’s separate call for a tokenised-securities framework points to a broader policy discussion, but no timetable or specific follow-up measure is given in the material available.
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Key Questions
Has MiCA already been changed?
No. ESMA has submitted recommendations to the European Commission’s review. The source does not report that the Commission has adopted or enacted them.
What investor safeguards is ESMA proposing?
ESMA recommends stricter rules for crypto marketing, including promotions by influencers and third parties, clearer cost information, and proportionate disclosures for staking, lending and borrowing. These could cover risks, rewards, collateral and potential losses.
What does ESMA propose for DeFi?
It recommends clearer criteria for deciding whether activity is genuinely decentralised and a new regulated service category for firms that provide users access to DeFi protocols. The source does not provide the proposed category’s detailed requirements.
What is ESMA proposing for crypto-asset classification?
ESMA wants common EU rules for classifying crypto-assets, including hybrid tokens, and proposes that it be able to issue binding opinions on token classification to support consistent treatment across the EU.
When could the proposals take effect?
The source gives no timetable. The recommendations are part of the Commission’s MiCA review, and the timing and outcome remain undecided.
Source: primary
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