European Securities and Markets Authority: Major global cryptocurrency companies start preparing for MiCA now

The EU regulator said that "sophisticated and opaque" global crypto companies may try to exploit differences between member states, and some may try to operate overseas through the EU's shell even after MiCA rules come into effect. The European Securities and Markets Authority (ESMA) on Tuesday told major global cryptocurrency firms to start preparing for MiCA now. MiCA rules will come into effect in December 2024, but companies can continue to operate without a formal license until July 2026 if they register under the existing, less stringent national anti-money laundering regime. ESMA officials are now concerned that the interim provisions could confuse MiCA's customers seeking assistance and allow businesses to take advantage of differences between national regulators. In a statement today, ESMA said: “Opaque group structures can also make it difficult for service providers’ customers to know which entity they are dealing with and its regulatory status. Some existing cryptocurrency firms may lack strong compliance culture...and their large size and geographical scope allow them to maintain a high degree of flexibility in where they operate, thereby increasing the risk of conflicts of interest, regulatory arbitrage and an uneven playing field. National regulators who enforce these rules in practice The establishment of so-called 'letter box' entities, which allow foreign suppliers to operate in the EU without real employees or substantive business, should be prevented. In principle, MiCA sets out the same rules across the EU, allowing companies to operate using a single license, but it also gives national regulators some wiggle room on how to apply transitional measures or how to define exceptions for decentralized networks room. This in turn has raised concerns that some countries may seek to weaken the rules to increase competitiveness. (CoinDesk)