ESMA proposes changes to strengthen and simplify EU crypto rules

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.