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ESMA has submitted recommendations to the European Commission’s review of the EU’s Markets in Crypto-Assets Regulation, proposing clearer rules for crypto marketing, costs, staking, lending and borrowing. It also wants stronger supervisory powers, clearer treatment of DeFi and token classifications, and simpler procedures for some regulated firms.
The European Securities and Markets Authority has called for changes to the EU’s Markets in Crypto-Assets Regulation, recommending clearer rules and stronger investor protections as crypto services evolve. In its response to a European Commission consultation, ESMA proposed measures covering crypto promotions, costs, staking, lending and borrowing, as well as supervision of unauthorised services and the treatment of decentralised finance.
For retail-facing services, ESMA wants stricter requirements for the marketing of crypto-assets, with particular attention to promotions by influencers and third parties. It also recommends greater transparency about costs and proportionate disclosure rules for staking, lending and borrowing. The authority says these disclosures should help customers understand risks, rewards, collateral arrangements and potential losses before making decisions.
ESMA also proposed stronger tools to address online fraud and services that do not comply with EU rules. Its recommendations include improving the EU’s ability to detect and disable fraudulent websites, and to freeze crypto-assets in cases of suspected market abuse or terrorist financing. It wants reinforced powers to deal with third-country firms soliciting EU investors without MiCA authorisation, and explicit rules preventing regulated crypto firms from offering services linked to stablecoins that do not meet MiCA requirements.
For emerging business models, ESMA says the rules should include clearer criteria for deciding whether an activity is genuinely decentralised. It also proposes a new regulated crypto-asset service for firms that give users access to DeFi protocols. On classification, ESMA calls for EU-wide rules covering crypto-assets such as hybrid tokens and says it should be able to issue binding opinions to help ensure similar products receive consistent treatment across member states.
Stronger Safeguards for Crypto Customers
The proposals address gaps ESMA sees between the risks customers face and the protections set out in the current framework. Crypto promotions can reach consumers through intermediaries, while staking, lending and borrowing may expose them to costs, losses or collateral risks that are not immediately clear. More standardised disclosures could give customers a better basis for comparing services, though they would not remove the underlying investment risks.
More consistent supervision could also affect how crypto businesses operate across the EU. If regulators can act more quickly against unauthorised firms, fraudulent sites and non-compliant stablecoin services, businesses may face clearer boundaries and consumers may have fewer avenues to services outside the rules. At the same time, ESMA’s recommendations would require decisions about the scope of new powers and how obligations apply to different business models.
The proposed DeFi category and token-classification process matter because the legal treatment of a product or service can determine which rules and supervisory responsibilities apply. A common approach across the EU could reduce divergent interpretations, but a new regulated service category could also mean additional compliance duties for firms that connect users with decentralised protocols.
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The Commission’s MiCA Review
MiCA is the EU framework for crypto-assets and related services. The European Commission is reviewing the regulation and sought public input; ESMA’s response is a set of recommendations to that process, not an adopted amendment. The authority describes its proposals as an effort to simplify the framework while improving investor protection and accommodating business models that have developed in crypto markets.
Alongside new safeguards and powers, ESMA is proposing procedural changes intended to reduce burdens. These include simplifying the notification process for crypto-asset white papers, reducing duplicate authorisation requirements for some already regulated firms, and making prudential requirements more consistent. Separately, looking beyond the immediate MiCA review, ESMA says the EU will need a framework for tokenised securities and on-chain settlement to support cross-border activity and an integrated tokenised capital market.
“ESMA’s recommendations aim to simplify the framework while improving investor protection and addressing innovative business models.”
— European Securities and Markets Authority
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Which Proposals Will Become Law
ESMA’s submission does not itself change MiCA. The source material does not say which recommendations the European Commission will accept, whether it will propose legislation, or on what timetable any changes could take effect. Details of how proposed powers—such as freezing assets or disabling fraudulent websites—would work in practice are also not set out in the summary.
The recommendations leave open questions about how regulators would determine whether a service is genuinely decentralised, which firms would fall within the proposed DeFi access category, and how hybrid tokens would be classified. The exact scope of new marketing, disclosure and stablecoin-related obligations would depend on any eventual legal text.
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Commission Review and Follow-Up
The next step is for the European Commission to consider ESMA’s response alongside other contributions to its MiCA review consultation. The Commission’s decisions will determine whether the proposals lead to amendments, guidance or other follow-up. No implementation date or final legislative plan is specified in the source material.
Readers and crypto businesses should watch for the Commission’s review outcome and any subsequent draft rules. Until then, ESMA’s recommendations indicate areas where the regulator believes the EU framework may need clearer standards or stronger oversight, but they should not be treated as rules already in force.
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Key Questions
Has MiCA already been changed?
No. ESMA has submitted recommendations to the European Commission’s review. The response does not itself amend MiCA.
What consumer protections does ESMA want?
ESMA proposes stricter crypto marketing rules, including for influencer and third-party promotions, and more transparent cost and risk disclosures for staking, lending and borrowing.
What does ESMA propose for DeFi?
It wants clearer criteria for identifying genuinely decentralised activity and proposes a new regulated service category for firms that provide users with access to DeFi protocols.
What happens to ESMA’s recommendations now?
The European Commission will consider the response as part of its MiCA review. The source gives no decision or implementation timetable.
Source: primary
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