Crypto-Asset Service Providers: Harmonised Framework Vs. Risk of an Unlevel Playing Field

This paper highlights issues surrounding the Markets in Crypto-Assets Regulation (MiCA) that could hinder the effective and convergent application of the new harmonised framework at the European level. The transition process to MiCA is a complex journey, largely due to the implementation of transitional measures. A significant aspect of this complexity is the inclusion of a grandfathering clause. This clause, which permits national law providers to continue offering crypto-asset services under their existing national regulations for 18 months post-MiCA implementation, adds a layer of intricacy to the transition process and its implications for the crypto-asset services sector. The diverse options available under the transitional measures introduce a significant risk. On the one hand, they could lead to a forced coexistence between national and European regulatory regimes. On the other hand, they could create an unlevel playing field among service providers. This potential risk could result in some providers operating under different regulatory disciplines gaining an unfair advantage and consolidating their market position at the expense of others. In this complex and uncertain scenario, the importance of the European Securities and Markets Authority’s (ESMA) intervention in establishing best practices or guidelines becomes a crucial step towards encouraging greater convergence of national authorities in the transition process, thereby ensuring a more harmonised and effective application of MiCA.