Europe’s securities watchdog ESMA has issued a warning to crypto companies regarding the misuse of their regulated status under the EU’s MiCA framework. ESMA advised companies not to falsely promote their MiCA-regulated status as a marketing tool to mislead investors.
MiCA regulation, which stands for Markets in Crypto-assets, is designed to protect investors by setting strict rules on asset safeguarding and complaint handling. Companies offering crypto services are required to obtain a CASP license from a national regulator to operate within the EU. ESMA expressed concerns that some CASPs may be using their regulated status under MiCA as a marketing tactic to create confusion between regulated and unregulated products and services.
The regulator emphasized that promoting regulated status without ensuring that all products and services meet regulatory standards can mislead customers. ESMA’s warning comes in the wake of a recent peer review that criticized Malta’s Financial Services Authority for its lenient approach to granting crypto licenses. The review highlighted deficiencies in Malta’s authorization process, indicating a lack of consistency in regulatory practices across the EU.
ESMA’s cautionary message serves as a reminder to crypto companies to uphold transparency and integrity in their marketing practices. While regulated status under MiCA can enhance credibility, companies must ensure that all offerings comply with regulatory requirements to avoid misleading customers. By adhering to regulatory standards and maintaining clarity in communication, crypto firms can build trust and credibility within the market.