ESMA Cautions Crypto Investors that MiCA Does Not Protect Consumers Until 2024

MiCA, or markets in crypto assets regulation, was approved by the European Union earlier this year. The aim is to provide regulatory clarity for digital assets in the EU.

Today, the European Markets and Securities Authority (ESMA) has issued a statement cautioning crypto investors that beyond the intrinsic risk in crypto markets, MiCA does not start until December 2024, and thus, protections are not available for investors until that time.

ESMA states:

“It is important for holders of crypto-assets and current or prospective clients of crypto-asset services in the EU to be aware that in addition to the risks inherent to crypto-assets, MiCA rules on the provision of crypto-asset services will not enter into application until December 2024. As such, holders of crypto-assets and clients of crypto-asset service providers will not benefit during that period from any EU-level regulatory and supervisory safeguards or recourse mechanisms built into the Regulation, such as the ability to file formal complaints with their NCAs against crypto-asset service providers.6 Given this timeline, holders of crypto-assets and clients of crypto-asset services should be aware of the recourse mechanisms and protections currently available in their jurisdiction (or lack thereof).”

ESMA highlights the fact that investors must be willing to lose all of their money if they participate in crypto markets.

Additionally, even after December 2024, “holders of crypto-assets and clients of crypto-asset service providers may not benefit from full rights and protections afforded to them under MiCA until as late as 1 July 2026.”

ESMA would like to see convergence across all EU member states in crafting final rules.

Existing crypto platforms must continue to adhere to each jurisdiction’s rules until the MiCA transition period is over. The EU regulator hopes for a smooth transition to MiCA.



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