The European Securities and Markets Authority (ESMA) released two consultation papers on January 29, outlining its efforts to establish standards and guidelines for implementing the Markets in Crypto-Assets (MiCA) regulation. Despite MiCA being passed in 2022, certain aspects, especially the definition of financial instruments, remain under consideration. The consultation papers specifically delve into the topics of reverse solicitation and the classification of crypto assets as financial instruments.

EU Examining Reverse Solicitation and Third-Country Crypto Asset Firms

One of the key aspects addressed in the consultation papers is reverse solicitation, a practice where potential customers approach firms for crypto asset services. MiCA’s framework includes an exemption allowing third-country crypto asset firms to serve EU clients solely through reverse solicitation. However, ESMA emphasizes the narrow nature of this exemption, aiming to actively protect EU-based investors and MiCA-compliant crypto asset service providers from non-EU and non-MiCA compliant entities.

Read more: Hong Kong Securities and Futures Commission Receives First Spot Bitcoin ETF Application

ESMA’s proposed guidelines draw inspiration from the Markets in Financial Instruments Directive 2014 (MiFID II), introducing measures to regulate direct solicitation methods, such as online banner advertisements, sponsorships, and influencer endorsements by third-country crypto asset service providers. Follow-up services by these providers are also covered in the guidelines. The deadline for comments on these proposals is set for April 24, 2024.

Native Ads - XHYPE - 970x90

Qualifying Crypto Assets as Financial Instruments under MiCA

Eu Markets In Crypto-Assets Regulation (Mica) (Source: Esma)
Markets in Crypto-Assets Regulation (MiCA) (Source: ESMA)

ESMA is actively seeking comments on the conditions and criteria for classifying crypto assets as financial instruments. This distinction is crucial as MiCA and MiFID II have distinct regulatory requirements for financial instruments. MiCA mandates ESMA to establish a consistent approach at the national level by the end of the year, differentiating between the two. MiFID II lacks a general definition of financial instruments, creating challenges for harmonization at the national level.

To be considered a financial instrument under MiCA, a crypto asset must fall under categories such as a transferable security, a money-market instrument, a unit of collective investment undertaking, a derivative contract, or an emission allowance. The absence of a common definition in MiFID II complicates the process, making it necessary for guidelines to promote convergent practices while recognizing the case-by-case nature of assessments. Comments on these criteria are expected by April 19, 2024.

Read more: US Government Plans to Sell $118M in Silk Road Bitcoin: Experts Downplay Impact


As the EU navigates the regulatory landscape for crypto assets, ESMA’s consultation papers shed light on the ongoing efforts to establish clear guidelines. The distinction between MiCA and MiFID-regulated securities, especially in the context of reverse solicitation and the classification of crypto assets, reflects the regulatory commitment to ensuring investor protection and fostering a consistent approach across the European Union. Stakeholders have an opportunity to contribute their insights as ESMA works towards creating a robust regulatory framework for the evolving crypto ecosystem.

Native Ads - XHYPE - 300x250