ESMA Guidelines on Crypto-Asset Transfer Services under MiCA

The European regulatory landscape for crypto-assets continues to evolve. In this post, we would like to outline the guidelines issued by the European Securities and Markets Authority (ESMA) on procedures and policies for transfer services for crypto-assets under the Markets in Crypto Assets Regulation (MiCA), published on 26 February.

Developed in cooperation with the European Banking Authority (EBA), these guidelines are based on Article 82(2) of MiCA. Their primary purpose is to foster consistent, efficient, and effective supervisory practices across the European System of Financial Supervision (ESFS) and ensure uniform application of MiCA's Article 82 provisions. In particular, they aim to provide clarity on requirements for crypto-asset service providers (CASPs) offering transfer services on behalf of clients, thereby anticipating a strengthening of investor protection.

The guidelines apply to both competent authorities and CASPs providing these services within the meaning of MiCA Article 3(1)(26). They cover crucial aspects for CASPs, including:

General policies and procedures (Guideline 1)

Requiring CASPs to establish adequate policies and procedures to provide clients with comprehensive information about transfer services, terms, conditions, charges, execution times, supported DLT networks, and liability before they enter into an agreement. This information must be clear, understandable, and provided electronically. Clients must also be able to access this information and the agreement at any time.

Information on individual transfers (Guideline 2)

Mandating specific information before execution (e.g., irreversibility warnings, charges) and after execution (e.g., originator/beneficiary details, amount, date, charges). Policies must also ensure compliance with the Regulation on information accompanying transfers of funds and certain crypto-assets (TOFR). Requirements for informing clients about rejected, returned, or suspended transfers are also included.

Execution and cut-off times (Guideline 3)  

Policies should cover cut-off times, maximum execution times per crypto-asset, and estimated irreversibility times on DLTs. 

Rejection or suspension (Guideline 4)  

CASPs need risk-based policies for executing, rejecting, returning, or suspending transfers, taking into account TOFR provisions.

Liability (Guideline 5) 

Policies must determine the CASP's liability to clients for unauthorised or incorrectly executed transfers.

These guidelines underscore the increasing regulatory focus on transparency and consumer protection in the crypto-asset space under MiCA. 

To read the full Guidelines, follow the link: https://buff.ly/9K59epe