ESMA Seeks Crypto Asset Freeze Powers in MiCA Review

Key Takeaways

• ESMA is seeking stronger powers to freeze crypto assets suspected of links to crime.
• The watchdog says lengthy procedures can allow suspected criminal assets to be moved before freezes take effect.
• The proposals form part of ESMA’s response to the European Commission’s review of MiCA.

The European Securities and Markets Authority (ESMA) seeks broader powers to enforce crypto rules, including stronger authority to order firms to freeze assets suspected of links to crime, Reuters reported.

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The EU markets watchdog wants direct powers to require crypto service providers to freeze assets where there are reasonable grounds to suspect links to market abuse, money laundering or terror financing, alongside clear powers for national regulators.

“Because of current lengthy procedures, when the freezing of suspicious crypto assets (linked to criminal activities) is requested, it is often too late, and the assets ‌have ⁠disappeared,” ESMA said.

ESMA submitted the recommendations to the European Commission’s consultation on the review of the Markets in Crypto-Assets Regulation (MiCA).

ESMA Seeks Stronger Powers Against Unauthorized Firms

Beyond asset freezes, ESMA also proposed explicit powers for national regulators to order the removal of scam websites and those offering unauthorized crypto services.

It also wants national regulators to have specific enforcement powers against non-EU crypto firms that actively solicit EU investors without MiCA authorization.

The regulator proposed stricter rules for crypto marketing, particularly promotions involving influencers and third parties. It also recommended fuller cost information and disclosure requirements for staking, lending, and borrowing services.

MiCA Already Provides Enforcement Powers  

MiCA already gives national authorities extensive powers to suspend crypto services, restrict trading, and act against unauthorized providers. It also permits them to request asset freezes, but ESMA wants faster, direct orders to crypto firms.

ESMA said the changes would enable faster, more consistent supervisory action across the EU.

ESMA also proposed regulating firms that provide access to decentralized finance protocols and explicitly barring regulated crypto firms from offering services linked to stablecoins that fail MiCA requirements.

The recommendations will inform the Commission’s MiCA review, which could lead to proposed legislative changes.

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