- The EU securities regulator has published new proposals targeting third-country crypto firms.
- The firms may access EU-based customers under one exception only.
- The proposals are out for public participation until April.
The European Union (EU) is contemplating subjecting crypto companies outside the bloc to stringent laws and provisions that would “protect” local investors and MiCA-compliant service providers from “undue incursions” by non-EU entities.
On January 29, the European Securities and Markets Authority (ESMA) published a new set of proposals targeting crypto asset firms that want to serve EU customers directly rather than from a physical base within the bloc.
Notably, the regulator proposed limiting third-country crypto firms’ access to EU customers.
ESMA Proposes “Reverse Solicitation” Model for Non-EU Crypto Firms
Per the proposal, while EU-based customers shall not be excluded from using third-country crypto firms if they decide to do so, the arrangement will be subject to only one exemption, given that such firms “are not authorized to provide CASP services in the Union.”
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“There is only one exemption, if the client at its own, exclusive initiative contacted the firm and requested the service, the third-country firm may provide it,” ESMA wrote.
Service initiation by the customer is known as “reverse solicitation,” a concept embedded in other EU financial laws to put pressure on third-country firms to set up a branch or subsidiary inside the bloc.
Further, the regulator stated that a third-country firm that may rely on the exemption to serve an EU customer “is not allowed to subsequently offer the client further crypto-assets or services,” even if the said service is of the same type as the one originally solicited.
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The proposal is subject to public consultation until the end of April, after which ESMA shall issue guidelines on supervision practices to “detect and prevent” circumvention of the regulation.
Read about Robinhood’s expansion into the US:
Robinhood Debuts EU Crypto Trading with BTC Back on Trades
Stay updated on the projected performance of the Euro stablecoin market:
Euro Stablecoin Market Set to Explode, Says Tempo France
