MiCA: ESMA Calls for a Clearer and More Effective EU Crypto-Asset Framework

On September 30, 2026, the European Securities and Markets Authority (ESMA) published a series of recommendations as part of the European Commission’s review of the Markets in Crypto-Assets Regulation, better known as MiCA.

After the first stages of implementation, ESMA believes that the European framework needs to evolve. The objective is to improve investor protection, reduce legal uncertainty and address emerging activities such as decentralized finance, staking, crypto lending and borrowing.

The proposals do not seek to replace MiCA. Instead, they aim to make the regulation more consistent, easier to apply and better suited to the rapidly changing crypto-asset market.

ESMA’s recommendations do not constitute legislative amendments at this stage. They are part of the European Commission’s consultation process on the review of MiCA.

A need for greater consistency across the European Union

MiCA created a common framework for crypto-assets across the European Union. It covers crypto-asset issuers, stablecoins and crypto-asset service providers, commonly referred to as CASPs.

The regulation has established important safeguards relating to governance, investor information and professional conduct. However, its implementation has also revealed several difficulties, including different interpretations between national authorities, overlaps with other EU financial rules and uncertainty around new types of services.

ESMA is particularly concerned that companies could choose their country of establishment based on which national authority applies the most flexible interpretation of the rules. This could result in different levels of investor protection across the EU.

The review should therefore focus on:

• aligning supervisory practices across Member States;
• clarifying how different crypto-assets should be classified;
• preventing overlaps between MiCA and other financial regulations;
• strengthening protection for retail investors.

A more consistent approach to token classification

The legal classification of crypto-assets remains one of the main areas of uncertainty.

Some products may fall under MiCA, while others could qualify as financial instruments under MiFID II. There are also assets whose regulatory status is not immediately clear, particularly when they combine characteristics from different categories.

This issue may affect hybrid tokens, fractionalized NFTs, wrapped tokens and certain governance tokens. The same product could potentially be treated differently depending on the national authority assessing it.

To address this problem, ESMA wants to strengthen its role in the classification of crypto-assets. It proposes, in particular, the possibility of issuing binding opinions, in cooperation with the European Banking Authority where appropriate.

ESMA could also intervene proactively when it identifies recurring product categories or similar structures across several Member States. The aim would be to ensure that economically comparable products are subject to comparable regulatory treatment throughout the European Union.

Stricter treatment of non-compliant stablecoins

ESMA also recommends clarifying the rules applicable to stablecoins that do not comply with MiCA.

The current framework may leave uncertainty about whether an authorized service provider can facilitate the use, trading or availability of a stablecoin that does not meet European requirements.

According to ESMA, this could weaken the effectiveness of the regulation and create an uneven playing field between compliant and non-compliant issuers.

The authority therefore proposes making it clear that an authorized crypto-asset service provider should not be allowed to offer regulated services involving a stablecoin that fails to comply with MiCA.

Such a rule would give supervisors a straightforward criterion: a service provider should be able to offer a particular service only when the relevant stablecoin satisfies the applicable European requirements.

DeFi comes under closer regulatory scrutiny

Decentralized finance, or DeFi, is one of the most significant issues in the review.

MiCA excludes genuinely decentralized services that are provided without an identifiable intermediary. In practice, however, determining whether a protocol is fully decentralized can be difficult.

ESMA is concerned that some identifiable operators could describe their activities as decentralized in order to avoid MiCA obligations. This practice is sometimes referred to as “decentralization washing.”

The authority therefore wants the regulation to provide more precise criteria for assessing whether a service, platform or protocol is genuinely decentralized. The exemption should remain narrowly defined so that it does not become a method of circumventing European requirements.

Regulating gateways to decentralized protocols

ESMA also considers creating a specific regulated category for service providers that give customers access to DeFi protocols.

This could cover platforms that:

• provide an interface for interacting with decentralized protocols;
• route customer transactions to specific protocols;
• allow users to access smart-contract-based services;
• offer exposure to lending, borrowing, staking or liquidity-provision mechanisms.

These providers would act as gateways between traditional financial services and decentralized protocols.

Their obligations could include:

• explaining the risks associated with the relevant protocols;
• providing information about transaction routing and selection;
• managing conflicts of interest;
• carrying out appropriate checks on the protocols made available;
• maintaining adequate operational and cybersecurity controls.

ESMA nevertheless supports a proportionate approach. The obligations imposed on a provider should reflect the degree of control it exercises over the underlying protocol.

Staking: more transparency for investors

Staking is an important technical function for blockchains that use a Proof-of-Stake consensus mechanism. ESMA does not want staking to be automatically treated as crypto lending or portfolio management.

However, the authority has identified several risks that may not be adequately explained to customers. Marketing materials often highlight potential rewards without fully describing:

• slashing risks;
• lock-up periods;
• withdrawal or unbonding delays;
• fees;
• validator selection;
• operational dependencies;
• the treatment of customer assets if the provider becomes insolvent.

ESMA suggests distinguishing between several types of staking activity:

1. staking carried out directly by the user without an intermediary;
2. technical staking services;
3. pooled or custodial staking provided by an intermediary;
4. liquid-staking products or arrangements that generate returns.

Depending on the service, providers could face additional requirements relating to customer information, asset custody, governance and conflicts of interest.

Lending and borrowing: greater transparency around asset reuse

The review also addresses crypto lending and borrowing services.

Under some lending arrangements, a provider may take customer assets and lend them to third parties. Customers may not always receive enough information about the borrowers, the collateral involved, the allocation of loans or the income generated by the program.

ESMA considers that these products can operate as “black boxes” from the investor’s perspective. It recommends, among other things:

• obtaining the customer’s clear and written consent;
• providing detailed information about the lending arrangement;
• explaining how collateral is managed;
• showing how returns are generated and how they are shared with the provider.

The objective is not necessarily to create a completely new authorization regime. Instead, ESMA appears to favor targeted obligations for providers that offer or facilitate lending services.

The risks associated with borrowing

Borrowing crypto-assets can expose users to leverage, volatile collateral values and rapid liquidations. The risks may increase when collateral is reused, connected to smart contracts or involved in multiple leveraged strategies.

Providers should clearly explain:

• the type and value of the collateral;
• the liquidation mechanisms;
• the risks associated with collateral reuse;
• the identity of related counterparties;
• protocol-related risks;
• the consequences of insolvency;
• the possibility that losses could exceed the amount initially deposited.

Marketing practices and influencers

ESMA believes that the current rules on crypto-asset promotion are not sufficiently detailed to support effective supervision.

National authorities may find it difficult to intervene when a communication is not technically false but presents potential returns in a disproportionately positive way or understates the associated risks.

The authority is therefore considering:

• prohibiting certain particularly misleading promotional techniques;
• restricting specific marketing practices for certain categories of crypto-assets;
• requiring greater transparency about conflicts of interest;
• imposing obligations on influencers and other third parties promoting crypto-assets or related services.

Companies based outside the European Union that actively target European investors could also face increased scrutiny.

ESMA wants the exception based on reverse solicitation — where a customer independently initiates contact with a provider — to be interpreted narrowly and consistently across Member States.

Clearer information about fees

Another important proposal concerns transaction costs.

Some platforms advertise commission-free trading even though their revenue is built into spreads or other elements of the transaction price. As a result, the absence of a visible commission does not necessarily mean that the overall transaction is inexpensive.

Providers offering execution, reception and transmission of orders, or exchange services could be required to present all relevant components of the total cost.

Greater transparency would make it easier for customers to compare platforms and identify marketing messages that create a misleading impression about the price actually paid.

Simplifying procedures for businesses

The review is not limited to adding new requirements. ESMA also wants to reduce unnecessary administrative burdens.

It recommends, among other measures:

• clarifying when a white paper has been properly notified;
• centralizing the notification process for certain white papers at EU level;
• simplifying the authorization process for certain transfer services;
• avoiding duplicate MiCA authorization requirements when a firm already authorized under MiFID II provides an equivalent service;
• aligning prudential requirements for crypto-asset service providers more closely with existing financial rules.

These changes could make the framework easier to navigate while preserving the protections already established by European law.

Stronger supervisory powers

ESMA also wants European and national authorities to be able to react more quickly to illegal activities.

The proposals include the possibility of:

• ordering the removal of fraudulent or unauthorized websites;
• blocking or disabling domains used for scams;
• freezing crypto-assets where there are serious concerns about market abuse, money laundering or terrorist financing;
• adopting permanent product intervention measures at European level.

These powers could help authorities respond more effectively to online fraud and cross-border activities that are difficult to tackle through isolated national measures.

Building a European market for tokenized securities

Beyond the immediate review of MiCA, ESMA is calling for a clearer framework for the tokenization of financial instruments.

The growth of tokenized capital markets will depend not only on technology but also on legal certainty concerning:

• ownership rights;
• custody;
• settlement;
• the finality of transactions;
• recognition of rights across borders;
• interoperability between blockchain-based and traditional financial infrastructures.

ESMA also refers to the possibility of an optional European regime — sometimes described as a “28th regime” — that could allow tokenized securities to be issued, transferred and settled under a common legal framework.

Such an approach could help prevent tokenization from reproducing the existing divisions between national markets and technological infrastructures.

The next phase of MiCA

ESMA’s recommendations point toward an important evolution of the European crypto-asset framework.

The aim is to preserve the foundations of MiCA while addressing its grey areas. The future framework could be built around three main principles:

• more consistent product classification;
• obligations proportionate to the level of control exercised by each provider;
• supervisory powers adapted to digital, global and rapidly changing markets.

For businesses, the review could provide greater legal certainty and reduce regulatory duplication. For investors, it could improve transparency around fees, returns and the risks associated with new services.

The next step now lies with the European Commission, which will assess these recommendations as part of the MiCA review. One point is already clear: European regulation will have to address not only traditional crypto-assets, but also DeFi, staking, tokenization and hybrid models that connect centralized platforms with decentralized protocols.