ESMA overreach in MiCA opinion

The EU regulation on markets in crypto-assets (MiCA) provides a dual set of rules: 

Firstly, MiCA provides rules at the level of the assets, including specific requirements for the offer of stablecoins ("asset-referenced tokens" (ART), or "electronic money tokens" (EMT)) in the EU. An entity may not issue, offer to the public or seek admission to trading of a stablecoin within the EU without prior authorisation. MiCA sets a specific reserve of assets requirements for the issuer.

Secondly, MiCA regulates services in relation to crypto-assets, creating a legal monopoly for crypto-asset service providers (CASPs) within the EU. The rules are similar to those applicable to investment services and investment firms (MiFID II).

ESMA's opinion confounds these two sets of rules and tries to create legal precedent.

ESMA considers that CASPs should not provide crypto-asset services in relation to asset-referenced tokens (stablecoins) that are not compliant with MiCA (non-MiCA compliant ARTs and EMTs).¹

ESMA has come to this conclusion based exclusively on the conduct of business rules under MiCA, cf. Article 66(1), which requires that CASPs "shall act honestly, fairly and professionally in accordance with the best interests of their clients and prospective clients."

ESMA states that:

"[...] the provision of a MiCA service in relation to a non-MiCA compliant ART or EMT is considered to expose clients to risks that do not arise from the provision of the service itself, but rather to risks that are inherent to the non-compliant status of the ART or EMT due to the absence of the issuer-level safeguards required by MiCA. In ESMA’s view, these risks cannot be adequately identified, managed or mitigated through the measures available to the CASP and should give rise to the presumption that the provision of all MiCA services is incompatible with the obligations set out in Article 66(1), since the CASP would be considered to knowingly facilitate client exposure to risks created by the absence of [MiCA] Title III/IV safeguards."

In the opinion, ESMA goes on to more general arguments on the effectiveness of MiCA being undermined, should non-EU stablecoins "remain accessible, usable or liquid in the Union through services provided by authorised CASPs".

There is no doubt about the fact that the issuance, offer to the public or seeking the admission to trading of a stablecoin within the EU, requires the issuer to be compliant with the MiCA requirements and its reserve requirements.

Likewise, there can be no doubt that several crypto-asset services do not constitute a public offering. This follows clearly from the Commission Q&A 2404, which ESMA also refers to in its opinion:

"Other crypto-asset services [than listing on an EU crypto-asset trading platform] could also constitute an offering to the public, which requires a case-by-case assessment. For instance, providers of crypto-asset services engaged in exchange services, reception and transmission of orders or execution services could be regarded as making an offer where they promote or advertise, as part of these services, an ART."

Typically, execution-only services may be provided without constituting promotion or advertisement of particular crypto-assets. The definition of crypto-assets under MiCA are (to a large extent) based on the definition of investment services under MiFID, and several investment services can be provided without it constituting an offer to the public.

In our view, ESMA's opinion is legally unfounded. ESMA's main concern is seemingly to protect EU issuers of stablecoins from non-EU competition. In this respect, the approach is similar to the "active account requirement" under EMIR, forcing certain EU financial counterparties to hold and clear a portion of OTC trades through an EU CCP – with the clear difference that the active account requirement is based on an EU regulation.

The MiCA rules governing crypto-asset services are similar to those of MiFID, governing investment services. Investment firms are also subject to conduct of business rules, on which MiCA article 66(1) are based. 

The ESMA opinion – if followed up by national regulators - would be akin to prohibiting an EU investment firm from transmitting orders or providing portfolio management services with respect to non-EU securitisation positions or money market funds. It would be like saying that a MiFID investment firm cannot allow its client to trade in US money market funds through the former. 

While MiCA compliant stablecoins are subject to more strict reserve requirements than non-EU counterparts, they typically do not benefit from the same global liquidity. Liquidity is extremely important for such an instrument – and it should ultimately be for the client to choose whether to use a non-EU stablecoin (e.g. USDT) rather than a MiCA-compliant stablecoin (e.g. USDC) if the client wants exposure against a certain instrument and certain currency (in the example, USD-exposure).

ESMA's opinion is addressed to national regulators, and most regulators will typically comply with ESMA opinions and guidelines. Should national regulators comply, the main result will presumably be that EU clients seek out non-EU trading platforms to carry out their transactions. This would be a highly unfortunate development for EU CASPs, as MiCA already has caused poorer liquidity on EU cryptocurrency exchanges, and also unfortunate for EU clients, who will then not benefit from the investor protection rules CASPs are subject to and which MiCA was designed for. 

ESMA is set to take on an increasingly more important role as part of the Savings & Investment Union. The opinion on stablecoins may jeopardise the future of that project, should ESMA take on a similar level of judicial activism in relation to other questions within its remit.

¹ ESMA opinion, 8 October 2026