FESE response to the Commission targeted consultation on the review of Regulation on the Markets in Crypto-Assets (MiCA)

FESE has submitted its response to the Commission’s targeted consultation on the review of the Markets in Crypto-Assets Regulation (MiCA) (here), welcoming the opportunity to assess the framework’s implementation and contribute to ongoing reflections on its future review. FESE supports a technology-neutral regulatory framework that promotes innovation while safeguarding investor protection, market integrity and financial stability.

Maintaining clear delineation between MiCA and traditional financial market legislation

FESE strongly supports preserving the distinction between crypto-assets covered by MiCA and financial instruments governed by MiFID II and other established financial market legislation. The regulatory treatment of an asset should be determined by its economic function and risk profile rather than the technology used for its issuance or transfer. FESE also highlights supervisory gaps relating to decentralised venues offering instruments that may qualify as financial instruments without equivalent oversight.

Strengthening investor protection for speculative crypto-assets

The response underlines concerns about the growing availability of highly speculative crypto-assets to retail investors. FESE calls for a more differentiated and risk-sensitive approach that distinguishes established crypto-assets from high-risk tokens associated with elevated risks of market manipulation, concentrated ownership, and significant investor losses. FESE supports stronger transparency requirements, enhanced monitoring by crypto-asset service providers (CASPs), and stricter restrictions on the marketing of speculative crypto-assets to retail investors.

Supporting tokenised markets through diverse forms of digital money

FESE considers that the continued development of tokenised financial markets requires access to interoperable forms of on-chain money. Stablecoins, tokenised bank deposits, and a future wholesale digital euro should coexist and support settlement and collateral management in digital markets. FESE welcomes recent legislative developments that facilitate the use of e-money tokens.

Building bridges between traditional finance and DeFi

FESE recognises the innovative potential of decentralised finance (DeFi) but stresses the importance of accountability, investor protection, and regulatory coherence. The response supports enabling regulated financial institutions to act as trusted access points to DeFi services while maintaining appropriate safeguards. Where DeFi activities replicate regulated financial services, equivalent regulatory standards should apply to avoid regulatory arbitrage and support a level playing field.

Clarifying the treatment of perpetual futures and prediction markets

FESE argues that perpetual futures and prediction market products that exhibit the characteristics of derivatives should remain within the scope of MiFID II rather than MiCA. Applying existing financial market rules to economically equivalent instruments is essential to maintain technological neutrality, ensure consistent investor protection, and avoid regulatory arbitrage. The response also points to supervisory gaps where decentralised venues may offer derivative-like products without equivalent regulatory standards.

Unlocking the potential of tokenised deposits

FESE sees significant potential for tokenised deposits, particularly for the settlement of tokenised securities, on-chain collateral management, and clearing activities. To support broader adoption, the EU should focus on improving legal certainty, interoperability, and common standards across tokenised financial instruments. FESE also calls for updates to the EU clearing and settlement framework to recognise DLT-based collateral and tokenised commercial bank money where they meet existing risk requirements.

Enhancing legal certainty for digital assets

The response highlights the need for greater legal certainty regarding rules on settlement finality, governance of smart contracts, and the treatment of crypto-asset sub-custody arrangements. In addition, FESE supports exploring solutions through a future European “28th Regime” for digital issuance and broader work towards a harmonised framework for digital assets.