Regulatory news · European Union
ESMA sets out MiCA review recommendations
ESMA has responded to the European Commission's consultation on the review of MiCA, proposing changes on investor protection, supervision, DeFi, classification and simplification.
The European Securities and Markets Authority (ESMA) has responded to the European Commission's public consultation on the review of Markets in Crypto-Assets Regulation (MiCA), setting out recommendations it says aim to simplify the framework while improving investor protection and addressing innovative business models such as decentralised finance (DeFi), staking, lending and borrowing.
Investor protection
ESMA proposes new safeguards in areas where it says investors face risks that are not fully covered under the current framework. These include stricter rules for the marketing of crypto-assets, particularly when they are promoted by influencers and third parties, greater transparency in costs, and proportionate requirements for staking, lending and borrowing, including through disclosure obligations. According to ESMA, these measures would provide clearer information on costs, risks, rewards, collateral arrangements and potential losses before investment decisions are made.
Supervision
On supervision, ESMA recommends strengthening supervisory powers and addressing the risks arising from unauthorised services, online fraud and non-compliant stablecoins. It proposes enhancing the EU's capacity to detect, block and deactivate fraudulent websites and freeze crypto assets in cases of suspicion of market abuse or terrorist financing. It also seeks reinforced supervisory powers to deal with third-country firms which solicit EU investors without being authorised under MiCA, and the introduction of explicit rules to prevent regulated crypto firms from offering services linked to stablecoins that do not comply with MiCA requirements. ESMA says these measures would support faster and more consistent supervisory action across the EU, better protect investors and reduce opportunities for regulatory arbitrage.
DeFi and classification
As crypto markets evolve and activity around DeFi and stablecoins grows, ESMA advocates the introduction of clearer criteria for determining which activities can be considered genuinely decentralised. It also recommends creating a new regulated crypto asset service for firms that provide users with access to DeFi protocols. To reduce uncertainty and support harmonised supervision across the EU, ESMA suggests adopting rules on how crypto-assets should be classified, including new products such as hybrid tokens. It also includes granting ESMA the ability to issue binding opinions on token classification to ensure the same products are treated consistently within the EU market.
Simplification
In line with the EU's simplification and burden reduction agenda, ESMA proposes to streamline parts of the existing rules. This includes simplifying crypto-asset white-paper notification procedures, reducing duplicative authorisation requirements for some regulated firms, and improving the consistency of prudential requirements.
Tokenised capital markets
Looking beyond the immediate MiCA review, ESMA highlights the need for a framework for tokenised securities and on-chain settlement that can support the development of an integrated European tokenised capital market and facilitate cross-border activity in the future.
The document, dated 30/09/2026 and referenced ESMA75-113276571-1721, is titled Response to the European Commission's consultation on the review of MiCA regulation. ESMA is described in the document as the EU's financial markets regulator and supervisor.
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