European authorities warned cryptocurrency companies with partial registration in the EU about legal risks

If market participants want to stay in it, they will have to get registered, according to the new Markets in Crypto Assets (MiCA) rules. Continuing to conduct core business in tax-free zones will be fraught, officials have made clear.

The practices of large multinational crypto exchanges do not comply with MiCA rules and pose a threat to investor funds, officials announced. Unequal competitive conditions are created that disadvantage European crypto operators, whose business is entirely based in the European Union.

To mitigate the risks, ESMA urges the national competent authorities (NCAs) in EU member states to scrutinize the business models of global companies and impose additional restrictions where necessary. The regulator stresses: for MiCA authorization approval, the place of execution of contracts plays a crucial role as the functioning of the European cryptoasset ecosystem depends on it. And directly affects consumer protection.

In January, the European Securities and Markets Authority circulated recommendations on methods for classifying digital currencies, which will help national competent authorities develop their own security standards and take measures to prevent circumvention of these standards.