EU Implements Limits on Non-EU Crypto Firms

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The European Securities and Markets Authority (ESMA) has proposed that cryptocurrency companies operating outside of the EU should only be allowed to provide services to customers within the bloc in limited circumstances to avoid unfair competition.

This comes as a response to the EU’s approval of the first comprehensive regulations for the crypto market known as MiCA, which aims to regulate a sector that has been difficult to control due to its borderless nature.

Under the proposed guidance, crypto asset firms based outside the EU can only offer services directly to EU customers under certain conditions, rather than from a physical base within the EU.

This means that the customer must be the one to initiate the service, a concept known as ‘reverse solicitation’ which is also found in other EU financial laws. ESMA believes that this exemption for third-country firms should be interpreted narrowly and should be seen as an exception rather than the norm.

The draft proposal is open for public feedback until the end of April and a final version is expected to be released by the end of 2024.

Overall, this proposal aims to ensure fair competition in the EU’s crypto markets and encourage foreign firms to establish a presence within the bloc.

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