ESMA (European Securities and Markets Authority) is an independent European Union institution established in 2011 to strengthen the stability and efficiency of EU financial markets. The Authority operates in close coordination with the national competent authorities of the Member States that are part of the European Financial Supervisory Authority, as well as with other European supervisory structures, including the European Banking Authority (EBA), which supervises the banking sector, and the European Insurance and Occupational Pensions Authority (EIOPA), which regulates insurance and private pensions.
ESMA’s mission is to strengthen investor protection mechanisms, to ensure the proper functioning, transparency and integrity of the European Union’s financial markets, and to promote the resilience and stability of the financial system as a whole.
ESMA was established as a result of the recommendations of the 2009 de Larosière Report, which highlighted the need for a European financial supervisory system in the form of a decentralised structure based on networking between national regulators. ESMA officially launched its activities on 1 January 2011 under the Constitutive Regulation, replacing the Committee of European Securities Regulators (CESR), the former advisory body that brought together national competent authorities and ensured coordination of supervisory practices in the field of capital markets within the European Union, as well as interaction with the European Commission.
In addition to pursuing the objectives of harmonising the supervisory practices of Member States’ national competent authorities (NCAs) supervising securities and capital markets, ESMA is also working to ensure regulatory coherence in related financial sectors. In this context, ESMA actively engages with other sectoral supervisory authorities at EU level – the European Banking Authority (EBA), responsible for the banking sector, and the European Insurance and Occupational Pensions Authority (EIOPA), responsible for insurance and pension schemes – to achieve common standards of financial regulation and the sustainability of the supervisory architecture.
Despite its status as an independent institution, the European Securities and Markets Authority (ESMA) reports to the main institutional bodies of the European Union. In particular, ESMA interacts with the European Parliament, within which it participates in formal hearings of the Economic and Monetary Affairs Committee (ECON) upon request, and regularly informs the Council of the European Union and the European Commission of its activities.
ESMA’s accountability is realised through the submission of annual reports, participation in working meetings and the provision of explanatory information on the results of supervisory and regulatory work, which ensures transparency of functioning and institutional control of the directorate’s activities.
ESMA’s two governing bodies are:
The Board of Supervisors (BoS) is ESMA’s highest governing body and is responsible for taking strategic and regulatory decisions covering a wide range of issues related to the Authority’s mandate. It is responsible for approving draft technical standards, developing guidelines, opinions, analytical reports and recommendations addressed to both European institutions and national supervisory authorities.
In addition, the BoS has the power to recognise the existence of a financial market crisis and to take appropriate supervisory measures, as well as approving ESMA’s annual budget and supervising financial planning. The BoS is composed of representatives of the national competent authorities of the EU Member States, which ensures co-ordination and uniformity of supervisory practices across the Union.
The Management Board (MB) plays a key role in ensuring the effective functioning of the European Securities and Markets Authority (ESMA) and is responsible for realising its institutional mission in accordance with the provisions of the Constitutive Regulation.
The main tasks of the Management Board are to oversee the internal governance of the Authority, to develop and implement a multi-annual strategic programme of activities, and to oversee the budgeting, human resource management and administrative infrastructure of ESMA. The Management Board ensures that the Authority’s activities are organised in an appropriate manner, respecting the principles of transparency, efficiency and accountability.
The ESMA President shall fulfil a representative function and act on behalf of the Authority in relations with the EU institutions, national supervisory authorities, international partners and other stakeholders. He is responsible for the preparation and organisation of the work of the Supervisory Board and the Management Board and chairs their meetings, ensuring effective decision-making and compliance with procedures.
In the absence or temporary inability to fulfil the duties of the Chairman, his functions are performed by the Vice-Chairman, who ensures the continuity of ESMA’s management and supervisory activities.
The Executive Director of ESMA is responsible for the day-to-day administrative and operational management of the Authority. He is responsible for the day-to-day management of ESMA’s activities, including staff management issues, the implementation of the Board’s decisions, the development and execution of the annual work programme and the preparation and presentation of the draft budget.
In addition, the Executive Director provides organisational support to the work of the Board, coordinates the interaction between the Authority’s internal departments and monitors the efficiency of administrative processes so that ESMA can properly perform its supervisory and regulatory functions.
Markets in Crypto-Assets Regulation (MiCA)
The Markets in Crypto-Assets Regulation (MiCA) is a pan-European regulation aimed at establishing a common legal framework for the circulation of crypto-assets within the European Union. It covers categories of digital assets that were not previously covered by existing financial services legislation.
The main provisions of MiCA apply to persons issuing cryptoassets, as well as market participants dealing in such assets, including asset-linked tokens (ARTs) and electronic money tokens (EMTs). The Regulation establishes mandatory requirements in terms of transparency, disclosure, authorisation, and supervisory mechanisms to ensure transaction monitoring and compliance with regulatory standards.
The introduction of MiCA is aimed at strengthening the integrity of the financial market and ensuring the stability of the EU financial system. One of the key objectives of the regulation is to protect investors and consumers by raising awareness of the risks associated with cryptocurrencies and other digital assets, as well as to establish legal certainty for public offerings of cryptoassets (ICOs) and the operation of crypto-service providers in the EU internal market.
Markets in Cryptoassets Regulation (MiCA) – came into force in June 2023 and was the first comprehensive EU legal act to regulate the cryptoasset market at a pan-European level. However, its practical implementation requires the phased introduction of additional regulatory tools.
The document envisages the development of a wide range of secondary (Tier 2) and supervisory and regulatory (Tier 3) acts necessary to specify technical requirements, supervisory procedures, disclosure standards and prudential norms. These measures should be prepared and approved within 12-18 months of the Regulation coming into force – depending on the complexity and regulatory mandate under MiCA.
As part of this process, European supervisory authorities, including ESMA and the EBA, have a key role to play, tasked with drafting regulatory technical standards (RTS), implementation standards (ITS), and methodological guidelines to ensure that MiCA provisions are uniformly applied across all European Union Member States.
During the MiCA implementation phase, ESMA The European Securities and Markets Authority (ESMA), in close coordination with the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA), and the European Central Bank (ECB), is carrying out a wide-ranging stakeholder consultation on the development of technical standards under the Regulation.
The preparation of the second and third level regulatory documents is being realised in stages and involves the publication of three thematic packages containing draft regulatory technical standards (RTS), implementation standards (ITS) and supervisory guidance and clarifications. These documents are being publicly discussed in order to take into account comments and suggestions from the professional community, industry representatives and other market participants.
The final entry into force of the relevant acts depends on the approval procedure at the level of the European Commission, as well as the approval of the European Parliament and the Council of the EU. This mechanism allows for a balance between the technical completeness and legal legitimacy of the regulations introduced under the MiCA regime, as well as ensuring that they are in line with market expectations and investor interests.
Cryptoasset related service providers (CASPs) that were operating under existing national legislation before 30 December 2024 may continue to provide such services until 1 July 2026, or until they are granted or refused authorisation under Article 63 of the MiCA Regulation, whichever comes first.
However, Member States reserve the right not to apply the transitional regime provided for or to shorten its duration if they consider that the legal framework for crypto services in force in their territory until that date is less stringent than the requirements set out in MiCA. Such a decision may be taken in order to prevent the risk of regulatory arbitrage and to ensure an equivalent level of investor protection.
By 30 June 2024, each Member State is required to send a formal notification to the European Commission and ESMA on whether it has exercised the right to deviate from the transitional regime and to indicate the exact duration of the grace period if it has been shortened at national discretion. These provisions aim to ensure transparency and consistency in the transition from national regulatory regimes to a single pan-European licensing and supervisory system under MiCA.
MiCA Transitional Periods by Country
Country | MiCA Transitional Period |
🇦🇹 Austria | 12 months |
🇧🇪 Belgium | To be announced |
🇧🇬 Bulgaria | 18 months (To benefit from the transitional period, CASP applicants must apply by 8 October 2025) |
🇭🇷 Croatia | 18 months |
🇨🇾 Cyprus | 18 months |
🇨🇿 Czech Republic | 18 months (To benefit from the transitional period, CASP applicants must apply by 31 July 2025) |
🇩🇰 Denmark | 18 months (To benefit from the transitional period, CASP applicants must apply by 30 December 2024) |
🇪🇪 Estonia | 18 months |
🇫🇮 Finland | 6 months |
🇫🇷 France | 18 months |
🇩🇪 Germany | 12 months |
🇬🇷 Greece | 12 months |
🇭🇺 Hungary | 6 months |
🇮🇸 Iceland | 18 months |
🇮🇪 Ireland | 12 months |
🇮🇹 Italy | 18 months (Entities registered as VASP in the Italian AML register, or entities belonging to the same group, must apply for MiCA authorisation by 30 December 2025 to benefit from the transitional period) |
🇱🇻 Latvia | 6 months |
🇱🇮 Liechtenstein | 12 months |
🇱🇹 Lithuania | 12 months |
🇱🇺 Luxembourg | 18 months |
🇲🇹 Malta | 18 months |
🇳🇱 Netherlands | 6 months |
🇳🇴 Norway | 12 months |
🇵🇱 Poland | 6 months |
🇵🇹 Portugal | To be announced |
🇷🇴 Romania | 18 months |
🇸🇰 Slovakia | 12 months |
🇸🇮 Slovenia | 6 months |
🇪🇸 Spain | 12 months |
🇸🇪 Sweden | 9 months |
Member States of the European Union have been granted the right to introduce transitional provisions as part of the implementation of the MiCA Regulation, in order to ensure a smooth transition from national regulation to the pan-European legal regime. These measures allow organisations already operating in the cryptoasset sector under national regulations to temporarily continue to provide relevant services within the time limit set for the transition period.
Under the terms of the Regulation, transitional provisions may include:
- Permission to continue activities: legal entities that have provided cryptoasset-related services in accordance with applicable national law until 30 December 2024 may continue such activities until 1 July 2026 or until permission is granted or refused on the basis of MiCA, whichever comes first.
- Simplified licensing procedure: for entities already registered or licensed under national regulation as at 30 December 2024, a simplified MiCA authorisation procedure may apply. This procedure aims to reduce the administrative burden and minimise regulatory hurdles for entities already operating in the market.
The decision on whether or not to apply the transitional regime is taken at the level of the individual Member State. However, by 30 June 2024, each state is required to provide the European Commission and ESMA with a formal notification of its choice and to indicate, if applicable, the duration of the envisaged transition period. This mechanism aims to strike a balance between flexibility for national regulators and respecting the unity of pan-European regulation under MiCA.
By 1 July 2026, the legal framework governing the cryptoasset market in the European Union and the European Economic Area will be finally harmonised – all Member States will align their national legislation with the provisions of the MiCA Regulation. This will create a single legal space for service providers related to cryptoassets, ensuring transparency, legal certainty and a high level of consumer and investor protection across the EU.
During the transition period before the new requirements come into full force, a number of countries, including the Czech Republic, provide favourable regulatory regimes that allow existing market participants to continue to operate under national law. Such mechanisms provide predictability for business, reduce the risks of a legal vacuum and provide additional time to adapt to the new pan-European standards.
That is why it is advisable for organisations planning to enter the EU market in the field of virtual assets to use this window of opportunity – to choose jurisdictions with the most loyal transition regime and to initiate the process of obtaining a MiCA licence in a timely manner.
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