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brendan malone
@bpm
1/ Today, Paradigm submitted a comment letter on ESMA’s consultation on financial instruments https://policy.paradigm.xyz/actions/ESMA-consultation
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brendan malone
@bpm
2/ Some background: The EU is in the process of implementing MiCA, which means 30+ consultations and draft rule proposals Some more important than others in our view
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brendan malone
@bpm
3/ This consultation is big because it outlines the gating criteria that will determine whether an asset falls under the tradfi regime for financial instruments (MiFID II) or if it falls under the crypto-specific regime of MiCA Our letter makes two main points…
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brendan malone
@bpm
4/ The first point: As drafted, the proposed guidelines are likely to result in an overclassification of crypto-assets as financial instruments, which goes against the original intent of MiCA
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brendan malone
@bpm
5/ This would be really bad for crypto companies, especially startups, because they would have to get additional (costly!) licenses Not to mention, there would HUGE inconsistencies in implementation across EU member states
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brendan malone
@bpm
6/ Imagine the scenario where an asset is deemed a security in France and a crypto token in Germany… …but to serve customers in the EU any company that touched it need to be registered under MiCA *and* MiFID (+ a bunch of other conflicting requirements) 😬
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