The European Securities and Markets Authority (ESMA) has increased red flags on the treatment of license approvals of Malta among the EU’s markets in crypto-assets (MICA) regulations.
In a Peer Review report issued on 10 July, ESMA emphasized shortcomings in the way the Malta Financial Services Authority (MFSA) approved a recent Crypto Asset Service Provider (CASP), in which strict supervision was invoked.
Malta’s Regulator, Mica Compliance
According to the report, although the MFSA has a solid foundation of expertise and sufficient resources to guide CASP requests, the latest authorization process did not appeal to the expected standards.
The Review Committee found that the supervisor granted approval despite outstanding material issues and an insufficient risk assessment. The report noted that these expired questions about the dedication of Malta to ensure full compliance with the mica framework.
The Peer Review Committee expressed its concern that the MFSA did not use the authorization phase to force the nameless CASP to resolve the most important shortcomings. ESMA emphasized that a rigorous approach could have helped to fully in line with MICA obligations before granting his license.
Malta remains one of the most active mica licensees in the EU. Since Mica’s enforcement began, the country has issued five CASP licenses, ranked just behind Germany and the Netherlands.
Recent data that is shared by Circle Executive Patrick Hansen show that 53 companies have protected MICA licenses within six months of the framework that is in force. These licenses enable Crypto companies to operate (EEA) countries in all 30 European economic space without additional approvals of the regulations in each jurisdiction.
This wave of compliance marks an important step for industry, with major players such as Circle and Kraken who have already been approved under the Mica regime.
Recommendations
In view of this, the report insisted on national European regulators to strengthen their supervision during the CASP License process.
It emphasized the need for accurate research in various risky areas. These include business model sustainability, administrative structures, potential conflicts of interest, intellers, IT architecture and the promotion of non -regulated crypto services.
Furthermore, the financial supervisor also marked emerging sectors such as Defi and Web3 for a more careful evaluation.
It added:
“The PRC encourages NCAs to assess, as part of the authorization assessment, user interfaces and customer journeys to ensure that relevant risk warnings are clearly presented to users and that the overall customer experience is in accordance with MICA requirements.”