AFME Urges EU to Keep Tokenised Securities Under MiFID II in MiCA 2 Response

The Association for Financial Markets in Europe (AFME) has submitted a formal response to the European Commission’s consultation on updating the Markets in Crypto-Assets (MiCA) regulation, staking out a firm position against extending MiCA’s scope to cover distributed ledger technology (DLT)-based financial instruments currently governed by MiFID II, MiFIR, and the Prospectus Regulation. AFME warned that such a shift would produce significant legal uncertainty, costs, and damage to market functioning, including liquidity, hedging, and collateral eligibility.

The European Banking Authority (EBA) reached a similar conclusion in its own consultation response, emphasising that regulating DLT-based securities under MiCA could complicate regulated-activity authorisations for banks, disrupt the eligibility of tokenised securities as financial collateral, distort the application of the Basel prudential framework, and create friction with accounting rules. The EBA went further, raising the question of whether asset-referenced tokens (ARTs) should be folded into the definition of a financial instrument under MiFID rather than left as a distinct MiCA category.

Beyond the MiFID boundary question, AFME’s response also backed multi-issuance stablecoins, called for revisions to stablecoin concentration limits, and sought confirmation that tokenised deposits remain governed by the existing banking framework. Notably, no ARTs have received authorisation under MiCA to date, which raises a question about whether the regulatory architecture needs restructuring before the category has meaningfully launched. The consultation positions set by AFME and the EBA will likely carry weight as the Commission shapes any MiCA 2 legislative proposal.