ESMA pushes to extend MiCA to DeFi, staking and non-compliant stablecoins

The European Securities and Markets Authority (ESMA) has submitted its formal response to the European Commission’s public consultation on revising the Markets in Crypto-Assets Regulation (MiCA), laying out a broad set of recommended changes that span investor protection, supervisory powers, decentralised finance (DeFi) classification, and the longer-term architecture of tokenised capital markets across the EU.

On investor protection, ESMA proposes stricter marketing rules targeting influencer-driven promotions, greater cost transparency, and proportionate disclosure requirements for staking, lending, and borrowing arrangements. On supervision, the authority wants expanded powers to detect and shut down fraudulent websites, freeze crypto-assets where market abuse or terrorist financing is suspected, act against third-country firms soliciting EU investors without MiCA authorisation, and prohibit regulated firms from offering services linked to non-compliant stablecoins. Taken together, these proposals would tighten the perimeter around activities that currently sit in grey zones.

ESMA also advocates for criteria to define what counts as genuinely decentralised activity, and a new regulated service category for firms providing access to DeFi protocols. To reduce classification uncertainty across member states, it recommends harmonised rules covering novel instruments such as hybrid tokens, and wants the authority itself to issue binding opinions on token classification so that identical products receive consistent treatment EU-wide. Administrative streamlining forms a further strand, covering simplified white-paper notification, reduced duplicative authorisation burdens, and more consistent prudential requirements.

Looking beyond the MiCA review itself, ESMA signals that a dedicated framework for tokenised securities and on-chain settlement will be needed to underpin an integrated European tokenised capital market capable of supporting cross-border activity. That framing positions the current consultation response as one layer of a longer regulatory build-out rather than a terminal fix.