Regulation
ESMA reaffirms MiCA rules on cryptocurrency staking amid controversy
The European Securities and Markets Authority (ESMA) has announced an updated Q&A on some of the guidelines, including the provision of staking services under MiCA. This comes as cryptocurrency firms begin to implement regulations to be fully compliant with the rules. Staking has become a controversial issue in most jurisdictions, attracting the attention of cryptocurrency regulators.
ESMA states its position under MiCA
The European securities regulator has said that the Markets in Crypto Asset Regulation does not prohibit staking features for cryptocurrency firms. There has been some controversy because the MiCA does not contain specific provisions for staking. This means that it does not prohibit the service or provide explicit rules like in other areas.
Second Data Protection AuthorityStaking service providers take direct measures to counter regulations that make staking ancillary to their original custodial services.
“In the provision of staking services, cryptocurrencies, or private keys that give access to them, are held in custody by the staking service provider. Therefore, the provision of staking services is ancillary to the custody services which are fully covered by MiCA. The provision of staking services therefore requires that the cryptocurrency staking service provider is authorised by MiCA…”
This brings companies directly under Article 75 MiCA and others which require companies to observe the custody and administration of cryptocurrencies. Staking has caused concerns among regulators and authorities in several jurisdictions. In particular, the U.S. Securities and Exchange Commission (
SEC) has flagged staking services and filed several lawsuits against companies offering staking features.
CASPs must comply with the disclosures
According to the release, in situations where cryptocurrency service providers offer staking functionality in conjunction with custody of assets, they must ensure that the digital assets can be returned under the agreement. Therefore, the loss of assets is attributed under Art. 75(8) MiCA. Furthermore, where staking services are to be performed in conjunction with custody, CASPs must obtain explicit consent from users to stake their crypto assets. This is because staking services impact the user’s ability to access their crypto assets.
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David is a financial news contributor with 4 years of experience in Blockchain and cryptocurrency. He is interested in learning about emerging technologies and has an eye for breaking news. Keeping up to date with trends, David has written in several niches including regulation, partnerships, cryptocurrency, stocks, NFTs, etc. Away from the financial markets, David enjoys cycling and horseback riding.