[ESMA24-229244789-4623 ] SMSG Advice on second MiCA package

The SMSG provided advice to ESMA on the second consultation paper regarding Technical Standards for MiCA, covering various aspects of the MiCA Regulation. Proportionality was emphasized, with the SMSG supporting the approach to business continuity measures that consider the scale, nature, and range of crypto-asset services. They recommended incorporating proportionality in other aspects of MiCA to prevent barriers to small players without compromising safety and soundness.
In terms of governance, the SMSG endorsed the proposed roles of the management body of CASPs in defining, endorsing, implementing, and reviewing business continuity policies. They suggested that there is no need for a separate business continuity function, leaving the decision to the CASP’s management body.
Regarding permissionless DLT, the SMSG supported the requirement for CASPs to communicate externally with clients in case of service disruptions involving permissionless DLT. They stressed the importance of ensuring users are reached and aware of issues, suggesting the establishment of temporary contact points and appropriate disclosure of risks associated with permissionless DLT.
The SMSG supported the use of methods for client identification under MiFIR, especially for clients not eligible for a LEI. They highlighted the unique composition of the user base of crypto services, predominantly represented by natural persons not acting in a business capacity.
Concerning pre-trade transparency for AMMs, the SMSG backed the proposal to disclose the mathematical equation used in liquidity pools, suggesting additional details to enhance understanding.
Regarding white papers, the SMSG emphasized the need for ongoing information disclosure to holders of other cryptos, not just asset-referenced tokens. They supported using a “closed“ taxonomy for white papers to reduce costs and enhance comparability.