EU regulator warns of risks of offshore cryptocurrencies under MiCA regulation

 European Securities and Markets Authority (ESMA), the regulatory agency responsible for overseeing the European Union's financial markets, has issued a new opinion emphasizing the significant risks posed by global cryptocurrency companies seeking partial authorization under the Markets in Crypto-Assets (MiCA) regulation and conducting significant business overseas. On July 31, ESMA issued a statement of opinion related to MiCA, which it has done on other occasions in the past after the implementation of new industry-wide regulatory laws (i.e. after Brexit). ESMA's latest warning focuses on the complex organizational structures of many global cryptocurrency companies, which reportedly use EU-authorized brokers to send orders to execution venues outside the EU, typically in offshore jurisdictions. The EU market regulatory agency states that this practice could undermine consumer protection and create an unfair competitive environment that is detrimental to EU execution venues.