The European Securities and Market Authority (ESMA) announced an updated Q&A on certain guidelines including the provision of staking services under MiCA. This comes as crypto firms begin to implement the regulations to become fully compliant with the rules. Staking has become a controversial issue in most jurisdictions drawing the attention of crypto regulators. 

ESMA States Position Under MiCA

The European securities regulator stated that the Markets in Crypto Asset Regulation does not prohibit staking features for crypto firms. A slight controversy arose because the MiCA doesn’t contain specific provisions for staking. This means that it doesn’t prohibit the service nor provide express rules like other areas. 

According to ESMA, the staking service providers take direct action to the rules making staking ancillary to their original custody services. 

“In the provision of staking services the crypto assets, or the private keys giving access to them, are held by the staking service provider in custody. Thus, the provision of staking services is ancillary to custody services which are fully covered under MiCA. The provision of staking services therefore requires that the crypto asset staking service provider is authorised under MiCA…” 

This brings firms directly under Article 75 MiCA and others which require firms to observe the custody and administration of crypto assets. Staking has caused concerns between regulators and authorities in several jurisdictions. Particularly, the United States Securities and Exchange Commission (SEC) flagged staking services and has filed several lawsuits against firms that offer staking features. 

CASPs to Comply With Disclosures 

Per the release, in situations where crypto assets service providers offer staking features alongside custody of assets, they must ensure that digital assets can be returned according to the agreement. Thus, loss of assets is attributed under Art 75(8) MiCA. Furthermore, where staking services are to be carried out alongside custody, CASPs should obtain express consent from users to stake their crypto assets. This is because staking services impact user’s ability to access their crypto assets.

Also Read: 4 Undervalued Ethereum Altcoins Gaining Institutional Interest

The post ESMA Reiterates MiCA Crypto Staking Laws Amid Controversy appeared first on CoinGape.

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