ESA Consultation Response to Crypto-Asset Classification Framework

On October 16th, INATBA responded to the ESA’s consultation on the Classification of Crypto-Asset Frameworks.

INATBA’s consultation response to the ESAs highlights concerns regarding the regulatory burden of crypto-assets under MiCAR. While INATBA welcomes clearer classification guidelines, they emphasize the need for proportionality, arguing that overly complex requirements will hinder Europe’s competitiveness in the blockchain industry. They propose replacing mandatory legal opinions with simpler legal analyses and making templates more user-friendly, accessible even to non-lawyers. Additionally, INATBA warns that high compliance costs could stifle innovation and startup growth, urging the ESAs to adopt a more modular and flexible regulatory approach.

For the asset-referenced tokens (ARTs) specifically, INATBA raises concerns about the legal opinion required to qualify ARTs under MiCAR. We argue that it adds significant cost burdens, which could harm Europe’s competitiveness in blockchain innovation. INATBA suggests simplifying the process by allowing a broader range of professionals to handle the opinion without liability, as opposed to mandating highly formalized legal opinions. They also criticize the template’s rigidity, calling for more clarity on key aspects such as ART descriptions, underlying assets, and redemption rights.

The response also addresses the standardized test for crypto-asset classification under MiCAR, which INATBA acknowledges as essential for consistency. However, we also explain that the test should be more user-friendly, modular, and better tailored to different types of crypto-assets. Our recommendations integrate decision trees, clear examples, and flowcharts to assist users in navigating the test and achieving compliance without unnecessary complexity. INATBA believes a more practical, flexible approach will encourage adherence to regulations while promoting market innovation.

Overall, INATBA expresses a strong commitment to working with the ESAs to improve regulatory frameworks for crypto-assets. They stress that ensuring Europe’s global competitiveness should be a priority alongside investor protection. Our recommendations  include reduced reliance on formal legal opinions, more accessible templates, and a focus on proportionality, aiming to foster a regulatory environment that supports innovation in the emerging blockchain ecosystem.