European authorities are issuing guidance that aims to help regulators guard against abusive trading under the region’s new crypto rules.
The guidance, issued by the European Securities and Markets Authority (ESMA), is targeted at the region’s various national regulators — setting out principles and supervisory practices for detecting and dealing with abusive trading involving cryptoassets, under the Market in Crypto Assets Regulation (MiCA), which took effect at the end of 2024.
The aim of the guidance is build a consistent approach to regulatory oversight in the crypto market.
“The guidelines put forward some general principles to ensure high quality and effective supervision on market abuse in crypto assets, as well as some more specific practices for [regulators] regarding detection and prevention,” it said.
ESMA said that the guidelines are based, in part, on its experience with enforcing anti-abuse rules in the traditional securities market, but also factors in the unique features of the crypto sector — including its inherently cross-border nature and the intensive use of social media.
It also requires that supervisory activity in the sector should be “risk-based and proportionate,” the group noted.
The guidance takes effect three months after it’s translated into all of the languages used in the European Union and published on ESMA’s website — however ESMA called on regulators to start implementing the principles immediately.