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ESMA Crypto Asset Classification: MiCA, MiFID II, and NFT Fungibility

Article Paradigm research
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Summary

This article summarizes Paradigm’s response to an ESMA consultation on deciding when crypto assets qualify as financial instruments. That classification affects whether an asset is treated under the EU’s crypto-specific MiCA framework or the broader financial instruments regime under MiFID II. The letter raises two concerns: that the proposed criteria could classify too many crypto assets as financial instruments, and that a broad interpretation of fungibility could bring many NFTs within MiCA’s scope.

The article emphasizes the potential importance of clear, technically grounded boundaries for builders and markets, given the EU’s influence on financial regulation. It reports the submitter’s position rather than presenting ESMA’s final policy or an independent legal analysis. It offers no trading method, market data, or evaluation of how the proposed classifications would affect prices or investment performance.

Key ideas

  • ESMA’s criteria may determine whether a crypto asset falls under MiCA or MiFID II.
  • The comment letter argues that the proposed criteria could overclassify crypto assets as financial instruments.
  • It warns that changing the practical meaning of fungibility could expand MiCA coverage to NFTs.
  • The document summarizes an industry submission and does not establish the regulator’s final position.

Tags

CryptoDeFi

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.