ESMA Wants Binding Token Rulings and a New DeFi Gateway Service Under MiCA

Points of Focus

• The ESMA wants binding opinions on token classification under MiCA.
• It also proposes a new regulated service for DeFi access.
• The ESMA’s recommendations do not bind the commission.

The European Securities and Markets Authority (ESMA) said on Sept. 30 that it wants binding opinions on how tokens are classified under the Markets in Crypto-Assets Regulation (MiCA) and a new regulated service for companies that give clients access to decentralized finance (DeFi) protocols, according to its response to the European Commission’s MiCA review consultation.

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The consultation closed on the same day, and a legislative proposal may accompany the commission’s report. The ESMA’s recommendations are advice and do not bind the commission.

ESMA binding token classification opinions would close a gap in MiCA

The ESMA proposes that it be allowed to issue binding opinions on token classification, including hybrid tokens, according to its press release.

The response notes that the ESMA “has so far only issued one non-binding opinion upon the request of an NCA,” referring to a national competent authority.

Classification decides whether a token falls under MiCA or under other EU financial rules, so companies launching hybrid products currently rely on national interpretations.

ESMA DeFi gateway service and a narrow definition of fully decentralized

The ESMA said greater legal certainty is needed on when a service can be considered provided in a fully decentralized manner, and it wants that definition kept as narrow as possible. It warns of decentralization washing, where an identifiable operator uses DeFi language to avoid MiCA obligations.

The authority also proposes a new regulated service for crypto-asset service providers (CASPs) that give clients access to decentralized protocols. Such providers would face risk disclosure, routing transparency, conflict management, protocol due diligence and security requirements.

ESMA stablecoin, freeze, and product intervention powers in the MiCA review

The press release says the ESMA wants explicit rules preventing regulated crypto companies from offering services tied to non-compliant stablecoins. The response says a CASP should not provide any licensable service for asset-referenced tokens or e-money tokens that do not comply with MiCA, and it links current ambiguity to regulatory arbitrage. The ESMA also wants derivatives settled in stablecoins treated as financial instruments under MiFID II.

The ESMA also asked for powers to require providers to immediately freeze crypto-assets where there are reasonable grounds for market abuse, financial crime, money laundering, or terrorist financing. It wants permanent product intervention powers whether or not the commission’s proposal to move CASP supervision to ESMA is adopted, and stronger capacity to detect, block and deactivate fraudulent websites.

MiCA staking, lending, and borrowing rules stay light on authorization

For staking, the ESMA asked for targeted conduct and disclosure duties covering rewards, lock-ups, slashing, validator selection, and fees, and not a new heavy authorization regime. It said staking should not automatically be treated as lending.

For lending, the ESMA asks for written client consent and disclosure, and it describes some programs as opaque to the clients who entrust them with assets. It also wants full cost disclosure to address offers that advertise zero commission while applying wide spreads, and it floats an optional EU-level 28th regime for tokenized securities.

What the MiCA review means for crypto firms in the EU

The commission must report under Articles 140 and 142 of MiCA, and its consultation page gives no date for the report. The press release also lists simplification measures, including streamlined white paper procedures, fewer duplicative authorization requirements, and more consistent prudential requirements.

MiCA entered full force on Dec. 30, 2024, and its transitional period ended on Jul. 1, 2026, according to the ESMA. The commission’s Market Integration and Supervision Package of Dec. 4, 2025, would place all CASPs under direct ESMA supervision, and Baker McKenzie expects negotiations to run until at least 2027.