Date: 23rd May 2024

BETTER FINANCE supports ESMA’s broad approach to guiding prudential regulation concerning the solicitation of EU clients by third-country firms, which is essential to protect European consumers from non-MICA compliant entities and therefore investor protection safeguards. We welcome that ESMA clarifies that the reverse solicitation exemption is to be considered as a prohibition for third country firms to solicit EU clients requested at the client exclusive initiative.

However, some general shortcoming may be noted. Notably, there could be more granularity in distinguishing (specify) between ‘passive’ and ‘active’ solicitation to close potential loopholes. Conversely, clear examples could be beneficial in the guidelines to more directly define the scope of what shall constitute the “exclusive initiative of the client,” which will help prevent indirect solicitation through seemingly benign activities like responding to general inquiries that may lead to covert advertising of a wide range of crypto-related services.

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