ESMA Newsletter: Navigating Reverse Solicitation Under MiCA
New ESMA guidelines (dated 26 February 2025) shed light on the evolving regulatory landscape for crypto-asset service providers (CASPs) operating outside the EU. These guidelines focus on the reverse solicitation exemption under article 61 of MiCA and underscore the challenges faced by third-country firms (firms located outside the EU) when providing crypto-asset services to EU customers without a proper license.
1. Overview of the ESMA Guidelines
The guidelines aim to establish a uniform framework for assessing when a third-country firm is deemed to be soliciting clients established or situated in the European Union. Their primary purpose is to:
Ensure consistent supervision: Align practices across competent authorities within the European System of Financial Supervision; and
Prevent circumvention of MiCA: Address the risk that third-country firms might bypass licensing requirements by relying on reverse solicitation.
These measures are designed to promote a level playing field and protect EU consumers by ensuring that only licensed providers can actively target the EU market.
2. The Challenge for Third Country CASPs
For crypto-asset service providers based outside the EU, the guidelines present a significant hurdle:
Strict Definition of Solicitation: ESMA adopts a broad, technology-neutral interpretation of solicitation. Any act that promotes, advertises, or offers crypto-asset services to EU clients—even indirectly—is likely to be seen as a solicitation. Even marketing of a general nature may constitute solicitation.
Reverse Solicitation Limitations: The reverse solicitation exemption only applies when the client has initiated contact entirely on their own. This means that if a third-country firm—even inadvertently—engages with an EU client through any proactive marketing, the firm may be deemed to be soliciting, thereby forfeiting the exemption and triggering the need for an EU license.
Preventive Measures: To safeguard their reverse solicitation status, firms might resort to practices like geo-blocking or deliberately avoiding marketing initiatives within the EU.
3. How ESMA Defines Solicitation
According to the guidelines, solicitation encompasses any form of promotion, advertisement, or offer of crypto-asset services or activities to clients or prospective clients in the Union. The definition is intentionally broad to cover both traditional and digital marketing channels. Some key points include:
Multiple Communication Channels: Solicitation can occur via internet commercials, brochures, telephone calls, emails, and even pop-ups on websites and social media.
In-Person and Digital Engagements: Face-to-face meetings, road shows, trade fairs, and events—all count as solicitation. Notably, invitations to events are explicitly included among the activities that could be considered as soliciting EU clients.
Third-Party Involvement: The guidelines clarify that solicitation may be carried out not only directly by the third-country firm but also through any person or influencer acting on its behalf, regardless of whether the arrangement is formal or informal.
Educational materials, trainings, and industry events focused solely on sharing knowledge about underlying technologies or industry innovations are not considered solicitation. However, if they direct the audience to the third-country firm's website, provide access to its services, distribute related brochures, invite completion of a client profile, or otherwise promote its crypto-asset services, they will be viewed as promotional.
This broad interpretation ensures that virtually any effort to build brand presence or engage potential EU clients—intended or incidental—is scrutinized under the reverse solicitation framework.
4. Implications and Best Practices
Given these regulatory parameters, third-country CASPs need to be vigilant about their marketing and outreach strategies. Here are some key considerations:
Strict Separation of Initiatives: Firms must ensure that any interaction with potential EU clients is strictly initiated by the client. This means avoiding any form of direct or indirect solicitation.
Clear Record-Keeping: Maintaining detailed records of client interactions is crucial. These records should clearly document that any engagement was initiated by the client, thereby supporting the reverse solicitation exemption.
Review of Marketing Materials: All forms of communication—including event invitations, digital ads, and social media posts—should be carefully evaluated to ensure they do not inadvertently target or appeal to EU clients.
Geo-Blocking and Access Control: Some firms might consider implementing measures such as geo-blocking to prevent access to their services from EU IP addresses, though this could limit business opportunities.
5. Norwegian implications of the new ESMA guidelines
Although MiCA has not yet been incorporated into Norwegian law, a letter from the Ministry of Finance dated September 28, 2023, requested that the Norwegian FSA prepare a proposal for its implementation. In response, the Norwegian FSA published a white paper on February 2, 2024, proposing legislation to transpose MiCA into Norwegian law. It is expected that this legislation —a move expected to be enacted sometime in 2025. In our view, even though MiCA has yet to be transposed into Norwegian law, the new ESMA guidelines will inform the assessment of whether non-local CASPs are deemed to be targeting the Norwegian market.
Under current Norwegian law, the only regulation governing CASPs is the Norwegian Anti-Money Laundering Act. Under this Act, crypto exchanges offering exchange and custody services for virtual currencies must register with the Norwegian FSA if they target the Norwegian market—even if they do not have a physical presence in Norway. This requirement applies regardless of the exchange’s location. The Norwegian FSA adopts a broad interpretation of what it means to “target the Norwegian market” and has clarified that unregistered cross-border services are not permitted if an exchange is actively seeking Norwegian customers. Consequently, any foreign crypto exchange currently aiming to serve the Norwegian market must register with the Norwegian FSA pursuant to this legislation. (Currently, since market access is granted solely through national authorization, a MiCA license from another EU state does not allow passporting into Norway. However, once MiCA is transposed into Norwegian law, its passporting mechanism will enable a CASP with a MiCA license from any EU territory to operate in Norway.)
We also believe these guidelines offer valuable insight into when financial institutions and investment firms are deemed to be providing cross-border services to Norway. This is especially relevant for credit provision, as Norwegian law generally requires a license for offering credit—a requirement not imposed under EU law.
6. Looking Ahead
The ESMA guidelines serve as a crucial reminder that compliance in the EU crypto market requires a proactive and well-documented approach. Third-country CASPs must carefully balance their global outreach with strict adherence to EU regulations to avoid the pitfalls of unintended solicitation.
Staying updated on supervisory practices and regulatory expectations will be essential for navigating this challenging environment. Firms are encouraged to review their current strategies, consult with legal experts, and adjust their operational practices to ensure full compliance with MiCA.
For more detailed insights and a full understanding of the ESMA guidelines, please refer to the complete document available on the ESMA website. Staying informed is key to ensuring that your business operations align with the latest regulatory requirements in the rapidly evolving crypto landscape.
Thank you for reading our newsletter. Stay tuned for further updates on regulatory changes and best practices in the crypto-asset industry.
Feel free to reach out with any questions or for further discussion on how these guidelines may impact your operations.
Source: ESMA Newsletter 26 February 2025
