- BTC miners and validators have been excluded from ESMA’s reporting of market abuse.
- Circle’s policy lead viewed the move as positive and flexible for evolving crypto markets.
Bitcoin [BTC] miners and PoS (proof-of-stake) validators have been relieved after the EU’s regulator exempted them from reporting market abuse.
Last December, the regulator, European Securities and Markets Authority (ESMA), concluded that miners, validators, builders, and searchers were to be excluded from Persons Professionally Arranging or Executing Transactions (PPAETs).
Source: ESMA
Under the EU’s Markets in Crypto-Assets Regulation (MiCA) guidelines, PPAETs monitor and report market abuse. Most of the PPAETs will now be crypto asset service providers (CASPs) like exchanges.
EU’s flexible crypto regulation: Impact on Bitcoin miners
Commenting on the update, Patrick Hansen, Circle’s director of EU strategy and policy, viewed the regulator as ‘flexible’ on crypto to balance innovation with compliance. He said,
“ESMA also decided not to rigidly define PPAETs in the regulatory technical standards (RTS), keeping room for flexibility as the market evolves.”
Hansen added that including miners and validators under PPAETs would, consequently, increase the regulatory burden on operators. As a result, this could ultimately drive them offshore.
As such, the exemption would spur financial innovation in the region.
“Good to see they took the potential negative impact for the industry and the EU into account, highlighting how a different decision could have incentivized these minors/validators to leave or avoid establishing in the EU, pushing innovation offshore.”
Regulators tout MiCA as the most comprehensive crypto regulation, which took effect in June 2023. They implemented the stablecoins provision in mid-2024, leading to the delisting of several non-compliant tokens from multiple exchanges.
For example, most exchanges operating in the EU, including Binance, delisted Tether’s USDT, giving Circle’s USDC a massive regulatory moat in the region.
TradingView data revealed that USDC’s market cap increased nearly 80% since MiCA went live. Its size was at $57B, slightly above the 2021 cycle peak.
Source: TradingView
Although USDT also made a new high of $142B in market cap, its growth was 28% over the same period. This implied that USDC saw massive growth post-MiCA implementation.
