ESMA’s Draft Guidelines on reverse solicitation under MiCA

On the 29th of February the European Securities and Markets Authority (“ESMA”) issued a consultation paper to address the reverse solicitation provisions under the Markets in Crypto-Assets Regulation (“MiCA”). ESMA aimed to provide clarity on how third-country firms can engage with clients within the European Union without breaching MiCA’s strict rules. Attention is placed on ensuring that third-country firms do not exploit the reverse solicitation exemption to circumvent the need for authorisation under MiCA.

ESMA adopts a broad interpretation of solicitation, encompassing any promotional activity by third-country firms, which are firms based outside the European Union ("EU”), aimed at clients within the EU. MiCA restricts these third-country firms from offering crypto-asset services or engaging in promotional activities directed at EU clients unless the client initiates the interaction through reverse solicitation. This includes traditional marketing strategies such as brochures and commercials, as well as modern digital methods like social media campaigns, online advertising, influencer endorsements, and sponsorships. Even indirect promotion, like employing influencers without explicit ties to the firm’s name, would be considered solicitation, requiring the firm to comply with MiCA's regulatory framework. In contrast, EU-based firms, once authorised under MiCA, can market freely within the EU through the passporting system, allowing them to operate across Member States without additional authorisation.

Another important aspect of the draft guidelines is the broad definition of the person soliciting. Solicitation is not limited to actions taken by the third-country firm itself but also applies to anyone acting on its behalf. This could include partners, affiliates, or third-party marketers, even if there is no formal contract between them. Any promotional activity that draws EU clients to a third-country firm may be seen as solicitation. ESMA’s approach here ensures that third-country firms do not escape compliance simply by outsourcing marketing activities to intermediaries.

ESMA’s draft guidelines impose clear limits on the reverse solicitation exemption, which allows third-country firms to provide services to EU clients only if the client initiates the contact. However, this exemption is strictly limited to the specific service request initiated by the client which must also be time-bound. Once a client requests a service, the firm can offer related services, but only within a limited time window directly linked to the original transaction. If too much time has passed, the firm is no longer permitted to market additional services or crypto-assets, even if they are similar. For example, if a client contacts a firm to purchase a specific crypto-asset, the firm may offer related services immediately after, but it cannot continue promoting new or similar services to that client at a later time. Additionally, the draft guidelines clarify that firms cannot offer crypto-assets of a different 'type' under the guise of the same transaction, and strict definitions have been provided to prevent circumvention of the MiCA requirement

To prevent the misuse of the reverse solicitation exemption, ESMA outlines various supervision practices for National Competent Authorities (“NCAs”). Since most crypto-asset services are offered online, the draft guidelines encourage NCAs to monitor online marketing activities, including websites, social media, and advertising campaigns. Authorities are also advised to pay attention to client complaints and whistle-blower reports, as these may provide crucial information about firms attempting to solicit clients unlawfully. ESMA also encourages cooperation between NCAs and other regulatory bodies, such as tax authorities and law enforcement, to ensure comprehensive oversight of third-country firms operating in the EU.

Overall, ESMA’s draft guidelines emphasise the need to protect EU investors and ensure that third-country firms do not gain an unfair competitive advantage over MiCA-compliant entities within the EU.

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