The European Securities and Markets Authority (ESMA) is seeking public input to shape the criteria for categorizing cryptocurrency assets as financial instruments, as part of the ongoing regulatory efforts in the European Union.

This decision to put the issue for public consultancy comes in the wake of the EU Parliament's approval of the Markets in Crypto Assets (MiCA) regulations in August last year, signaling a significant advancement in crypto market regulation within the bloc. 

More to read:
More developing countries embrace cryptocurrencies, but worldwide crypto adoption slows

The ESMA acknowledges the challenge of applying a standardized test to define what qualifies as a financial instrument, especially given the absence of a universally applicable definition in the Markets in Financial Instruments Directive (MiFID). 

The authority underscores the need to assess whether a crypto-asset represents a digital form of value or rights, transferable and storable through Distributed Ledger Technology (DLT), and whether these aspects establish a right in relation to the issuer.