In our response, we outline key areas for consideration to foster a proportionate and effective regime.
Below are some key highlights from Adan's insightful feedback.
We support combating market abuse. However, we strongly disagree that miners, validators, and custodians should be considered Persons Professionally Arranging and Executing Transactions (PPAETs).
Miners and validators do not meet the requirements laid down in Article 92 of MICA
Imposing PPAET rules on validators/miners is unlikely to be successful as they are not market operators, therefore it is practically impossible for them to effectively meet these requirements. This approach would not effectively achieve the policy objective of combating market abuse.
Likewise, miners and validators do not hold the capacity to reorder transactions. Thus, making them comply with market abuse rules is technically unfeasible.
Regarding custodians, if a CASP is solely offering custody services, they should not be subject to market surveillance obligations under MiCA, as their role does not involve managing or executing trade transactions. These providers do not interact with the market dynamics in a way that could influence market integrity or transparency. However, if a CASP also has permission to execute trading activities, such as operating as a broker or an exchange, then it is appropriate for them to be considered under the PPAET category.
Adan also provided clarifications on the Maximal extractable value (MEV) to ensure it is not automatically labeled as Market abuse.
In PoW, miners must include transactions in the order they are received to ensure that the chronological sequence of transactions is preserved. Reordering transactions within a block would disrupt the continuity of the blockchain and lead to inconsistencies in the transaction history. Therefore, any attempt to reorder transactions or manipulate block content would result in an invalid block that is rejected by the network.
In PoS, validators do not have access to the content of transactions until they are included in a block and presented for validation. This blind validation process prevents validators from selectively reordering transactions.
Categorizing MEV as inherently abusive behavior may overlook its essential role in maintaining a healthy and efficient crypto market. MEV is a neutral tool. It's the strategy behind it that determines whether it's abusive or beneficial.
Adan encourages the distinction between operations that intentionally or unintentionally harm consumers and those that bring balance to the system (Non-toxic Vs. Toxic MEV). Recognizing this distinction clarifies that MEV itself isn't inherently abusive, but the way it's utilized can be.
Likewise, Adan calls on a proportionality approach when setting up the STOR regime. This would ensure that systems can be adequate to the size, nature and scale of the business activity carried out by PPAETs and therefore to the risk dimension of the activities carried out.
Proportionality ensures the implementation of the proposed systems in a way that allows the correct allocation of resources without compromising the ability to prevent and detect market abuse situations.
Cost is a significant concern in the implementation of MiCA. The necessary additional investments to meet the current technical standards to prevent and detect market abuse are likely to vary widely depending on the level of sophistication and size of the firm.
As a result, a careful balance must be struck so as to protect the integrity of these growing markets but not stifle innovation which would ultimately affect the EU's competitiveness.

Adan also provided clarifications regarding the information of the ‘’location’’ of transactions embedded in the STOR template.

Adan highlighted that, in a DLT, transactions are propagated and validated by nodes distributed across the network. The concept of "location" of a transaction in a DLT may not correspond then to a physical or geographical location, but it can still be interpreted in terms of node identity, transaction path, and chronological sequence within the decentralized network.

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