European crypto-assets regulation (MiCA)

SUMMARY OF:

Regulation (EU) 2023/1114 on markets in crypto-assets

WHAT IS THE AIM OF THE REGULATION?

Regulation (EU) 2023/1114 establishes uniform rules for issuers of crypto-assets that have so far not been regulated by other European Union (EU) financial services acts and for providers of services in relation to such crypto-assets (crypto-asset service providers).

The rules cover:

• transparency and disclosure requirements for the issuing, the offering to the public and the admission of crypto-assets to a trading platform;
• the authorisation and supervision of crypto-asset service providers and issuers of asset-referenced and electronic money (e-money) tokens;
• the operation, organisation and governance of the issuers and crypto-asset service providers;
• protection for holders of crypto-assets and clients of service providers;
• measures to prevent insider dealing, unlawful disclosure of inside information and market manipulation.

KEY POINTS

The regulation applies to the issuing, the offering to the public and the admission to trading of crypto-assets, and to the provision of services in relation to crypto-assets.

It distinguishes the following types of crypto-assets:

• e-money tokens (crypto-assets that stabilise their value in relation to a single official currency);
• asset-referenced tokens (crypto-assets that stabilise their value in relation to other assets or a basket of assets);
• crypto-assets other than asset-referenced tokens or e-money tokens.

Offerors¹ or persons seeking admission to trading of crypto-assets other than asset-referenced tokens and e-money tokens must:

• be a legal person²;
• publish a crypto-asset White Paper and any marketing communication on their website;
• act honestly, fairly and professionally;
• communicate with actual and potential asset holders in a fair, clear and non-misleading manner;
• identify, prevent, manage and disclose any conflicts of interest;
• be liable for damages for incorrect information in the White Paper;
• provide holders of crypto-assets with a right of withdrawal.

Issuers of asset-referenced tokens that offer them to the public or seek their admission to trading on a trading platform for crypto-assets must:

• be a legal person or a certain undertaking based in the EU;
• have authorisation from their home EU Member State; or
• be a credit institution that produces a crypto-asset White Paper that is approved by the competent national authority;
• redeem their asset-referenced tokens at any time upon request of the holders at market value of the referenced assets or by delivering the referenced assets;
• publish a crypto-asset White Paper and any marketing communication on their website and be liable for damages for incorrect information in the White Paper;
• act honestly, fairly and professionally;
• communicate with actual and potential holders of the tokens in a fair, clear and non-misleading manner;
• act in the best interests of the holders of the tokens and treat them equally;
• establish and maintain effective and transparent procedures for handling complaints promptly, fairly and consistently;
• identify, prevent, manage and disclose any conflicts of interest;
• maintain at all times a reserve of assets covering the liabilities towards the holders of the tokens, and have own funds at least equal to the highest of the following:
  • €350,000,
  • 2% of the average amount of the reserve assets,
  • a quarter of the fixed overheads of the preceding year;
• establish recovery and redemption plans for use if they are unable to meet their obligations.

Issuers of e-money tokens that offer them to the public or seek their admission to trading on a trading platform for crypto-assets must:

• be authorised as a credit or e-moneyinstitution;
• publish a crypto-asset White Paper and any marketing communication on their website and be liable for damages for incorrect information in the White Paper;
• comply with issuance, redeemability and marketing rules;
• issue the tokens at par value on receipt of funds;
• redeem, upon a holder’s request, the tokens at any moment and at par value;
• invest the funds they receive in secure, low-risk assets in the same currency and deposit them in a separate account in a credit institution;
• establish recovery and redemption plans for use if they are unable to meet their obligations.