It seems that the EU will soon roll out its regulation on crypto. These are some important highlights from the supposed political compromise on the latest drafts of MiCAR (EU Markets in Crypto Assets Regulation MiCA).
- MiCA will apply to natural, legal persons and other undertakings and the activities and services performed, provided or controlled, directly or indirectly, by them, including when part of such activity or services is performed in a decentralized way. However crypto assets services provided in a fully decentralised manner without any intermediary do not fall within scope.
- MiCA should not apply to NFT that are unique and not fungible with other crypto, including digital art and collectibles, whose value is attributable to each crypto-asset’s unique characteristics and the utility it gives to the token holder. Similarly, it also does not apply to cryptos representing services or physical assets that are unique and not fungible, such as product guarantees or real estate.
- However, IMP, the fractional parts of a unique and non-fungible crypto asset should not be considered unique and not fungible.
- Entities offering services within the scope of this regulation will be required to follow applicable rules on aml in the EU and if the above captioned fractional NFTs will be captured under the FATF guidance, the real capture is on the actual use not fungibility and terminology.
- ESMA, in cooperation with EBA to have powers to draft regulatory technical standards even on climate and other environment related adverse impacts and to outline key energy indicators.
- Credit institutions should not need another authorisation under MiCA in certain pre-determined instances.
- Some firms subject to EU legislation on financial services also to be allowed to provide all or some crypto asset services without prior authorisation.
- Crypro asset services should only be provided by legal entities/persons that have a registered office in a Member State and that have been authorised and with the place of effective management in the EU.
- However, where a client established or situated in the EU initiates at its own exclusive initiative the provision of a crypto asset service or activity by a third‐country firm, (reverse solicitation) MiCA is not applicable.
- Offerors that are established in a third country should notify their crypto asset white paper to the competent authority of the Member State where the crypto assets are intended to be offered.
- 18-month transitional period from coming into force of MiCA allowing crypto asset service providers to provide services on the basis of their national framework.
For more information please contact Dr Ian Gauci.
Disclaimer: This article is not intended to impart legal advice and readers are asked to seek verification of statements before acting on them.