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Understanding MiCA: A Comprehensive Guide to Europe's Proposed Regulation on Crypto Assets

MiCA introduces uniform requirements for the issuance, offering and market placement of different types of crypto-assets, as well as creates one of the most encompassing regulatory regimes globally for the operation of crypto-asset service providers and for the performance of crypto-asset related activities.


MiCA will apply not only to entities established in the EU, but also to entities conducting the covered activities in the EU, regardless of their place of origin.


SCOPE OF MiCA


MiCA applies to natural and legal persons and other undertakings which are involved in the issuance, offering to the public and admission to trading of crypto-assets, and in the provision of various services related to crypto-assets in the EU.


The Key Categories Of Requirements Laid Down By Mica Are The Following:


  • Requirements related to transparency and disclosure as part of the issuance, offering to the public and the admission to trading of crypto-assets on trading platforms;

  • Authorization and supervision of crypto-asset service providers and issuers of asset-referenced tokens or of electronic money tokens;

  • Requirements related to the operation, organization and governance crypto-asset service providers, issuers asset-referenced tokens or of electronic money tokens;

  • Requirements related to the crypto-asset holders protection as part of the issuance, offering to the public and admission to trading thereof; and crypto-asset service providers' client protection;

  • Requirements related to the prevention of insider dealing, unlawful disclosure of inside information and market manipulation.


REGULATED CRYPTO ASSETS UNDER MiCA


MiCA defines 'crypto asset' as "a digital representation of a value or a right which may be transferred and stored electronically, using distributed ledger technology or similar technology".


It further distinguishes between three main categories of 'crypto-assets', subjecting each of them to a distinct regulatory regime. The first two generally referring to different types of tokens commonly referred to as ‘stablecoins’, (including algorithmic):


  • ASSET-REFERENCED TOKENS : crypto-assets, which are not e-money tokens, and which are intended to maintain a stable value by reference to any value or right or combination of the two, including any number of official currencies.

  • ELECTRONIC MONEY TOKENS OR E-MONEY TOKENS : crypto-assets which are intended to stabilize their value by reference to a single official currency.

  • ALL OTHER CRYPTO ASSETS : this category includes crypto-assets, which do not fall under the definition of asset referenced tokens or e-money tokens, and covers a wide array of crypto-assets, including utility tokens.


Crypto-assets which fall under existing EU financial services regulations, such as security tokens and deposits, are not subject to the regulation and continue to be regulated under the respective regimes.


REQUIREMENTS FOR ISSUERS OF CRYPTO-ASSETS (OTHER THAN EMTS & ARTS) (“REGULAR TOKENS”)


Under MiCA, the offering of Regular Tokens, which are not EMTs or ARTs, to the public in the EU or their admission to trading on a trading platform for crypto-assets is subject to a wide array of specific requirements, including:


  • The offering must be made by a legal person;

  • Drafting a white paper in accordance with content and form requirements set in MiCA;

  • Notification and publishment of a white paper;

  • Where applicable, drafting and publishing marketing communications;