MICA´s impact on crypto-asset offerings
If you as an inovative company want to catch up with the 4.0 industrial revolution and think about making new ways of monetization by creating a tokenized ecosystem, the first obvious step would be to issue crypto-assets, right? Having that in mind, let us explore how MiCA regulates the issuance of crypto-assets.
In the first place, MiCA stipulates that all issuers of crypto-assets be a legal entity established in the EU. Additionally, the requirement that players in the traditional financial industry publish a prospectus prior to offering securities to the public is now extended to crypto-asset issuers. Specifically, MiCA establishes an obligation to issue and publish a white paper containing information regarding the basic characteristics of the project, the rights and obligations for the issuer and investors, and the underlying project technology (issuers will be required to create sufficient safety mechanisms to prevent hacking and fraud). The white paper must be written in English or in another EU official language.
Unlike prospectuses, the white papers do not have to be approved by the relevant state authorities. It is unclear why MiCA requires this disclosure. Is it to foster the issuance of crypto-assets or simple have information from the white paper made public? Once published on the issuer’s website, it can be marketed throughout the whole European Economic Area (not just the EU).
However, there are certain exceptions. With respect to the public offer of crypto-assets, other than asset-referenced tokens or e-money tokens, the MiCA requirements will not apply if:
- The crypto-assets are offered for free (e.g. “airdrops”); unless recipients have to provide personal data or the issuer earns a commission or benefits from other parties;
- The crypto-assets are automatically created through mining as a reward for the maintenance of the network or the validation of transactions;
- The crypto-asset is unique and nonfungible with other crypto-assets (meaning Non Fungible Tokens or NFTs). Put simply, you can create your own NFT easily and without any regulatory burden imposed by MiCA;
- The offering of crypto-assets is addressed to fewer than 150 natural or legal persons per member state;
- The total consideration of such an offering in the EU does not exceed EUR 1,000,000, or the corresponding equivalent in another currency or in crypto-assets, over a period of 12 months;
- The offering of crypto-assets is solely addressed to qualified investors and the crypto-assets can only be held by such qualified investors. MiCA does not purport to protect qualified investors.
Besides the general obligation for issuers of crypto-assets to act honestly, fairly, and professionally, and to communicate with holders of crypto-assets in a fair, clear, and truthful manner, member states must also ensure that crypto-asset issuers be liable under their national laws for the information disclosed in their white papers. Consumers will have a 14-day right to withdraw from purchasing a non-listed crypto-asset token if bought directly from the issuer. MiCA seeks to extend existing financial service consumer protection rules to the crypto world.