The Markets in Crypto-Assets Regulation (MiCA) represents a significant milestone in the European Union's regulatory landscape for digital assets. This analysis aims to provide an overview of the key provisions and requirements laid out by MiCA, specifically focusing on white papers for crypto-assets other than e-money tokens and asset-referenced tokens.
By examining the scope of the application, the content requirements, and the regulatory authorities involved, this analysis seeks to offer valuable insights for stakeholders in the crypto-asset industry looking to navigate the MiCA framework.
Definition of White Papers
As defined under MiCA, white papers are comprehensive documents outlining essential information about a crypto-asset offering or an admission to trading on a trading platform. These documents aim to provide potential clients with a clear understanding of the project's objectives, the technology employed, the risks associated, and the rights conferred to the token holders, among other critical details.
Scope: Tokens Other than E-Money and Asset-Referenced Tokens
This analysis covers white papers on crypto-assets that do not fall under the e-money or asset-referenced tokens category. E-money tokens are digital representations of fiat currency that can be electronically stored and used as a medium of exchange. On the other hand, asset-referenced tokens are a class of crypto-assets that maintain a stable value by referring to a basket of assets, such as fiat currencies, commodities, or other crypto-assets.
By focusing on white papers for tokens outside these categories, this analysis seeks to provide a comprehensive understanding of the regulatory framework established by MiCA for a broader range of crypto-assets.
Offers to the Public of Crypto-Assets and Admission to Trading of Crypto-Assets
A person cannot make an offer to the public and admission to trading a crypto-asset other than an asset-referenced token or e-money token in the Union unless they have:
a) Drawn up a crypto-asset white paper.
b) Notified the crypto-asset white paper to the competent authority.
c) Published the crypto-asset white paper following Article 9 of MiCA.
In cases where an offer to the public of a crypto-asset is exempt from the obligation to publish a crypto-asset white paper, but a white paper is voluntarily drawn up, the provisions of MiCA still apply.
Main Content Requirements
A crypto-asset white paper must contain the following information about:
the offeror or the person seeking admission to trading, including their name, legal form, registered address, head office (if different), registration date, legal entity identifier, or another identifier required pursuant to applicable national law, and contact details;
the issuer if different from the offeror or person seeking admission to trading;
the trading platform operator in cases where it draws up the crypto-asset white paper;
the crypto-asset project, including details about the offer, the crypto-asset, the rights and obligations attached to the crypto-asset, the underlying technology, the risks involved, and the principal adverse impacts on the climate and other environment-related adverse impacts of the consensus mechanism used to issue the crypto-asset.
The white paper must also contain:
a clear and prominent statement on the first page of the white paper, stating that the offeror is solely responsible for the content of the crypto-asset white paper and that it has not been approved by any competent authority in any Member State of the European Union;
a clear and unambiguous statement regarding potential risks associated with the crypto-asset, including the possibility of losing its value, transferability, liquidity, and coverage by investor compensation or deposit guarantee schemes;
a statement from the management body of the offeror, a person seeking admission to trading, or the operator of the trading platform confirming that the white paper complies with MiCA and that the information presented is fair, clear, and not misleading;
a summary of the crypto-asset white paper providing key information in brief and non-technical language;
the date of the white paper's notification and a table of contents.
Language Requirements
The crypto-asset white paper must be drafted in an official language of the home Member State or a language customary in the sphere of international finance. Suppose the crypto-asset is also offered in another Member State. In that case, the white paper must be drafted in an official language of the host Member State or a language customary in the sphere of international finance. Additionally, the white paper must be made available in a machine-readable format.
Publication Requirements
Offerors and persons seeking admission to trading of crypto-assets other than asset-referenced tokens or e-money tokens must:
a) Publish their crypto-asset white papers and, where applicable, their marketing communications, on their website, which should be publicly accessible.
b) Make the white papers and marketing communications available on their website at a reasonable time in advance of, and in any event before, the starting date of the offer to the public of the crypto-assets or their admission to trading.
c) Ensure the published crypto-asset white papers and, where applicable, the marketing communications, remain available on their website for as long as the public holds the crypto-assets.
d) Ensure that the published crypto-asset white papers and, where applicable, the marketing communications, are identical to the version notified to the competent authority or, where applicable, to the version modified.
Notification Process
The approval process for crypto-asset white papers and marketing communications is as follows:
a) Offerors, persons seeking admission to trading, or operators of trading platforms for crypto-assets other than asset-referenced tokens or e-money tokens must notify their crypto-asset white papers to the competent authority of their home Member State.
b) Marketing communications, upon request, must be notified to the competent authority of the home Member State and the competent authority of the host Member State when addressing prospective holders of crypto-assets other than asset-referenced tokens or e-money tokens in those Member States.
c) Competent authorities shall not require prior approval of crypto-asset white papers or any marketing communications relating to that before their respective publication.
d) The notification of the crypto-asset white paper must be accompanied by an explanation of why the crypto-asset described in the white paper should not be considered a crypto-asset excluded from the scope of MiCA, an e-money token, or an asset-referenced token.
No Additional Information Requirements
The MiCA regulation specifies that offerors and persons seeking admission to trading of crypto-assets, other than asset-referenced tokens or e-money tokens, who have published a compliant crypto-asset white paper and, if applicable, an updated version, won't be subject to any further information requirements concerning the public offer of that crypto-asset or its admission to trading. This provision ensures that the regulatory framework remains streamlined, allowing offerors and persons seeking admission to trading to operate without encountering redundant or excessive requirements.
Right of Withdrawal
Under the MiCA regulation, clients can withdraw their acceptance of a crypto-asset offer within three business days without giving any reason or incurring any penalty. Offerors of crypto-assets must inform potential investors about this right in their crypto-asset white paper, ensuring they know their ability to reconsider their decision.
Liability for Information in a Crypto-Asset White Paper
If an offeror, a person seeking admission to trading, or an operator of a trading platform provides incomplete, unfair, unclear, or misleading information in a crypto-asset white paper or an updated version, they may be held liable for any loss incurred by a crypto-asset holder due to that infringement. Any contractual exclusion or limitation of this civil liability will not have any legal effect.
Crypto-asset holders are responsible for providing evidence that the offeror, person seeking admission to trading, or trading platform operator has provided misleading or inaccurate information, influencing their decision to purchase, sell, or exchange the crypto-asset.
However, the MiCA regulation states that offerors, persons seeking admission to trading, and trading platform operators will not be held liable for any loss incurred by a crypto-asset holder due to reliance on the information provided in a summary, as long as the summary isn't misleading, inaccurate, or inconsistent with other parts of the white paper, and it provides key information to help prospective holders make informed decisions about purchasing the crypto-asset.
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In conclusion, the MiCA regulation establishes a comprehensive framework for the crypto-asset market, ensuring transparency, fairness, and investor protection. However, navigating the legal complexities and requirements can be challenging. Prokopiev Law Group is well-equipped to guide you through this regulatory landscape, providing expert advice and assistance in understanding and complying with the MiCA provisions. Our team is dedicated to helping you successfully navigate the world of crypto-assets while adhering to the highest legal standards.
DISCLAIMER: The information provided is not legal, tax, or accounting advice and should not be used as such. It is for discussion purposes only. Seek guidance from your legal counsel and advisors on any matters. The views presented are those of the author and not any other individual or organization. The information provided is for general educational purposes only and is not investment advice. The author of this material makes no guarantees or warranties about the accuracy or completeness of the information. A professional should review any action based on the information discussed. The author is not liable for any loss from acting on the information discussed.
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