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The European Parliament adopted Regulation (EU) 2023/1114 on crypto-asset markets (MiCA regulation) in April 2023, with the aim of boosting digital finance by establishing obligations for issuers and service providers of crypto-assets, the first piece of legislation in this regard on a global scale.

The MiCA regulation will not apply to decentralised finance (DeFi), NFTs, or cryptocurrencies generated in a decentralised manner (Bitcoin, Ethereum…), but it will apply to the platforms on which they are traded.

Among the aspects regulated by the legislation, the following points regarding issuers of asset-referenced tokens are noteworthy:

  • Issuers must either (i) be a legal person, or a specific company based in the EU, (ii) hold an authorisation issued by an EU member state, or (iii) be a credit institution that produces a crypto-asset white paper approved by the competent national authority.
  • Issuers must redeem their asset-referenced tokens at any time at the request of the holders, at the market value of the referenced assets, or by delivering the referenced assets.
  • Publish a crypto-asset white paper and any commercial marketing communications on its website and be liable for any damages caused by incorrect information in the white paper.
  • Establish and maintain effective and transparent procedures for the prompt, fair and consistent handling of complaints.
  • Maintain at all times an asset reserve sufficient to cover liabilities in respect of token holders, and dispose of their own funds at least equal to the greater of the following amounts:
    • EUR 350,000.
    • 2% of the average amount of reserve assets.
    • One quarter of the previous year’s fixed overheads.
  • Establish recovery and repayment plans for their use if they fail to meet their obligations.

In terms of general obligations applicable to all crypto-asset providers, the following are noteworthy:

  • Ensure that members of the management body are of good repute and have the necessary knowledge, experience, skills and time to perform their duties effectively.
  • Implement policies and procedures to prevent money laundering, terrorist financing or other crimes.
  • Keep crypto-assets and customer funds separate from other assets and not use them for their own account.
  • Establish and maintain effective and transparent procedures for the prompt, fair and consistent handling of customer complaints.
  • Maintain and implement an effective policy to identify, prevent, manage and disclose conflicts of interest.
  • Take reasonable steps to avoid any risk when outsourcing activities.
  • Develop a plan for the orderly winding down of its activities, if necessary.

The MiCA regulation is expected to enter into force this June. After its entry into force, a transitional period of 18 months will be allowed for the European Securities and Markets Authority and the European Banking Authority to adopt technical standards for its implementation. At the end of this period, a new one will begin with a duration of one year, in which the National Securities Market Commission will begin to grant authorisations to applicant companies to provide crypto-asset services.

 

 

Julio González

Vilá Abogados

 

For further information, please contact:

va@vila.es

 

21 June 2024