European rules on crypto-assets – The MICAR Regulation

Prepared by Fabrizio Cascinelli, Francesco Della Scala, Silvia Brezigia

Published in the Official Journal of the European Union on 9 June 2023 the first European Regulation aimed at harmonising the regulation of crypto-assets among Member States (Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on crypto-asset markets and amending Regulations (EU) No 1093/2010 and (EU) No 1095/2010 and Directives 2013/36/EU and (EU) 2019/1937). 

This is the so-called MICAR Regulation (Market in Crypto-Assets Regulation), which aims to address the fragmentation of the legal framework applicable to crypto-assets and, more specifically, to offerors or persons seeking admission to trading and crypto-asset service providers.

The subject matter of the MICAR Regulation is broad and clearly defined; in particular, this Regulation lays down the following (in 149 articles divided into nine Titles):

  • transparency and disclosure requirements for the issuance, offer to the public and admission of crypto-assets to trading on a trading platform for crypto-assets;
  • requirements for the authorisation and supervision of crypto-asset service providers, issuers of asset-referenced tokens and issuers of e-money tokens, as well as for their operation, organisation and governance;
  • requirements for the protection of holders of crypto-assets in the issuance, offer to the public and admission to trading of crypto-assets;
  • requirements for the protection of clients of crypto-asset service providers;
  • measures to prevent insider dealing, unlawful disclosure of inside information and market manipulation related to crypto-assets, in order to ensure the integrity of markets in crypto-assets.

With reference to the scope, the MICAR Regulation will apply to issuers and offerors of crypto-assets (for which different rules apply depending on the type of crypto-asset issued) as well as to crypto-asset service provider.

The new Regulation defines “crypto-activity” as “a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology”; specifically, the Regulation outlines three types of crypto-assets: asset-referenced token, e-money token and utility token and specific rules are laid down for each type.

This Regulation does not apply to crypto-assets that are unique and not fungible with other crypto-assets as well as to crypto-assets that qualify as financial instruments, deposits (including structured deposits), funds (except if they qualify as e-money tokens), securitisation positions, non-life or life insurance products, pension products, pan-European Personal Pension Product; ESMA has the task to issue guidelines on the criteria and conditions for the qualification of crypto-assets as financial instruments.

It is useful to note that credit institutions authorised under Directive 2013/36/EU offering or seeking admission to trading of asset-referenced tokens will be subject to all requirements that apply to issuers of asset-referenced tokens except for authorisation requirements, own funds requirements and the approval procedure with respect to qualifying shareholders, as those matters are covered by sector-specific legislation.

The MICAR Regulation enters into force on the 20th day following its publication in the Official Journal of the European Union, i.e. on 29 June 2023, and will apply from 30 December 2024; however, the requirements set out for asset reference tokens and e-money tokens will apply from 30 June 2024.

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Fabrizio Cascinelli

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