Prepared by Fabrizio Cascinelli, Francesco Della Scala
On July 12, 2023, the European Securities and Markets Authority (ESMA) launched the first public consultation under the so-called MICAR Regulation (Market in Crypto-Assets Regulation) i.e. Regulation (EU) 2023/1114 of the European Parliament and of the Council of May 31, 2023 on crypto-assets markets.
The objective of the MICAR Regulation – published in the Official Journal of the European Union on June 9, 2023 – is to address the fragmentation of the European legal framework applicable to crypto-assets and, more specifically, to offerors or persons requesting their admission to trading as well as to service providers related to them.
The Regulations define “crypto-asset” 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” and outlines three types of crypto-assets: asset-referenced tokens, e-money tokens and utility tokens, establishing specific rules for each type.
With reference to timing, the MICAR Regulation will be applicable in its totality from December 30, 2024; however, the requirements set for asset-referenced tokens and e-money tokens will have to apply as early as June 30, 2024.
In order to fully implement and enforce the standards set by MICAR, ESMA is required to develop (in close cooperation with EBA) Regulatory Technical Standards (RTS),Implementing Technical Standards (ITS) and guidelines; given the volume of technical standards to be developed, ESMA has previously announced that it will proceed with the publication of three consultation “packages” (the first in July 2023, the second in October 2023 and the third in the first quarter of 2024).
Therefore, the public consultation launched on July 12, 2023 represents the first of three expected Consultation papers and contains drafts of 5 sets of RTS and 2 sets of ITS that specifically address various aspects of Crypto-Asset Service Providers (so-called CASPs) under Title V of the MICAR Regulation.
Precisely, the technical standards submitted for consultation concern:
- information that certain financial entities must disclose to the relevant national authorities about their intention to provide cryptocurrency services (RTS ex Art. 60(13), MICAR);
- the standard formats, templates and procedures for the notification referred to in the previous point (ITS ex art. 60(14), MICAR);
- the content of the application for authorization as a service provider for cryptocurrencies (RTS ex art. 62, par. 5, MICAR);
- formats, templates, and standard procedures for the information to be included in the application for authorization as a service provider for cryptocurrencies (ITS ex Art. 62(6), MICAR);
- the requirements, templates and procedures for the handling of complaints by cryptocurrency service providers (RTS ex Art. 71(5), MICAR);
- requirements for policies and procedures on the management, prevention and disclosure of conflicts of interest by service providers for cryptocurrencies (RTS ex Art. 72(5), MICAR);
- the requirements of information on plans to acquire a qualified interest in a cryptocurrency asset service provider (RTS ex Art. 84(4), MICAR).
The ESMA consultation ends on September 20, 2023.
On the same day, the European Banking Authority (EBA) has also submitted for consultation three documents containing draft technical standards with reference to asset-referenced tokens under the MICAR Regulation.
In particular, EBA’s technical standards cover:
- the requirements, templates and procedures for the handling of complaints by issuers of asset-referenced tokens (RTS under Article 31(5), MICAR);
- the content of the application for authorization to offer asset-referenced tokens to the public or request their admission to trading (RTS ex Art. 18(6), MICAR);
- the formats, templates and standard procedures for the information to be included in the application for authorization referred to above (ITS ex Art. 18(7), MICAR);
- the requirements for information on projects to acquire a qualifying holding of asset-referenced token issuers (RTS ex Art. 42(4), MICAR).
EBA’s consultations end on October 12, 2023.
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