THE REGULATION OF CRYPTO-ASSETS. MICA A FIRST STEP. 

Author: Enea Franza, economist

 

PREMISE. EUROPEAN REGULATION

The European Union, with the MiCA (Markets in Crypto-Assets) regulation[1], intervenes with the stated aim of creating a solid and harmonized regulatory framework in the field of crypto-assets, and pursues the goal not only by recognizing the potential of blockchain and distributed ledger (DLT) technologies, but also by responding to the need to address security challenges,  consumer protection and the stability of financial markets. Indeed, the intervention implemented is aimed at promoting a digital ecosystem that hopes to be innovative and competitive, while regulating the use of crypto-assets in a responsible and sustainable way, and supports the development of new business models related to distributed ledger technology (DLT) and blockchain whose potential, to develop new business models and economic activities,  is widely recognized^[2].

Indeed, crypto-assets represent one of the main applications of distributed ledger technology (DLT); they are digital representations of value or rights that have the potential to offer significant benefits to market participants, including retail holders.  The evidence shows how crypto-assets themselves can simplify capital raising processes and strengthen competition, offering an innovative and inclusive approach to financing, particularly useful for small and medium-sized enterprises (SMEs) and, when used as a means of payment, can make payments cheaper, faster and more efficient, especially on a cross-border basis, reducing the need for intermediaries[3].

That said, as anticipated, the objective (of MiCA) is to create a regulatory environment that not only stimulates innovation, but also brings concrete benefits to all European citizens, improving access to new opportunities and contributing to the economic and technological progress of the Union; in summary, the MiCA regulation aims to balance technological innovation with investor protection and financial stability, creating a regulatory framework that facilitates the development and competitiveness of the crypto-asset sector in Europe.

Before the MiCA regulation, in fact, the European regulatory framework was rather fragmented. Some crypto-assets, in particular those classifiable as financial instruments under Directive 2014/65/EU of the European Parliament and of the Council, were already subject to Union financial services law. For these crypto-assets, there was already comprehensive regulation covering both issuers and the companies involved, thus ensuring a robust and clear regulatory environment. However, many crypto-assets did not fall within the scope of European financial services legislation, as required by Directive 2014/65/EU (MiFID II) and Regulation (EU) No. 600/2014 (MiFIR). Except for anti-money laundering regulations, in particular Directive (EU) 2015/849 (AMLD), there were no specific rules for services related to these unregulated crypto-assets. This resulted in a lack of discipline on crucial aspects, such as the operation of trading platforms (not covered by MiFID II), the exchange of crypto-assets for fiat currency or other crypto-assets, and the custody and administration of crypto-assets on behalf of clients

The absence of a regulatory framework in these areas exposed holders of crypto-assets to considerable risks, especially in areas not covered by consumer protection rules, as set out in Directive 2011/83/EU on consumer rights. In addition, this lack of regulation generated significant risks to market integrity, including market abuse (Regulation (EU) No 596/2014) and financial crimes. To address these risks, some Member States had adopted specific regulations for crypto-assets not covered by EU financial services legislation, while others legislated independently in this area.

The absence of a unified regulatory framework at Union level undermined user trust in crypto-assets, representing a significant obstacle to the development of a single market for these technologies. This regulatory vacuum meant the loss of opportunities related to innovative digital services, alternative payment instruments and new sources of financing for businesses in the EU. Companies using crypto-assets did not enjoy legal certainty regarding their treatment in different Member States, holding back their digital innovation efforts.

Moreover, this lack of a common regulatory framework, if it had lasted too long, would certainly have led to a fragmentation of national regulations, distorting competition in the single market and making it difficult for crypto-asset service providers to expand cross-border, favouring regulatory arbitrage.

Now, although crypto-asset markets are still relatively small and do not currently pose a threat to financial stability,[4] there is a possibility that in the future consumers will adopt large-scale crypto-assets that aim to stabilize their value with respect to specific assets or baskets of assets and, of course, such a development could lead to additional challenges in terms of financial stability,  smooth functioning of payment systems, transmission of monetary policy and monetary sovereignty, as already discussed in the contexts of the European System of Central Banks (ESCB) and the European Central Bank (ECB).[5]

The European Union's regulation for markets in crypto-assets has set itself the goal of achieving several key objectives in response to the challenges and opportunities presented by this emerging sector. First, the clear and harmonised regulatory framework has supported innovation and promoted fair competition, allowing crypto-asset service providers to operate on a cross-border basis and facilitating market expansion and growth without excessive regulatory barriers. With regard to investor protection and market stability, the regulation introduces specific measures that ensure a high level of protection for retail holders and preserve the integrity of crypto-asset markets, including transparency and disclosure requirements to prevent fraud and malpractice[6]. The legislation also seeks to facilitate access to banking services for crypto-asset service providers, promoting greater integration between traditional and crypto-asset-based financial services, and allowing businesses to operate more easily across the European single market.

The proportionate treatment of issuers of crypto-assets and related service providers is ensured through the adoption of regulations adapted to the size and complexity of companies, supporting fair market access and incentivising sustainable development. In the environmental field, the regulation set requirements for the adoption of greener consensus mechanisms and provided for reporting obligations regarding the environmental impacts of crypto-assets, requiring issuers to provide clear information on the influence of their activities on the environment and taking solutions to reduce the environmental impact.

The regulation also seeks to avoid imposing excessive regulatory burdens, ensuring that regulations do not penalise companies and maintaining the competitiveness of the European market globally, without jeopardising innovation and growth in the crypto-asset sector. On this point, the European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA),[7] i.e. the European financial market regulators, are called upon to develop detailed technical standards relating to environmental reporting and the main energy indicators, defining the methodologies and presentations necessary to ensure clarity and consistency in information on the environmental impacts of crypto-assets.

 

1. REGULATED CRYPTO ASSETS

The European Union regulation on markets in crypto-assets MiCA starts from some premises that need to be made explicit.

Firstly, and incidentally, the European decision-maker bases the discipline on cooperation with international bodies such as the Financial Stability Board, the Basel Committee on Banking Supervision and the Financial Action Task Force is crucial. This approach ensures that Union regulations are aligned with best practices globally, helping to prevent regulatory arbitrage and foster effective supervision and greater international financial stability[8]. The synergy with these international bodies thus makes it possible to harmonize regulations and to address the global challenges posed by crypto-assets in a coherent manner, thus strengthening the stability and integrity of global financial markets.

Second, the regulation responds that EU legislative acts in the field of financial services are guided by the principle of 'same activity, same risks, same rules' and the principle of technological neutrality[9]. Therefore, crypto-assets falling under existing Union financial services legislation remain governed by the existing regulatory framework, regardless of the technology used for their issuance or transfer, instead of being governed by this Regulation. Thus, the MiCA discipline explicitly excludes certain categories.  

Crypto-assets qualified as financial instruments according to Directive 2014/65/EU (MiFID II) are excluded, as they are already regulated by existing regulations. In addition, crypto-assets classified as deposits under Directive 2014/49/EU, including structured deposits, are not covered by the regulation, and e-money tokens, while resembling deposits, are not treated as such under Directive 2009/110/EC. Crypto-assets that qualify as funds under Directive (EU) 2015/2366 (PSD2) are also excluded, unless they qualify as e-money tokens. The Regulation also does not apply to crypto-assets representing securitisation positions as defined in Regulation (EU) 2017/2402 and to non-life or life insurance contracts, pension products or social security schemes[10].

Unique and non-fungible crypto-assets, such as digital art and collectibles, are not covered by the regulation due to their uniqueness and the difficulty of comparison with other crypto-assets. However, if such unique crypto-assets are issued in series or collections indicating their fungibility, or if their characteristics make them de facto fungible, they could fall under the regulation[11]. MiCA also excludes intragroup transactions and activities of certain public entities, such as the International Monetary Fund and the Bank for International Settlements, as they do not pose significant risks to financial stability or other regulatory aspects. Finally, digital assets issued by central banks and other public authorities, such as central bank money in digital form, are also not subject to the Union Regulation for Markets in Crypto-assets.

On the other hand, with the aim of ensuring a clear distinction between crypto-assets regulated by the regulation and financial instruments, ESMA is the entity responsible for issuing guidelines on the criteria and conditions for qualifying crypto-assets as financial instruments. These guidelines will also need to clarify when crypto-assets, otherwise considered unique and non-fungible, could qualify as financial instruments.

In addition, to promote a uniform approach in the classification of crypto-assets, the EBA, ESMA and EIOPA will need to facilitate discussions on this classification. Competent authorities will be able to request opinions from the ESAs[12] on the classification of crypto-assets, including cases proposed by offerors or persons applying for admission to trading. Offerors and persons applying for admission are also responsible for the correct classification of crypto-assets, but this classification may be challenged by the competent authorities, both before the publication of the offer and subsequently[13].

Having said that, let's delve into the new discipline. The MiCA Regulation provides for a classification of crypto-assets into three distinct categories, each of which is subject to differentiated requirements based on the associated risks, as specified in Articles 3 and 4 of Regulation (EU) 2023/1114. In particular, Article 3 defines the different types of crypto-assets, distinguishing between "e-money tokens", "asset-referenced tokens" and "other crypto-asset tokens". Article 4 sets out the specific regulatory requirements for each category, adapting them to the particular risks associated with each type of crypto-asset. This classification is based on the characteristic of crypto-assets to stabilize their value by reference to other assets. Incidentally, the value of a crypto-asset can be seen from two main perspectives: external value and intrinsic value, and these two aspects are relevant for the purposes of market regulation. In summary, the external value of a crypto-asset is what is seen in the markets and can be influenced by external and speculative factors, while the intrinsic value is linked to the fundamentals and real utility of the crypto-asset^[14].

The first category, as already mentioned, includes crypto-assets that aim to stabilize their value by referring to a single official currency. Such crypto-assets perform a similar function to that of electronic money, as defined in Directive 2009/110/EC, and act as electronic substitutes for coins and banknotes, making them suitable for use in payments. These crypto-assets are identified in this Regulation as "electronic money tokens."

On this point, it is worth better emphasizing the differences with electronic money.  Electronic money (or e-money) is defined by Directive 2009/110/EC of the European Union as a monetary value stored electronically, including values stored on electronic or magnetic devices, issued upon receipt of funds and accepted as a means of payment by parties other than the issuer. It is a representative value of fiat money, which can be used to make payments through digital platforms or tools such as electronic wallets (e.g. PayPal or prepaid cards). E-money must be issued by a regulated entity such as a bank or licensed e-money institution. It is managed centrally and accepted as payment by a wide range of subjects, with direct convertibility into legal tender. Examples include prepaid cards that can be reloaded, or PayPal accounts.

On the other hand, the e-money token is a digital representation of a value that can be exchanged or used in a decentralized system, often associated with blockchain platforms. E-money tokens can be used on decentralized networks and employ smart contracts to manage transactions. Unlike regulated e-money, tokens can be issued without stringent regulatory oversight, depending on the context. Token issuers can be private developers or blockchain platforms, and the tokens themselves can serve several purposes beyond payments, such as representing holdings or access rights in digital ecosystems. Common examples are stablecoins, such as USDC or Tether, which are pegged to the value of fiat currencies such as the dollar. The main differences between e-money and e-money tokens relate to regulation, issuer, technology used, and usage structure. Electronic money is strictly regulated, issued by authorized institutions and is based on a centralized system for transactions. E-money tokens, on the other hand, can be unregulated, issued in decentralized systems, and used in more flexible and complex ways thanks to blockchain technology[15].

Therefore, there are significant differences between electronic money and crypto-assets pegged to an official currency. Holders of electronic money, as defined by Directive 2009/110/EC, always have a claim against the issuer and the contractual right to request at any time the redemption of the nominal value of the currency held. Conversely, some crypto-assets referenced to an official currency do not guarantee holders a similar claim on the issuer and may not fall within the scope of Directive 2009/110/EC. In addition, other crypto-assets of this type do not offer credit at the face value of the reference currency or impose time limits for redemption. As MiCA points out[16], the lack of a direct credit to the issuer or the absence of collateral on the nominal value could weaken the confidence of holders in these crypto-assets.

The second category includes so-called "asset-linked tokens" that aim to stabilize their value by referring to a value or right, or a combination of them, including one or more official currencies. This category includes all crypto-assets, other than e-money tokens, whose value is backed by specific assets, in order to avoid possible circumvention and to ensure that settlement remains future-proof.

It is essential for us to understand the difference between the two types of tokens. The distinction between Asset-Referenced Tokens (ART) and E-Money Tokens (EMT) is indeed subtle but important and concerns the nature of value stabilization and linkage with currencies. ARTs, as we have just seen, are crypto-assets that stabilize their value by referring to one or more underlying assets. These assets can include official currencies, but also assets or other rights. ARTs can be based on a single currency (e.g., a token pegged only to the U.S. dollar) or on a combination of currencies and other assets (e.g., a combination of euros and gold). If an ART is only linked to an official currency, it is still classified as an ART when the token's structure and issuance are more complex and could include other forms of collateralization beyond simply holding foreign exchange reserves. EMTs, on the other hand, are crypto-assets designed to maintain a stable value against a single official currency and operate as electronic money. EMTs must be directly linked to a single currency (such as the euro or US dollar) and must grant users the right to redemption at face value in that currency. EMTs essentially act as a digital representation of the currency and are tightly regulated to protect the stability of value, making them more similar to traditional electronic payment instruments. Therefore, if a token is only linked to an official currency and operates primarily as a means of payment, it is an EMT, while if the token is linked to several more complex assets or structures, i.e., it is linked to a combination of assets or currencies, or the structure is more complex than a simple currency representation,  is classified as ART. Therefore, definitely, if a token is only linked to an official currency but is more complex than a simple payment instrument, it will be an ART. Instead, if it is a direct and simple representation of an official currency, it will be an EMT.

Finally, the third category refers to "crypto-assets other than asset-linked tokens and e-money tokens", encompassing a large residual range of crypto-assets that do not have as their main objective the stabilization of their value by reference to an underlying asset or official currency and generally referred to as "Other Than". A list that is certainly not exhaustive, but merely explanatory of the types that fall into this category includes Utility Tokens. In this regard, these are crypto-assets designed to provide access to a specific product or service offered by a particular provider or platform. These tokens are not intended to serve as a means of payment or a stable store of value, but serve to facilitate use or interaction with digital applications or ecosystems. Another possible case to be included in the residual category concerns the so-called Governance Tokens. These tokens give holders the right to participate in decision-making processes within a decentralized network or platform. Holders can vote on proposals regarding platform development, protocol changes, or other strategic decisions, thus exerting influence on the future direction of the project.

Another category is that of Decentralized Network Tokens. These tokens are used to incentivize and facilitate participation in decentralized networks. They can be employed to reward network validators, facilitate governance, or enable exchanges within the ecosystem. Usually, they are issued by blockchain protocols and are closely linked to the technical functioning of the network itself.

Non-Fungible Tokens (NFTs) are also included, representing unique and non-interchangeable digital objects, often used to certify ownership of digital assets such as works of art, multimedia content or collections. Unlike other crypto-assets, NFTs are non-fungible, meaning that each token is unique and cannot be exchanged on a 1:1 basis for other tokens.

Another case is that of Decentralized Financial Services (DeFi) Access Tokens that are used within DeFi applications to allow users to access financial services such as loans, decentralized exchanges, yield farming and staking[17]. They are closely related to the DeFi ecosystem and can represent both economic participation rights and rewards for liquidity provided to the network.

The list also includes Tokens for Games and Metaverse (TGM), and the so-called Security Tokens. TGMs are used in gaming environments and virtual realities, such as the metaverse, and represent virtual currencies or assets that can be used within those platforms. They can be used to purchase virtual items, land, characters, or other digital assets. Security Tokens (when not linked to specific activities) can belong to different categories. When, in fact, they are not directly linked to an underlying asset, they fall into the third category, which includes tokens with more complex characteristics or that do not represent rights to specific assets. These tokens represent legal, financial or contractual rights, such as shares in a company or investment project, without being tied to specific stabilizing assets. In conclusion, this category encompasses an extremely diverse set of crypto-assets that do not aim to represent stabilizing currencies or assets, but rather serve as tools for accessing services, products, decentralized networks, governance, and digital assets.

Some of these, as already mentioned, are excluded from the MiCA regulation.

 

2. ISSUANCE, OFFER AND ADMISSION TO TRADING

Let us now first examine the aspects concerning the issuance, i.e., the initial creation and release of crypto-assets, the offering, i.e., the public proposal of these assets for sale or possession, and the admission to trading on platforms, which implies the inclusion of these assets on trading platforms to allow them to be exchanged between investors, since each process has a specific role and needs a separate discipline. MiCA also sets out specific rules for entities providing crypto-asset-related services, such as the operation of trading platforms, the exchange of crypto-assets for funds or other crypto-assets, the custody and administration of crypto-assets on behalf of clients, and crypto-asset transfer services. Other services include placing crypto-assets, receiving or transmitting crypto-asset orders on behalf of clients, executing crypto-asset orders, advising on crypto-assets, and managing the crypto-asset portfolio. This aspect, however, will be dealt with in a special paragraph to which reference is made.

The regulation is articulated through a graduation of the obligations of issuers, offerors and applicants for admission to trading with reference to the type of crypto-asset.  In the event that a crypto-asset falls under the definition of 'asset-referenced tokens' or 'e-money tokens', the provisions of Title III or Title IV of Regulation (EU) 2023/1114 (MiCA) shall apply, regardless of how the issuer intends to design the crypto-asset, including the mechanism to maintain a stable value of the crypto-asset. In particular, Title III applies to "asset-referenced tokens" and sets out specific requirements for their issuance and management, including transparency, disclosure and investor protection requirements, as provided for in Articles 16 to 47 of the Regulation. Title IV applies to "electronic money tokens" and regulates the methods of issuance, reserve requirements and protection of users' rights, as provided for in Articles 48 to 58 of the Regulation.

The same rules also apply to so-called algorithmic stablecoins, which seek to maintain a stable value against an official currency or one or more assets through protocols that regulate the supply of such crypto-assets in response to changes in demand, as specified in the MiCA Regulation. Conversely, if an offeror or applicant for admission to trading of algorithmic crypto-assets^[18] does not seek to maintain a stable value by referring to one or more assets, then it must follow the rules set out in Title II of Regulation (EU) 2023/1114 (MiCA), which lays down the general rules applicable to all crypto-assets that are not covered by specific rules in Titles III and IV,  defined as "tokens other than those linked to activities or electronic money" so-called "other than" as specified in articles 4 to 15 of MiCA.

The rules common to all tokens provided for by the MiCA (Markets in Crypto-Assets Regulation) regulation are designed to ensure a minimum level of investor protection and transparency in the crypto-asset market, regardless of the specific type of token. These rules apply to both Asset-Referenced Tokens (ART), Electronic Money Tokens (EMTs), and generic crypto-assets (other than tokens).

The minimum provisions are provided for in Title II and, as we will see, concern the obligation: to draft and publish a detailed whitepaper describing the project, the characteristics of the token, the associated risks and the rights of investors, in compliance; to keep the information provided in the whitepaper up to date and to promptly communicate any significant changes to the competent authorities and investors; notifying the competent authorities of their Member State before offering or admitting tokens to trading, although prior approval is not always required; to adopt an appropriate governance structure, including internal controls and risk management policies; to ensure security measures for the IT systems and for the custody of investors' funds, separating investors' funds from those of the issuer. In addition, there is an obligation to comply with anti-money laundering and counter-terrorist financing regulations including the implementation of KYC (Know Your Customer) measures and the monitoring of suspicious transactions.

 

2.2. THE ISSUANCE, OFFER AND ADMISSION TO TRADING: CRYPTO-ASSETS OTHER THAN ASSET-REFERENCED TOKENS OR E-MONEY TOKENS

To ensure a proportionate approach, MiCA provides that the requirements set out in the Regulation do not apply to offers to the public of crypto-assets other than asset-referenced tokens or e-money tokens that are offered free of charge or automatically created as a reward for maintaining a distributed ledger or validating transactions within a consensus mechanism,  as provided for in Article 4, paragraph 1, of Regulation (EU) 2023/1114 (MiCA). In addition, the requirements do not apply to offers of utility tokens that provide access to existing goods or services, allowing the holder to withdraw the asset or make use of the service, or if the holder of the crypto-assets has the right to use them exclusively in exchange for goods and services in a limited network of merchants with contractual agreements with the offeror,  as indicated in Article 4, paragraph 1, letter a) of Regulation (EU) 2023/1114 (MiCA). However, as specified in Article 5(4) of Regulation (EU) 2023/1114 (MiCA), the exemption ceases when the offeror, or a person acting on its behalf, expresses an intention to apply for admission to trading or when the exempted crypto-assets are actually admitted to trading[19].

The requirements for the preparation and publication of a crypto-asset white paper, as set out in Article 6 of Regulation (EU) 2023/1114 (MiCA), do not apply to offers of crypto-assets other than asset-referenced tokens or e-money tokens if these offers are addressed to fewer than 150 persons per Member State or exclusively to qualified investors,  provided that such crypto-assets can only be held by such investors, in accordance with Article 4(2)(a) of the MiCA Regulation. In addition, offers of crypto-assets whose total value does not exceed EUR 1,000,000 over a period of 12 months are exempted from the requirement to draw up a White Paper, as provided for in Article 4(2)(c) of the MiCA Regulation.

The admission to trading or publication of the buy and sell prices of crypto-assets shall not be considered as an offer to the public of crypto-assets, unless it includes a communication that constitutes an offer to the public within the meaning of Article 2(1) of the MiCA Regulation. It should be noted, however, that while some offers of crypto-assets are exempt from various requirements of the Regulation, Union legislative acts ensuring consumer protection, such as Directive 2005/29/EC of the European Parliament and of the Council or Council Directive 93/13/EEC, including the disclosure requirements contained therein, remain applicable to offers of crypto-assets to the public when they concern business-to-consumer relations[20].

Before making any offer to the public of crypto-assets in the Union or before such crypto-assets are admitted to trading, offerors and persons applying for admission to trading of crypto-assets other than asset-referenced tokens or e-money tokens must notify their white paper and, at the request of the competent authority, also their marketing communications,  to the competent authority of the Member State in which they have their registered office, as set out in Articles 5, 6 and 7 of Regulation (EU) 2023/1114 (MiCA).

If the issuer and/or offeror does not have a registered office in the Union, the notification must be made to the Member State in which they have a branch. Bidders established in a third country must notify their White Paper and, if required, their marketing communications to the competent authority of the Member State where they intend to offer crypto-assets.

With regard to the whitepaper, it should be noted that this document must provide detailed information regarding the issuer, offeror or person requesting admission to trading, the project for which the capital is raised, the public offering of crypto-assets or their admission to trading, the rights and obligations associated with the crypto-assets, the underlying technology and the risks involved. However, the White Paper should not include a description of unpredictable or highly unlikely risks. The information contained in the White Paper and advertising materials, including messages on social media and other platforms, must be fair, clear and not misleading. The whitepaper must be available in electronic format and must meet the transparency requirements of MiCA. In addition, the White Paper and trading platforms' operating rules must be drafted in at least one official language of the home Member State and of any host Member State, or in a language commonly used in international finance circles, currently English, although this may change in the future.

The operator of a trading platform is responsible for complying with the requirements of Title II of Regulation (EU) 2023/1114 (MiCA) when crypto-assets are admitted to trading on their own initiative and the White Paper has not already been published, as set out in Article 8(1) of the MiCA Regulation. In such a case, the operator must ensure that the information contained in the White Paper is clear, accurate and not misleading. In addition, the AIFM is responsible for complying with these requirements even if it has entered into a written agreement with the person requesting admission to trading, as specified in Article 8(2) of the MiCA Regulation. However, the person applying for admission to trading continues to be responsible for providing accurate information and for all matters that have not been delegated to the operator of the trading platform, in accordance with Article 8(3) of the MiCA Regulation.

Competent authorities have the power to request amendments to the White Paper and marketing communications, as well as to request the inclusion of additional information, as provided for in Article 7(4) of Regulation (EU) 2023/1114 (MiCA). In addition, competent authorities may suspend or prohibit an offer to the public of crypto-assets or their admission to trading where such transactions do not comply with the requirements of the MiCA Regulation or if the White Paper or marketing communications contain incorrect, unclear or misleading information, as set out in Article 7(5). Competent authorities may also publish a notice informing the public that the offeror or the person requesting admission to trading has not complied with the applicable requirements.

White papers on crypto-assets, duly notified to a competent authority, together with marketing communications, must be published, but the competent authority is not required to approve them before publication, as required by Article 8(5) of Regulation (EU) 2023/1114 (MiCA). Once such publication has been made, offerors and persons applying for admission to trading may offer such crypto-assets throughout the Union, in accordance with Article 8 of the MiCA Regulation. Providers of crypto-assets, other than asset-linked tokens and e-money tokens, must take effective measures to monitor and protect the funds or crypto-assets raised during the offering. In the event of cancellation of the offer, the funds or crypto-assets raised must be returned to holders without undue delay. In addition, the offeror must ensure that the funds or crypto-assets raised are safeguarded by an independent third party, as referred to in Article 14(1) of the MiCA Regulation.

To further protect retail holders, a right of withdrawal of 14 days from the acquisition is guaranteed, as provided for in Article 13 of the MiCA Regulation. This right cannot be exercised after the expiry of the subscription period and does not apply if crypto-assets are admitted to trading before purchase, in accordance with Article 46 of the MiCA Regulation. Finally, bidders and applicants for admission to trading must operate with honesty, fairness and professionalism, and must communicate with holders and potential holders of crypto-assets in a clear, fair and non-misleading manner, as required by Article 15 of the MiCA Regulation. In addition, as required by Articles 4 and 5 of the MiCA Regulation, those who issue, offer or trade crypto-assets must obtain registration and authorisation from the competent authorities, providing detailed information on the issuer, directors and governance processes. Measures to prevent market abuse, such as insider trading and market manipulation, must be complied with by all traders, in accordance with Articles 9-11 of the MiCA Regulation.

It is also mandatory for issuers and service providers to comply with prudential requirements, such as capitalisation and liquidity, to ensure the stability of transactions, as required by Article 14 of the MiCA Regulation. Finally, crypto-asset operators must ensure cybersecurity and risk management in accordance with the technical and security standards set out in Article 15 of the MiCA Regulation.

In addition, issuers, bidders must comply with AML/CFT regulations[21], implementing KYC (Know Your Customer) policies, and monitoring transactions for suspicious activity. They must ensure that investors have access to all the information they need to make informed decisions and to protect their rights.

 

2.3 ASSET-LINKED TOKENS: A.R.T.

Issuers of asset-linked tokens are subject to stricter regulatory requirements than other issuers of crypto-assets due to the higher risks associated with these tokens. Asset-linked tokens can be used as a means of exchange or transfer of value, and as such, they can compromise the protection of holders and the integrity of the market. Therefore, specific regulation is essential to ensure proper supervision and monitoring.

Issuers of asset-referenced tokens must be based in the European Union, as required by Regulation (EU) 2023/1114, Article 16(1). The public offering of such tokens is allowed only with the authorisation of the competent authority and approval of the White Paper, in accordance with Article 18(1) and (2) of the same Regulation. However, authorisation is not required if the tokens are intended exclusively for qualified investors or if the public offering does not exceed EUR 5,000,000, as set out in Article 16(4). In such cases, the issuer must still draft a White Paper to inform buyers of the characteristics and risks of the tokens and notify the White Paper to the competent authority before publication, as required by Articles 18(3) and 19(1).

Credit institutions authorised under Directive 2013/36/EU do not need additional authorisation to offer or apply for admission to trading of asset-referenced tokens, but must notify the competent authority of the elements necessary to verify their ability to manage such tokens, as set out in Article 24 of Regulation (EU) 2023/1114. These institutions must comply with the requirements applicable to issuers of asset-referenced tokens, with the exception of those relating to authorisation, own funds and the qualified shareholder approval procedure, in accordance with Directive 2013/36/EU and Regulation (EU) 575/2013[22].

The White Paper prepared by these institutions must be approved by the competent authority of the home Member State before its publication, in accordance with Article 18(2) of Regulation (EU) 2023/1114.

A competent authority may refuse authorisation on objective and demonstrable grounds, including risks to market integrity or financial stability. Before granting or refusing authorisation, the competent authority shall consult the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA) and the European Central Bank (ECB), and, if the issuer is established in a Member State with a currency other than the euro, also the central bank of that Member State, as set out in Article 20 of Regulation (EU) 2023/1114. If the ECB or the central bank issues negative opinions on grounds of financial stability or other risks, the competent authority must refuse authorisation. If granted, the authorisation is valid throughout the Union, allowing the issuer to offer the tokens and apply for admission to trading without further national requirements, and the White Paper is also valid throughout the Union without further national requirements, as set out in Article 21 of Regulation (EU) 2023/1114.

To ensure the protection of retail holders, issuers must provide complete and clear information. White Papers must contain details on the stabilisation mechanism, the policy for investing reserves, the safekeeping arrangements and the rights of holders, as provided for in Article 18(3). In addition, they must provide ongoing information on the tokens in circulation and the value and composition of reserves, and disclose any significant event that may affect the value of the tokens, according to Article 24 of Regulation (EU) 2023/1114.

Issuers must act honestly and professionally, respecting the interests of token holders and have transparent procedures in place for handling complaints. They must implement policies to identify, prevent, manage and communicate conflicts of interest and have robust governance arrangements and procedures in place for risk management. The members of the management body must meet the requirements of competence and good repute and must not have been convicted of compromising offences, while shareholders with qualifying holdings must also meet the requirements of good repute, as set out in Article 25 of Regulation (EU) 2023/1114.

Issuers must use resources proportionate to the size of their businesses and ensure business continuity, establishing continuity policies to maintain core businesses in the event of disruptions. They must also have a robust internal control system and procedures to ensure information integrity and risk management. Issuers of asset-referenced tokens must select independent, accredited and qualified auditors to ensure an objective and accurate assessment of reserves and management practices. The independent audit function is crucial to verify that reserves are adequate and managed in accordance with the requirements set out in Regulation (EU) 2023/1114. Auditors must carry out periodic audits and provide detailed reports on management practices and reserve conditions, ensuring that any discrepancies or issues are promptly identified and reported to the relevant authorities. These reports must be made available to supervisory authorities and investors, thus ensuring a high level of transparency and trust in the crypto-asset market. In the event of non-compliance or irregularities found by the independent auditors, the authorities may take corrective measures, including administrative sanctions, requests for immediate remedies or, in serious cases, the suspension or revocation of the issuer's authorisation.

To manage risks to the stability of the financial system, issuers must comply with own funds requirements proportionate to the issuance of tokens, calculated as a percentage of reserves. Competent authorities may increase own funds requirements based on risk management and reserve volatility, as set out in Article 28. Reserves must be securely stored, segregated from the issuer's assets and managed by authorised service providers. In the event of a decline in the value of reserves, issuers must invest in safe, low-risk financial instruments to maintain the stability of the tokens' value. Token holders are entitled to permanent redemption, which must take place in funds equivalent to the market value of the underlying assets or with the delivery of the same assets, as set out in Article 30 of Regulation (EU) 2023/1114.

Article 40 of Regulation (EU) 2023/1114 (MiCA) prohibits issuers of asset-linked tokens from granting interest on the tokens. This provision was introduced to prevent such tokens from being used as long-term savings or investment tools, which could compromise financial stability and investor protection. The ban on granting interest on asset-linked tokens is to prevent potential financial risks. Allowing interest could incentivize the use of tokens as savings tools, which could have destabilizing effects on the market and increase risks for investors. The article reflects a regulatory orientation aimed at keeping tokens linked to assets as means of payment or transfer of value, rather than as investment instruments. This measure helps prevent tokens from becoming long-term stores of value, reducing the risk of unrealistic expectations and potential losses for investors. In addition, the interest ban helps to ensure that investors are not lured into promises of passive returns that may be misleading or unsustainable. Without the ability to grant interest, investors are less inclined to invest in tokens with the expectation of passive gains, thus limiting the risk of disappointment and loss[23].

This provision also ensures regulatory uniformity within the European Union, reducing the risk of regulatory arbitrage between different member states and facilitating supervision and control. For issuers, the ban may affect business models, forcing them to explore other sources of revenue and review their bidding strategies. However, this ban helps to ensure that business models remain compliant with stability and investor protection regulations.

Issuers of asset-referenced tokens are required to develop and maintain a detailed recovery plan to address and correct any imbalances or discrepancies in the asset stockpile. This recovery plan must be structured to ensure that, in the event of insufficient reserves or other issues that may jeopardise compliance, the necessary measures are taken to restore the situation to normal and restore the expected level of reserves. In emergency situations or when reserves are not properly managed, the competent authority has the power to temporarily suspend token redemptions to protect market integrity and prevent further damage. In addition, issuers must develop an orderly redemption plan that allows for structured and systematic redemption management, thus ensuring the protection and rights of token holders. This redemption plan must be drawn up in accordance with the provisions set out and, if the issuer is subject to Directive 2014/59/EU, must include consultation with the relevant resolution authority, as provided for in Article 33 of Regulation (EU) 2023/1114.

 

2.4 E-MONEY TOKENS: E.M.T.

Issuers of electronic money tokens must be authorised as credit institutions under Directive 2013/36/EU or as electronic money institutions under Directive 2009/110/EC.[24] This implies that, depending on their activity, they can be regulated as traditional banks or as institutions specialized in the issuance of electronic money. E-money tokens must be considered 'electronic money' within the meaning of Directive 2009/110/EC, which implies that they must comply with the rules on issuance and redemption laid down in the Directive.

Issuers of electronic money tokens are required to comply with the requirements of Directive 2009/110/EC for the start-up, operation and prudential supervision of electronic money institutions, including obligations relating to the issuance and redemption of tokens. This includes compliance with regulations regarding the protection of client funds and transparency of operations.

In addition, issuers must draft a White Paper, which must be notified to the respective competent authority prior to publication. The White Paper must provide detailed information on the characteristics and risks of e-money tokens, as well as the conditions for admission to trading.  The MiCA Regulation (Regulation (EU) 2023/1114) provides that the White Paper must include all relevant information regarding the issuer itself and the offering of e-money tokens, such as the right of redemption at face value and the face value of funds denominated in the token's official reference currency.

Issuers of e-money tokens can also benefit from the exemptions specified in Directive 2009/110/EC. Such exemptions are designed to reduce the regulatory burden for small entities or specific transactions that do not pose a significant risk to the stability of the financial system or to consumer protection. These exemptions include those for limited networks, for certain transactions carried out by providers of electronic communications networks and for institutions issuing only a limited maximum quantity of electronic money^[25]. However, even in the presence of such exemptions, it is mandatory to draft and notify the White Paper to ensure transparency and information to buyers.

The MiCA Regulation complements and expands the provisions of Directive 2009/110/EC, maintaining the rights of holders of electronic money tokens, such as the right to redemption at face value and the absence of additional fees. In particular, MiCA stipulates that it is not permitted to charge fees for the redemption of e-money tokens. This provision aims to ensure transparency and adequate protection for investors, ensuring that token holders can always recover the face value without additional charges.

Issuers of e-money tokens must develop and maintain recovery and redemption plans to ensure that the rights of holders of e-money tokens are protected in the event that issuers are unable to meet their obligations. These plans should include specific measures to address any shortfalls in reserves or other issues that may compromise compliance.

The MiCA Regulation also stipulates that e-money tokens must not generate interest, as required by Article 50 of the MiCA Regulation. This ban helps prevent tokens from being used as long-term savings or investment tools and reduces the risk of unrealistic expectations and potential losses for investors. Additionally, the prohibition of interest is essential for keeping tokens as a means of payment or transfer of value, rather than as investment instruments.

When an issuer of e-money tokens receives funds from buyers in exchange for the tokens, those funds must be invested in assets denominated in the token's official reference currency. This requirement is to ensure that the issuer can maintain the face value of the token and prevent currency risks that could compromise the token's ability to redeem. Investing funds in assets denominated in a different currency could expose the issuer to currency fluctuations, compromising the stability of the token's value.

In addition, issuers must comply with anti-money laundering (AML) and know-your-customer (KYC) regulations, such as the provisions of Directive (EU) 2018/843 (Fourth AML Directive) and applicable local requirements. AML and KYC regulations are essential to ensure that transactions are secure and compliant, preventing money laundering and terrorist financing. Issuers must also comply with the General Data Protection Regulation (GDPR) to ensure that clients' personal information is treated safely and securely.

In summary, the regulatory framework for e-money tokens has strict requirements to ensure investor protection and market stability, ensuring that the rights of token holders are adequately protected and that transactions are managed in a transparent manner and in compliance with European regulations.

 

3. THE SIGNIFICANCE

The concept of significance within the Markets in Crypto-Assets Regulation (MiCA) is a central element in the regulation of crypto-assets, with particular regard to the supervisory obligations and requirements applicable to issuers. A crypto-asset token can be considered significant if it is widely used by a large number of users, both individuals and businesses, and if it has a large-scale diffusion that increases the risk of systemic impacts if there are issues with the stability, accessibility or convertibility of the tokens. The economic size of the token, measured in terms of market capitalization, is another critical factor. A token with significant capitalization can have a major impact on financial markets, affect other asset classes, and affect investor confidence. A high number of transactions, particularly if regular and widespread, is a further indicator of significance. A high transactional volume indicates that the token is used extensively in payments, transfers, or other economic transactions, making it potentially systemic.

In addition, tokens that are used not only domestically, but that have a wide international diffusion, can be considered significant. Their adoption on a global scale amplifies the risks related to their instability or lack of supervision. Ultimately, tokens that have the potential to influence financial markets, institutions or payment infrastructures can be considered significant and this is linked to the risk that their failure or instability could generate ripple effects in the global or regional financial system. A somewhat different situation is the case where the issuance of a token is concentrated in a few hands or at a few players. In such a situation, there is a real risk that these entities could significantly influence the price or availability of the token. This concentration can lead to governance issues and pose a vulnerability for the entire system. Finally, tokens that are closely tied to other crypto-assets or traditional financial instruments may be considered significant if their fluctuation affects the value or stability of other markets. The presence of derivatives or financial instruments based on the token can amplify the risks.

The concept of significance in the context of MiCA is a mechanism that allows authorities to identify and regulate more rigorously those crypto-assets that pose a potential systemic or consumer protection risk. The MiCA framework outlines regulatory criteria and consequences for asset-linked tokens, e-money tokens and, more generally, for other crypto-assets.

MiCA defines the significance of "asset-referenced tokens" (ART) based on specific criteria set out in Article 39. This article sets out systemically important criteria, including customer size, market capitalisation level and transaction volume. When asset-referenced tokens meet these criteria, they are classified as "significant," resulting in more stringent regulatory requirements under Articles 43 and 44. These requirements include transparency obligations, detailed reporting, and the need to maintain adequate reserves to ensure the stability of the token's value.

The supervision of significant ART issuers is entrusted to competent authorities, including the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA), in accordance with Article 48. The significance of 'electronic money tokens' (EMTs) is governed by Article 45, which sets out criteria similar to those applied to asset-linked tokens: a large user base, high market capitalisation and significant volume of transactions. When e-money tokens reach significant status, issuers are subject to additional governance requirements (as provided for in Article 46), as well as more stringent obligations regarding consumer protection and maintaining liquidity to ensure convertibility into fiat money at all times. In addition, Article 48 requires enhanced supervision for issuers of significant EMTs, aimed at minimising systemic risks.

Incidentally, in the context of the MiCA Regulation, the significance of asset-referenced tokens is also monitored not only on the basis of economic and market criteria, but also for their impact on the financial system and monetary policy. If an asset-linked token is identified as posing a serious threat to the financial system or monetary policy, central banks may require the competent authorities to revoke the issuer's permission to offer such tokens. This extreme measure is intended to prevent significant systemic damage. In addition, competent authorities may be required to limit the amount of asset-linked tokens that can be issued, to avoid an excessive impact on economic stability. Alternatively, a minimum nominal amount may be imposed to ensure that the token cannot be used for purposes that threaten monetary policy or monetary sovereignty. These rules and measures reflect MiCA's intent to ensure that asset-referenced tokens operate in a safe and stable manner, preventing their spread and overuse from undermining the financial system or monetary policies.

The provisions on significant electronic money tokens (EMTs), as defined in Articles 56 and 57 of MiCA, are similar to those for asset-referenced tokens, but have their own specificities. The rules applicable to e-money tokens are dealt with in Articles 43-46 of the MiCA Regulation[26].  In particular, where e-money tokens pose significant risks to financial stability or monetary policy, competent authorities shall have the power to take measures to mitigate those risks, as provided for in Article 44. These measures may include limiting the amount of tokens that can be issued or stricter reserve requirements. Finally, Article 46 provides that central banks may require competent authorities to take specific measures if e-money tokens pose a serious threat to the financial system, monetary policy or monetary sovereignty. Measures may include restricting the issuance of new tokens or imposing a minimum nominal amount. In the case of e-money tokens, as for asset-referenced tokens, central banks may require the withdrawal of the issuer's authorisation if the token poses a serious threat to the financial system or monetary policy. In addition, competent authorities may limit the amount of e-money tokens that can be issued or impose a minimum nominal amount to prevent detrimental effects on economic stability and monetary policy.

These rules reflect MiCA's intent to ensure that e-money tokens operate in a secure and stable manner, preventing their spread and overuse from undermining the financial system or monetary policies, similar to what is expected for asset-linked tokens. Finally, with regard to non-asset-linked tokens, which are not designed to maintain a stable value relative to an underlying asset, significance is mainly related to their diffusion and the potential systemic impact they may have.

While there is no specific regulatory definition in MiCA for the significance of unpegged tokens, MiCA provides general guidance on the requirements applicable to all significant crypto-assets, including monitoring their impact on the market and the real economy. Even for these crypto-assets, significance implies more intense supervision by the authorities, especially in situations where their extensive use could jeopardise financial stability.

 

4. SERVICE PROVIDERS

Until the entry into force of the MiCA Regulation (Regulation (EU) 2023/1114), the provision of crypto-asset-related services was unregulated in most Member States, despite known risks to investor protection, market integrity and financial stability. In particular, in Italy, until 2022, there was no specific legislation dedicated exclusively to crypto-asset services. Crypto-assets were largely regulated through general and indirect regulations, such as those related to the prevention of money laundering and investor protection. Ultimately, operators in the crypto-asset sector had to comply with anti-money laundering (AML) regulations, which in Italy were regulated by Legislative Decree 231/2007, which implements EU Directive 2015/849 (IV Anti-Money Laundering Directive). This legislation imposed customer due diligence (KYC) obligations and suspicious transaction reporting. However, these rules were more general and not specific to crypto-asset services. Since 2022, Italy has launched a series of initiatives to improve the regulation of crypto-assets. The Market Supervisory Authority (Consob) and the Bank of Italy have intensified the monitoring and enforcement of existing regulations, and parliamentary debates have been held to introduce more specific and detailed legislation. However, until the introduction of MiCA, Italian regulation remained relatively fragmented and less developed than in other European countries, such as Germany or France[27].

The MiCA regulation applicable to the provision of services for crypto-assets is mainly contained in Title V. This title regulates crypto-asset service providers and includes various chapters and articles. In particular, Chapter 1 (Articles 59–74) concerns the authorisation and supervision of crypto-asset service providers, setting out the conditions and requirements for obtaining authorisation and the responsibilities of competent authorities for supervision. Chapter 2 (Articles 75–84) sets out the prudential and operational requirements that lenders must comply with, including capital requirements and risk management measures. Chapter 3 (Articles 85–93) defines organizational requirements, such as those related to governance and organizational structure. Chapter 4 (Articles 94–101) regulates disclosure and transparency requirements, including the disclosure of information on services and risks associated with crypto-assets. Chapter 5 (Articles 102–111) sets out rules for consumer protection, including provisions relating to customer rights and complaint handling. Chapter 6 (Articles 112–119) regulates specific requirements for the custody and management of crypto-assets, including requirements for the separation and protection of client funds.

These articles provide a detailed framework for the regulation of crypto-asset service providers, ensuring that they operate in a prudent, secure and compliant manner with the standards set by MiCA. In particular, crypto-asset service providers operating in the European Union and applying for authorisation to offer crypto-asset services must comply with the conditions and requirements for obtaining authorisation to provide crypto-asset services. To obtain authorisation, a provider must submit an application to the competent authority of the Member State in which it has its registered office and comply with various regulatory requirements, including organisational and prudential requirements (ex Article 60). These requirements include the demonstration of an adequate organizational structure, sufficient financial resources, and appropriate risk management measures (ex Article 61).

The authorities must decide within certain deadlines and provide reasons in the event of refusal.

The MiCA regulation provides that crypto-asset services may only be offered by legal entities with their registered office in a Member State of the European Union, where they must also carry out substantial commercial activities, including the provision of such services. This requirement ensures effective supervision and prevents circumvention or aggravation of controls. In addition, providers of such services must operate within the European Union to ensure prudential supervision and enforcement of the requirements of the MiCA Regulation, aimed at protecting investors, maintaining market integrity and safeguarding financial stability. Direct, continuous and regular contact between the supervisory authorities and the management of the service providers, which must have their effective place of management in the European Union, with at least one director resident in the Union, is also required[28].

In addition, in order to protect the Union's financial system from the risks of money laundering and terrorist financing, it is crucial that crypto-asset service providers put in place strengthened controls[29]. This is particularly important when dealing with financial transactions involving customers and financial institutions from high-risk third countries, i.e. countries with significant deficiencies in their anti-money laundering and countering the financing of terrorism regimes.

That said, according to Regulation (EU) 2023/1114 (MiCA), the authorisation to operate as a crypto-asset service provider must be granted, refused or revoked by the competent authority of the Member State where the provider has its registered office. When a competent authority grants an authorisation, it must specify the crypto-asset services that the provider is authorised to offer and must be valid in all EU Member States.

Certain companies can provide crypto-asset services without obtaining a specific new authorisation. In particular, credit institutions already authorised under Directive 2013/36/EU (CRD IV), investment firms regulated by Directive 2014/65/EU (MiFID II), insurance and reinsurance companies regulated by Directive 2009/138/EC (Solvency II), and fund management companies and asset management companies (asset management companies) regulated by Directive 2011/61/EU (AIFMD) only need to notify the competent authorities of their intention to offer crypto-asset services, as provided for in Article 61 of the MiCA Regulation. Even without a new authorisation, they will be treated as crypto-asset service providers and will be subject to the rules and administrative powers provided for in the MiCA Regulation, but will be exempt from the authorisation, capital and shareholder approval requirements already governed by the existing regulations to which they are subject.

The national competent authority is responsible for verifying that the provider complies with all regulatory requirements before granting authorisation. Once obtained, the authorisation specifies the crypto-asset services that the provider is authorised to offer and remains valid in all EU Member States. In particular, Article 64 sets out the conditions and procedures for the withdrawal of authorisation if a service provider no longer meets the regulatory requirements or does not comply with the provisions of the Regulation. The service providers themselves must inform the competent authority of any significant change in their situation, structure or operations that may affect their compliance with the authorisation requirements. Service providers must also disclose detailed information on their operations and the crypto-assets they manage, to ensure transparency and oversight. To ensure consumer protection, market integrity and financial stability, crypto-asset service providers must always act honestly, fairly and professionally and in the best interests of their clients, as set out in Article 66 of Regulation (EU) 2023/1114 (MiCA). Crypto-asset services are considered financial services according to Directive 2002/65/EC when they meet the criteria defined by that Directive. If such services are marketed at a distance, contracts between crypto-asset service providers and consumers must also comply with Directive 2002/65/EC, unless otherwise specified by the MiCA Regulation, as provided for in Article 6. Crypto-asset service providers are obliged to provide complete, fair, clear and non-misleading information to their clients and must warn them of the risks associated with crypto-assets. In addition, they must make their pricing policies public, establish procedures for handling complaints, and have robust policies in place to identify, prevent, manage, and disclose conflicts of interest.

To ensure consumer protection, authorised crypto-asset service providers must comply with prudential requirements, as provided for in Article 67 of the MiCA Regulation. These prudential requirements are set as a fixed amount or in proportion to the fixed overheads of the providers, depending on the type of services provided. In addition, crypto-asset service providers must meet strict organisational requirements, as required by Article 68 of the MiCA Regulation. The members of the management body must be fit and must not have been convicted of offences related to money laundering, terrorist financing or other offences that may compromise their good repute. Shareholders or members with qualifying holdings must be of good repute and must not have any convictions for similar offences. In addition, competent authorities must have the power to intervene if the influence of shareholders or members could jeopardise the sound and prudent management of the service provider. Crypto-asset service providers must employ managers and staff with appropriate knowledge, skills and competencies and must take reasonable steps to enable them to perform their respective functions, including the development of a business continuity plan. Crypto-asset service providers must have robust internal control and risk assessment mechanisms in place and adequate systems and procedures to ensure the integrity and confidentiality of information. In addition, they must adopt provisions to record all transactions, orders and services related to crypto-assets and must have systems in place to identify potential market abuse. To ensure the protection of clients' ownership rights over crypto-assets held, crypto-asset service providers need to make appropriate arrangements.

Article 69 of the MiCA Regulation sets out specific requirements for the storage and recording of information by crypto-asset service providers. These requirements are essential to ensure transparency and accountability in the crypto-asset sector and to enable competent authorities to perform their supervisory and control functions effectively. Crypto-asset service providers are obliged to keep detailed records of the transactions and services provided, including data on clients, transactions and any other relevant information. This guarantees the traceability and verification of the activities carried out. The information must be kept for a minimum period of five years from the date of the transaction or from the termination of the service. This period is considered adequate to allow authorities to access the data necessary for investigations and controls even after a long period after the transaction or the termination of the service. Information must be stored in a form that ensures its integrity and security, involving the use of secure IT systems and procedures that prevent data loss, modification or tampering. Service providers are required to follow regulatory technical standards and guidelines set by the European Commission and the relevant authorities, ensuring that recording and storage practices are uniform and comply with European standards. In addition, the information recorded must be complete and accurate, requiring service providers to implement effective procedures for data verification and validation.

 

5. THE TYPE OF SERVICES

MiCA clearly states which crypto-asset services can be authorised.

According to Article 3 of Regulation (EU) 2023/1114 (MiCA), crypto-asset services that require authorisation include: the custody and administration of crypto-assets on behalf of third parties, the provision of crypto-asset exchange services against fiat currencies or other crypto-assets, the execution of orders related to crypto-assets on behalf of third parties, the transfer of crypto-assets from one distributed address or ledger account to another,  advice on the purchase, sale and use of crypto-assets, the public offering or issuance of crypto-assets, the operation of crypto-asset trading platforms, the placement of crypto-assets on behalf of third parties, the reception and transmission of orders for crypto-assets on behalf of third parties, and the management of crypto-asset portfolios on behalf of clients. These services must be licensed to ensure compliance with MiCA regulations, protect investors, and safeguard the integrity of the crypto-asset market.

Incidentally, MiCA provides that not all crypto-asset-related activities or entities are required to obtain a licence to operate. In particular, it distinguishes between crypto-asset service providers, which usually need to be authorised, and crypto-asset issuers, which are subject to different requirements depending on the type of crypto-asset issued[30]. MiCA sets out differentiated regulations for each role to adequately protect investors and ensure the safe functioning of the crypto-asset market. Therefore, issuers of crypto-assets, such as stablecoins and tokens, are not always obliged to obtain an authorization to provide services, but must still comply with certain obligations and requirements set out in MiCA, which depend on the nature of the crypto-asset issued. For example, as seen, utility tokens represent access to a specific service or product and do not require an authorization to operate if offered to the public in a single member state, but must still follow transparency rules, such as the publication of a white paper. Asset-referenced tokens (ART), which are pegged to multiple assets to maintain stable value, require stricter rules than utility tokens, including transparency obligations, minimum capital requirements, and risk management. Even though issuers of ART do not necessarily need to be licensed as crypto-asset service providers, they still need to obtain authorization to issue these tokens. Electronic money tokens (EMTs), which are tied to a single fiat currency, require specific authorization to operate as electronic money or credit institutions under the European Electronic Money Regulation (EMD2 Directive), and are not considered crypto-asset service providers but rather financial institutions. In some special cases, such as the private issuance of crypto-assets, if the tokens are not offered to the public or if the issuance is limited to a small group of qualified investors, the issuer may be exempt from authorisation requirements or stricter regulations. In addition, issuers launching crypto-assets of very limited value could benefit from certain exemptions based on the issuance threshold provided for in the regulation.

As regards providers of crypto-asset-related services, such as custody, platform operation and advice, they are generally subject to the authorisation requirement, as set out in MiCA. Unlike issuers, those who offer custody or exchange services of crypto-assets on behalf of third parties must obtain a license to operate, in order to ensure regulatory compliance and investor protection. In summary, MiCA distinguishes between crypto-asset service providers, which must always obtain authorization, and crypto-asset issuers, which, as we have seen, have different obligations based on the type of tokens they issue. Issuers of utility tokens may not need an authorization if they meet certain criteria, while issuers of ART and EMTs are subject to specific requirements and authorizations, different from those required for crypto-asset service providers. Therefore, while service providers must be licensed without exception, issuers of crypto-assets have different obligations depending on the type of crypto-assets they issue.

The services requiring authorisation include, as provided for in Article 3(1)(16)(a) and defined in point 17) of the MiCA Regulation, the custody and administration of crypto-assets. This service includes storing and protecting crypto-assets on behalf of clients and includes activities such as offering secure digital wallets or managing private keys for institutional clients. The regulation of these services reflects specific protection and security needs in the crypto-asset market.

Custody and administration is crucial to ensuring the security of digital assets held on behalf of customers. The secure storage of private keys and crypto-assets is essential to prevent theft and losses that could have serious financial consequences for investors. Inadequate management of these assets could undermine trust in the system and cause instability in the crypto-asset market. Regulating these services helps to protect investors and ensure that assets are managed and safeguarded according to high security standards. These security standards aim to prevent risks of abuse and fraud. Crypto-asset service providers must adopt governance and security practices that reduce the risk of embezzlement and ensure that they operate ethically and in compliance with applicable regulations.

In addition, crypto-asset service providers offering custody and administration services must conclude an agreement with clients that includes mandatory provisions, as set out in Article 75 of the MiCA Regulation. Such an agreement must clearly specify the nature of the service provided, which may include the holding of crypto-assets or the means of access to these assets. The agreement must be made available to customers in electronic format upon their request[31]. In the case of holding crypto-assets or means of access, the provider must ensure that these assets are not used for its own purposes and that they remain unencumbered at all times. In addition, crypto-asset service providers are liable for any losses resulting from information and communication technology (ICT) related incidents, including cyber-attacks, theft or malfunctions. The regulation of custody and administration services is particularly relevant as these services are vulnerable to specific risks, such as theft of crypto-assets and technological malfunctions. Therefore, it is crucial that service providers comply with strict regulatory requirements to ensure the safety and security of clients' digital assets, maintain market trust and ensure greater stability of the crypto-asset system.

Article 3(1)(16)(e) and (21) of the MiCA Regulation defines the service of executing crypto-asset orders as the activity of executing orders on behalf of clients on the crypto-asset market. Order execution includes the receipt and execution of client orders, ensuring that such orders are executed efficiently, accurately and in the best interests of clients, considering factors such as price, cost, speed, likelihood of execution and settlement, size and nature of the order. Service providers must have an order execution policy that explains how to obtain the best possible result for clients and communicate this policy to clients. They must also monitor the status of orders, manage any changes, cancellations or problems that may arise during the execution process, and provide confirmations and reports on the results of executed transactions. Crypto-asset service providers executing crypto-asset orders on behalf of clients should always aim to achieve the best possible result for their clients, including when acting as a counterparty to the client. Where a crypto-asset service provider acts as a counterparty to the client in the execution of orders, specific obligations regarding transparency and conflict of interest management apply. They must take all necessary measures to prevent their employees from misusing information related to customer orders (see Article 78 of the MiCA Regulation).

Crypto-asset service providers that receive orders and transmit them to other crypto-asset service providers, as provided for in Article 3(1)(16)(g) and defined in point (23), or those that carry out an activity consisting of receiving orders for crypto-assets from a client and transmitting them to another crypto-asset service provider or to a platform for execution,  they must implement procedures that ensure the timely and correct submission of such orders. Crypto-asset service providers shall not receive any monetary or non-monetary benefit for the transmission of orders to a particular trading platform or any other crypto-asset service provider, in order to avoid any conflict of interest. They must also monitor the effectiveness of the order execution arrangements and execution strategies in place, ensuring that the intended execution venues offer the best possible result for the client. If necessary, they must amend the execution arrangements and promptly inform the clients with whom they have a relationship of any material changes to their order execution arrangements or execution strategies (pursuant to Article 80 of the MiCA Regulation).

The exchange of crypto-assets for funds or other crypto-assets, when carried out by an issuer in a non-professional or ancillary manner, may not be considered a regulated crypto-asset service under the MiCA Regulation, unless the activity is of a professional or commercial nature. The regulation of crypto-asset exchange services, as provided for in Article 3(1)(16)(d) and defined in point (19), understood as the conversion of crypto-assets into fiat currency or other crypto-assets, through centralised or decentralised means, is crucial to ensure investor protection, minimise the risks of fraud and manipulation and ensure market stability. Regulation also contributes to greater integration of crypto-asset markets with the traditional financial system, promoting trust and acceptance of crypto-assets as legitimate financial instruments. Exchange services are also subject to anti-money laundering (AML) and countering the financing of terrorism (CFT) regulations, which require providers to adopt controls aimed at preventing the use of crypto-assets for illicit purposes (pursuant to Article 77 of MiCA).

A crypto-asset transfer service provider on behalf of clients, as referred to in Article 3(1)(16)(j) and defined in point (26), is an entity that provides the service of transferring crypto-assets from a distributed ledger address or account to another on behalf of a client. This includes executing transfers of crypto-assets from one client to another client or from one client to a third party. This service involves the movement of crypto-assets from a digital address controlled by one party to another address, with the obligation to comply with the client's instructions regarding the transfer. The transfer service does not include the activity of validators, nodes, or miners participating in confirming operations and updating the status of the underlying distributed ledger. Many crypto-asset service providers offer transfer services as part of other activities, such as the custody and administration of crypto-assets, the exchange of crypto-assets for funds or other crypto-assets, or the execution of orders on behalf of clients. According to the MiCA Regulation, the crypto-asset transfer service is considered a "crypto-asset service" and, as such, is regulated. However, in the event that the transfer service involves e-money tokens, it may fall under the definition of payment services under Directive (EU) 2015/2366 (PSD2). In such circumstances, transfers must be made by entities authorised to provide payment services in accordance with the PSD2 Directive (formerly Article 82 of MiCA).^[32]

Crypto-asset advisory services include specialized assistance on crypto-asset-related investments and strategies. Advisory and research services, which include crypto-asset-related market consulting and analysis, such as a research firm providing cryptocurrency market analysis reports or strategic advice, are regulated by Article 3(1)(24) MiCA. An advisor who provides recommendations on which crypto-assets to invest in or how to participate in an Initial Coin Offering (ICO) falls into this category. To ensure consumer protection, crypto-asset service providers that provide advice on crypto-assets, either at the request of a client or on their own initiative, or that offer crypto-asset portfolio management services^[33], must carry out an assessment to determine whether such services or crypto-assets are appropriate for clients, taking into account experiences,  of customers' knowledge, objectives and ability to sustain losses. This obligation is set out in Directive 2014/65/EU (MiFID II) and Regulation (EU) 2017/565, which impose the obligation of adequacy and to provide appropriate recommendations based on the client's profile. Where clients do not provide information to crypto-asset service providers about their experience, knowledge and ability to bear losses, or where it is evident that crypto-assets are not suitable for clients, crypto-asset service providers shall not recommend such services or crypto-assets to clients, nor shall they start providing crypto-asset portfolio management services.

When providing advice on crypto-assets, crypto-asset service providers must provide clients with a report including an appropriateness assessment, specifying the advice provided and how it meets the clients' preferences and objectives. This obligation is set out in Regulation (EU) 2017/565, which requires detailed documentation of the recommendations and rationale for the advice provided.

The placement service, as defined in Article 3(1)(22) of the MiCA Regulation, includes the activity of promoting and distributing crypto-assets to the public, which may or may not include an irrevocable commitment to subscribe for or purchase such crypto-assets. This service involves facilitating the sale of crypto-assets to potential investors, through the offering and advertising of such assets. Under Article 79 of the MiCA Regulation, providers of employment services are subject to specific transparency requirements. They must provide potential investors with clear, detailed and understandable information about the crypto-assets offered, including the associated characteristics and risks. This information must be transmitted in a transparent and non-misleading manner, allowing investors to make informed decisions. In addition, providers of employment services must have adequate procedures in place to prevent, manage and communicate conflicts of interest that may arise in relation to their placement activity. Such conflicts must be managed in a way that ensures investor protection and market transparency. Lenders must clearly communicate any conflicts of interest to customers and take all necessary measures to avoid them, in accordance with the regulatory provisions of MiCA. In summary, the placement service according to MiCA is not limited to the promotion and distribution of crypto-assets, but also provides for the fulfillment of disclosure obligations and the management of conflicts of interest to protect investors and ensure market integrity (pursuant to Article 79 of MiCA).

This must include the hypotheses in which the proposed price for the placement of crypto-assets has been overestimated or underestimated. Let's imagine, at this point, that a company called CryptoTech decides to launch a new crypto-asset, called TechCoin, on the market. CryptoTech has predicted a TechCoin placement price set at ten EUR per unit. If CryptoTech has set the placement price at 10 EUR, but in reality, due to low demand or high competition, the actual market price that investors are willing to pay is only 7 EUR, then the price has been overestimated. This means that investors may feel that the initial price is too high compared to the real value of the crypto-asset, and CryptoTech may find it difficult to sell all the units at the proposed price. Conversely, if CryptoTech set a placement price at 10 EUR for TechCoin, but in reality, the demand is very high and investors are willing to pay 15 EUR per unit, then the price has been underestimated. CryptoTech may miss out on an opportunity to raise more capital due to this undervaluation. In addition, as provided for in Article 2(1)(5) of Regulation (EU) 2020/1503, the placement of crypto-assets in the name of an offeror must be considered a separate offer and, this means that, even if an entity decides to launch several crypto-assets at the same time, each of them must be assessed and treated as a separate proposal[34].

Crypto-asset service providers operating a trading platform for crypto-assets must be authorised in accordance with Article 60 of Regulation (EU) 2023/1114 (MiCA). According to Article 3(1)(18) of MiCA, the 'trading platform management service for crypto-assets' refers to the operation of platforms that facilitate the buying and selling of crypto-assets by means of automated or manual systems, both centralised and decentralised. To ensure the proper functioning of crypto-asset markets and protect investors, Article 79 of MiCA sets out specific requirements for service providers operating such platforms. In particular, trading platform operators must adopt and maintain detailed and transparent operating rules governing access to the platform and trading operations. Such rules must be non-discriminatory and based on objective criteria to ensure fair treatment and prevent unjustified discrimination against platform users. In addition, Article 79 requires crypto-asset service providers to ensure the resilience of their systems and procedures by taking appropriate technical and organisational measures to maintain business continuity and minimise the risks of malfunctions that could undermine confidence in the market. Service providers must ensure pre- and post-trade transparency, ensuring that information relating to orders, prices and transaction volumes is readily available and easily accessible to platform users. It is also mandatory for platform operators to establish a clear and transparent fee structure for the services provided, in order to avoid practices that may lead to market manipulation or abnormal trading conditions. In addition, crypto-asset service providers must regulate the transactions executed on their platforms in a timely manner. For off-chain transactions, settlement must be initiated within the same business day as the execution of the transaction. For on-chain transactions, which are subject to the timing of the underlying distributed ledger and are not directly controlled by the service provider, the settlement process should be closely monitored to avoid undue delays. In summary, the service of managing crypto-asset trading platforms, as defined by MiCA, implies a series of regulatory obligations aimed at ensuring transparency, resilience of systems and investor protection, thus contributing to the smooth functioning and stability of the crypto-asset market.

In conclusion, MiCA, in pointing out the areas of overlap between the services offered for crypto-assets and those regulated by other European Union regulations, such as the Payment Services Directive (PSD2, Directive 2015/2366), notes that some crypto-asset services (e.g., custody and administration of crypto-assets, placement of crypto-assets or transfer services on behalf of customers) may coincide with regulated payment services from PSD2. This implies that companies offering such services could be subject to multiple regulations at the same time, with obligations covering both crypto-assets and traditional payment services.

In particular, with regard to the tools provided by e-money issuers to manage "e-money tokens", it is observed that such instruments could look very similar to the custody and administration services of crypto-assets regulated by the MiCA Regulation. However, e-money institutions (such as banks or other entities authorised to issue e-money) may provide custody and administration services for crypto-assets without having to obtain a new authorisation, provided that such services are exclusively related to the e-money tokens issued by them. This represents an important exemption for these institutions, allowing them to offer crypto-asset services without having to comply with all the rules for other crypto-asset service providers.

In relation to the distribution of electronic money and electronic money tokens, it should be noted that traditional electronic money distributors, i.e. entities that distribute electronic money on behalf of issuers, carry out an activity similar to the "placement" of crypto-assets in the context of the new MiCA Regulation. The placement of crypto-assets involves the promotion and sale of those assets to clients. The text clarifies that natural or legal persons authorised to distribute electronic money under Directive 2009/110/EC (Electronic Money Directive) should also be able to distribute electronic money tokens on behalf of the issuers of such tokens, without the need for additional crypto-asset-specific authorisation. This exemption reduces the regulatory burden for these entities, recognising that their activity of distributing e-money tokens is broadly similar to that of traditional e-money distribution. In summary, European legislation allows those who already distribute electronic money under the EMI Directive to also distribute electronic money tokens without having to obtain additional crypto-asset-specific authorizations, thus simplifying the regulatory framework for these operators.

With regard to crypto-asset transfer services, a transfer service provider is defined as an entity that, on behalf of a client, transfers crypto-assets from one distributed ledger address or account to another. This transfer service does not include the validators, nodes, or miners who participate in confirming operations and updating the underlying distributed ledger. Many crypto-asset service providers also offer transfer services as part of other activities, such as the custody and administration of crypto-assets for clients, the exchange of crypto-assets for funds or other crypto-assets, or the execution of orders on behalf of clients. Depending on the specific characteristics of services related to the transfer of electronic money tokens, these could therefore be considered payment services under Directive (EU) 2015/2366. In such circumstances, transfers must be executed by an entity authorised to provide such payment services in accordance with PSD2.

 

6. INSIDE INFORMATION

In order to strengthen investor confidence and preserve the overall integrity of crypto-asset markets, the adoption of a clear, consistent and specific regulatory framework is essential. This framework must be structured in such a way as to prevent and deter unlawful behaviour, such as market abuse and manipulation, which may undermine the stability and transparency of the markets. The importance of this regulation becomes even more relevant in the context of crypto-assets admitted to trading on public platforms, as these are subject to market dynamics similar to those of traditional listed financial instruments, but with their own characteristics that require ad hoc rules. In fact, in the absence of clear and timely regulations, the crypto-asset market could be exposed to high risks of abuse, including the misuse of inside information, the misleading dissemination of information and market manipulation through unfair practices. Such conduct could lead to price distortions, undermine the transparency of transactions and, as a result, erode investor confidence, disincentivising participation and hampering market development.

The creation of a specific regulatory framework therefore becomes crucial to ensure that market participants operate within certain and expected rules, while ensuring an adequate level of protection for investors, in particular for those who may be less experienced or exposed to higher risks. Crypto-assets admitted to trading are subject to particular regulatory attention as their visibility and accessibility, especially through regulated exchange platforms, make them vulnerable to forms of manipulation by entities with significant economic interests or access to non-public information. In this context, regulation not only strengthens the protection of the individual investor, but also contributes to creating a fair, stable and transparent market environment, fostering a healthy development of the crypto-asset sector, making it compatible with the fundamental principles of legality and security that govern traditional financial markets.

Regulation (EU) 2023/1114 on Markets in Crypto-Assets (MiCA), in combination with Regulation (EU) No. 596/2014 on Market Abuse (MAR), establishes the fundamental regulatory framework for the regulation of crypto-assets within the European Union. Both regulations aim to ensure market transparency and integrity by specifically addressing risks of market abuse, including insider dealing and market manipulation. MiCA, in particular, includes provisions in Title VI (Articles 86-92) that address crypto-asset-specific abusive behaviour. These articles set out requirements and prohibitions regarding insider dealing and market manipulation in the context of crypto-assets. The MAR Regulation, complementary to MiCA, applies market abuse rules to a wider spectrum of financial instruments, including derivatives based on crypto-assets.

According to MiCA, the prohibition of insider dealing and market manipulation is regulated specifically for the crypto-asset environment. Inside information, according to MiCA, is defined as information of a precise nature that has not been publicly disclosed and which, if made public, could have a significant impact on the prices of crypto-assets. This definition reflects the need to protect the integrity of crypto-asset markets from abuses that could alter their value and reliability. Market manipulation, as described in MiCA, includes any action aimed at artificially distorting the market, both in terms of price and transaction volume, and applies not only to crypto-assets admitted to trading on regulated platforms, but also to those that may affect financial markets in general.

In comparison, Regulation (EU) No. 596/2014 (MAR) provides a more general framework for market abuse applicable to a wide range of financial instruments, including derivatives based on crypto-assets. MAR defines inside information as accurate and not publicly available information that could affect the price of financial instruments, but does not specify in detail for crypto-assets. Market manipulation according to MAR includes practices that artificially alter the price and volume of financial instruments, but the regulation is designed for a broader and more traditional context of financial markets, without considering the peculiarities of crypto-assets. MAR applies to all financial instruments, including crypto-assets when they are treated as traditional instruments or derivatives, but does not adapt its rules specifically to the unique characteristics of the crypto-asset market.

When a crypto-asset serves as the underlying asset for a derivative instrument covered by Regulation (EU) 596/2014, it is subject to the same stringent provisions as those provided to prevent market abuse. This rule applies to derivatives traded on regulated markets, MTFs or OTFs. The MAR Regulation applies to such derivatives to prevent unfair practices such as insider trading and market manipulation, ensuring treatment similar to that of traditional financial instruments and maintaining the integrity and transparency of the markets.

MiCA recognises the significant role of small and medium-sized enterprises (SMEs) in the crypto-asset market and introduces specific measures to reduce their regulatory burden. SMEs, compared to large companies, often have more limited resources and operate with less complex organisational structures. For this reason, MiCA envisages that SMEs will be able to adopt less complex and burdensome control and compliance mechanisms. This approach is justified by the need to ensure that regulations are proportionate to the size and nature of SME operations, without compromising the effectiveness of investor protection and market integrity. For example, SMEs can implement controls and governance systems that, while less elaborate than those required for large companies, must still be adequate and sufficient to ensure compliance with MiCA provisions. This approach avoids placing an undue burden on SMEs with administrative and financial burdens, allowing them to focus on their core activities and compete fairly in the crypto-asset market.  In addition, MiCA introduces specific exemptions for SMEs regarding the obligations of immediate transparency of inside information. SMEs can benefit from greater time flexibility in disclosing relevant information that could affect the price of crypto-assets. This allows SMEs to better manage their resources and adapt their communication processes to their operational capabilities without compromising the timeliness and effectiveness of market transparency. The increased time flexibility helps reduce operational pressure, allowing SMEs to meet regulatory obligations in a more manageable and sustainable way.

This differentiated approach reflects a balance between the need to protect investors and maintain market integrity and the need to support the growth and competitiveness of SMEs in the crypto-asset sector. By ensuring that SMEs can operate with less regulatory burden, MiCA promotes the inclusion and participation of SMEs in the crypto-asset market, thus contributing to a more dynamic and diverse ecosystem.

The MiCA Regulation gives competent authorities, including the European Securities and Markets Authority (ESMA) and national supervisory authorities, broad powers to take enforcement measures, including administrative and financial penalties, against those who violate market abuse rules. However, the measures taken must be proportionate to the size and complexity of the operators, with less burdensome controls for SMEs, recognising their limited resources. To support SMEs in complying with market abuse rules, MiCA provides guidelines and training programs, facilitating compliance without the need for expensive external consultants. This approach helps SMEs to operate within a clear and predictable regulatory framework, without excessive financial burdens.

 

7. SUPERVISORY AUTHORITIES. THE POWERS

Regulation (EU) 2023/1114 on Markets in Crypto-Assets (MiCA), in combination with Regulation (EU) No. 596/2014 on Market Abuse (MAR), establishes the fundamental regulatory framework for the regulation of crypto-assets within the European Union. Both regulations aim to ensure market transparency and integrity by specifically addressing risks of market abuse, including insider dealing and market manipulation. MiCA, in particular, includes provisions in Title VII (Articles 93-138) that address crypto-asset-specific abusive behaviour. These articles set out requirements and prohibitions regarding insider dealing and market manipulation in the context of crypto-assets. The MAR Regulation, complementary to MiCA, applies market abuse rules to a wider spectrum of financial instruments, including derivatives based on crypto-assets.

According to MiCA, the prohibition of insider dealing and market manipulation is regulated specifically for the crypto-asset environment. Inside information, according to MiCA, is defined as information of a precise nature that has not been publicly disclosed and which, if made public, could have a significant impact on the prices of crypto-assets. This definition reflects the need to protect the integrity of crypto-asset markets from abuses that could alter their value and reliability. Market manipulation, as described in MiCA, includes any action aimed at artificially distorting the market, both in terms of price and transaction volume, and applies not only to crypto-assets admitted to trading on regulated platforms, but also to those that may affect financial markets in general.

In comparison, Regulation (EU) No. 596/2014 (MAR) provides a more general framework for market abuse applicable to a wide range of financial instruments, including derivatives based on crypto-assets. MAR defines inside information as accurate and not publicly available information that could affect the price of financial instruments, but does not specify in detail for crypto-assets. Market manipulation according to MAR includes practices that artificially alter the price and volume of financial instruments, but the regulation is designed for a broader and more traditional context of financial markets, without considering the peculiarities of crypto-assets. MAR applies to all financial instruments, including crypto-assets when they are treated as traditional instruments or derivatives, but does not adapt its rules specifically to the unique characteristics of the crypto-asset market.

The MiCA Regulation establishes a multi-level supervisory system that combines the direct control of national authorities with supervision and coordination at European level by the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA). This integrated approach ensures that crypto-assets are effectively regulated, protecting investors and maintaining the stability of the markets. Under Articles 93-138 of MiCA, the financial supervisory authorities of the Member States have the power to supervise the issuance, offer to the public and admission to trading of crypto-assets, including asset-linked tokens and e-money tokens. Authorities must exercise supervisory powers to ensure investor protection and the smooth functioning of markets and may suspend or prohibit the offer to the public or admission to trading of crypto-assets, as well as block the provision of services related to these assets.

In addition, the competent authorities are required to investigate possible breaches of market abuse rules, such as insider trading or market manipulation, in accordance with Art. 86 of MiCA and the provisions of MAR. They may adopt restrictive measures against crypto-asset service providers, as set out in Art. 90 of MiCA, in order to ensure compliance with the rules of transparency and fairness in the market. These powers include the possibility to suspend the provision of services where there are risks to market integrity or investor protection.

Issuers of crypto-assets other than asset-referenced tokens or e-money tokens are not subject to the supervision of regulatory authorities, as specified in Art. 122 of MiCA, unless they proceed with the offer to the public or admission to trading on regulated markets. This framework ensures that supervisory activity is focused on those market segments that present greater systemic risks or significant impacts for investors.

Under the MiCA Regulation, competent authorities have the power to impose sanctions on issuers, offerors and applicants for admission to trading of crypto-assets, including the specific categories of asset-referenced tokens and e-money tokens, as well as on crypto-asset service providers. This sanctioning power is established by art. 94 of MiCA, which gives the authorities the power to adopt effective, proportionate and dissuasive administrative sanctions. The authorities must determine the type and level of the administrative sanction or other remedial measures on the basis of a comprehensive assessment of the circumstances of the case, as specified in Art. 95 by MiCA. The seriousness and duration of the violation, the intentionality of the violation, any recidivism, the gains obtained or losses avoided as a result of the violation, and the cooperation with the authorities during the investigation are central factors in determining the sanction. Penalties imposed may include significant monetary fines, temporary or permanent bans from business, as well as other measures designed to re-establish regulatory compliance and prevent future violations.

MiCA gives ESMA the task of establishing and maintaining a centralised, public and easily accessible ledger, which includes essential information on the players in the crypto-asset market. In particular, art. 109 requires that the following be entered in the register: the White Papers of the issuers of crypto-assets, documents that must provide a detailed description of the project, the risks involved, the rights of investors and the methods of issuance of crypto-assets; issuers of asset-linked tokens, entities that operate with instruments whose value is linked to underlying assets, such as commodities, currencies or other financial assets; issuers of e-money tokens, which offer fungible crypto-assets intended to function as digital currencies; and authorised or registered crypto-asset service providers, market operators facilitating transactions, custody, exchanges and other services related to such assets. The establishment of the register by ESMA pursues the primary objective of enhancing the transparency of the crypto-asset market. The publication and accessibility of information on issuers and service providers reduces information asymmetries between market participants and investors, as well as ensures that information is public, verifiable and up-to-date. In doing so, the Register contributes to increasing investor and public confidence in crypto-assets, promoting a safer and better regulated market.

The transparency resulting from the obligation to publish White Papers, as well as the mandatory registration of issuers and service providers, ensures that investors can access material information regarding crypto-assets and the entities offering them. This reduces the risk of fraud or abusive practices, as it makes important data available on the project and issuers, which can be analyzed and monitored not only by the competent authorities, but also by the investors themselves. This advertising mechanism also acts as a deterrent, deterring market players from engaging in bad behaviour. In addition, regulatory foresight promotes market integrity by facilitating supervision by supervisory authorities. Centralisation of data makes it possible to quickly identify issuers and service providers that operate in compliance with current regulations, thus increasing investor security. The fact that the register is public allows authorities to detect any breaches of market standards at an early stage and to take appropriate corrective action. The MiCA rationale fits perfectly into the general objective of regulation and stability of the crypto-asset market pursued by the European Union. Creating an accessible and detailed register of entities operating in the crypto-asset sector aims to ensure compliance with transparency rules, protecting investors from uncertainties and the risk of relying on non-compliant operators. At the same time, the possibility to publicly verify information on issuers and service providers ensures that market participants act according to the rules, contributing to the creation of a more stable and integrated financial environment.

Specific rules are then dictated with reference to situations of potential significance. The European Banking Authority (EBA) is responsible for directly supervising issuers of significant asset-linked tokens and significant e-money tokens, as required by the MiCA Regulation. In contrast, the European Securities and Markets Authority (ESMA) exercises its powers vis-à-vis service providers for significant crypto-assets, based on the MiCA Regulation. Tokens linked to significant assets can be used as a medium of exchange and for carrying out significant payment transactions, which can pose specific risks to monetary transmission channels and monetary sovereignty. As a result, the EBA is required to supervise such issuers of tokens linked to significant assets.

In accordance with Directive 2009/110/EC, competent authorities designated at national level are to supervise issuers of electronic money tokens, in order to ensure compliance with the regulatory provisions applicable to electronic money institutions. However, given the potential importance of significant e-money tokens as payment instruments and the risks to financial stability, joint oversight is needed. This supervision will be exercised by national competent authorities, together with the EBA, which will ensure compliance with the additional specific requirements for issuers of significant e-money tokens. The additional obligations apply only to e-money institutions that issue significant tokens. Accordingly, credit institutions that issue significant e-money tokens and are not subject to such obligations will continue to be subject to the exclusive supervision of their national competent authorities.

Significant e-money tokens denominated in an official currency of a Member State other than the euro, used as a medium of exchange and for the settlement of large volumes of payment transactions, may pose specific risks to the monetary sovereignty of the Member State of the currency. However, if at least 80% of the total number of holders and transaction volume of those tokens is concentrated in the home Member State, the responsibility for supervising those tokens remains with the national competent authorities.

In order to ensure adequate supervision of issuers of asset-referenced tokens and significant e-money tokens, EBA is empowered to carry out on-site inspections, take supervisory measures and impose fines, as provided for in the MiCA Regulation. In addition, EBA should require issuers of significant asset-referenced tokens and issuers of significant e-money tokens to pay fees to cover their costs, including overheads, in accordance with the MiCA Regulation.

The European Commission has the power to adopt delegated acts in accordance with Article 290 of the Treaty on the Functioning of the European Union (TFEU). These acts concern the specification of the technical elements of the definitions provided for in the MiCA Regulation in order to adapt them to market and technological developments, the definition of criteria for classifying asset-referenced tokens or e-money tokens as significant, the determination of situations of significant investor protection, and the specification of procedural rules for the exercise of the EBA's power to impose administrative penalties or penalty payments. The rules must include provisions on the rights of the defence, time limits and the collection of penalties, limitation periods for the imposition and enforcement of sanctions, and the type and amount of supervisory fees that the EBA may impose on issuers of significant tokens[35].

In addition to their work at national level, the EBA and ESMA have key roles in the creation and harmonisation of regulations at European level. In order to ensure that the Regulation is applied in a uniform manner across the Union and to adequately protect holders of crypto-assets and clients of crypto-asset service providers, it is necessary to lay down technical standards. EBA and ESMA develop draft regulatory technical standards and submit them to the European Commission, which adopts these standards covering aspects such as the content and presentation of information in crypto-asset white papers, the approval procedures for white papers, and the information in the application for authorisation for token issuers.

In addition, the Commission shall adopt implementing technical standards developed by EBA and ESMA concerning standard forms and formats for white papers and other disclosures, requirements for the transmission of information in applications for authorisation, and technical tools for disclosure and delay of disclosure of inside information.

 

 

[1] Regulation (EU) 2023/1114 on markets in crypto-assets, the so-called MiCA Regulation or only MiCAR (Markets in Crypto-assets Regulation). Published in the Official Journal of the European Union of 9 June 2023. The MiCA Regulation amends Regulations (EU) No. 1093/2010 and (EU) No. 1095/2010 and Directives 2013/36/EU and (EU) 2019/1937. MiCAR applies from 30 December 2024, except for Titles III (Asset-linked tokens) and IV (E-money tokens) which apply from 30 June 2024.

[2] There are several studies that analyze how blockchain and distributed ledger technologies can positively influence economic development and employment. Here are some examples: World Economic Forum (WEF) report: Title: "The Future of Financial Infrastructure: An Ambitious Look at How Blockchain Can Reshape Financial Services", Year: 2016; McKinsey & Company Report: Title: "Blockchain Beyond the Hype: A Practical Guide for Business", Year: 2018; Harvard Business Review study: Title: "The Potential for Blockchain to Transform Jobs and Create Opportunities", Year: 2019; Report of the Institute of International Finance (IIF): Title: "The Impact of Blockchain Technology on the Financial Services Industry", Year: 2020; PwC study: Title: "Global Blockchain Survey 2021", Year: 2021; World Bank Group Research: Title: "Distributed Ledger Technology (DLT) and Blockchain: A New Era for Economic Development", Year: 2022.

[3] In particular, on the issue of simplifying capital raising and financing processes for SMEs, see: OECD Report on Blockchain Technology and Corporate Governance (2019) and the World Bank - "Distributed Ledger Technology (DLT) and Blockchain" (2017). As for the strengthening of competition and an inclusive approach, see European Central Bank - "Crypto-Assets: Implications for financial stability, monetary policy, and payments and market infrastructures" (2019) and IMF - "Cryptoassets as National Currency? A Step Too Far" (2021); On the efficiency of payments, especially cross-border payments, see: Bank for International Settlements (BIS) - "The technology of retail central bank digital currency" (2020) and World Economic Forum - "Crypto, What Is It Good For? An Overview of Cryptocurrency Use Cases" (2020).

[4] Per la BCE: "Crypto-assets: Implications for financial stability, monetary policy, and payments and market infrastructures" (2020) e "Financial Stability Review" (varie edizioni), "The euro area financial system: From stability to risk" (2022); Per l’ESMA, "Report on Trends, Risks and Vulnerabilities in the EU Financial Markets" (2022), "Thematic Report on Crypto-Assets" (2021), “ESMA Report on the integration of sustainability risks and factors in the EU financial sector" (2022).

[5] https://www.ecb.europa.eu/ecb/orga/escb/html/index.it.html  

[6] The issuance, offer or application for admission to trading of crypto-assets and the provision of crypto-asset services may involve the processing of personal data. Any processing of personal data within the framework of this Regulation should be carried out in accordance with applicable Union law on the protection of personal data. MiCA is without prejudice to the rights and obligations set out in Regulation (EU) 2016/679 of the European Parliament and of the Council and Regulation (EU) 2018/1725 of the European Parliament and of the Council.

[7] Vedi per l'Autorità Europea degli Strumenti Finanziari e dei Mercati (ESMA): https://european-union. Euro pa.eu/institutions-law-budget/institutions-and-bodies/search-all-eu-institutions-and-bodies/ europe an-securi ties-and-markets-authority-esma_it; e per l'Autorità Bancaria Europea (EBA): https://european-union.europa.eu/institutions-law-budget/institutions-and-bodies/search-all-eu-institutions-and-bodies/european-banking -authority-eba_it .

[8] International cooperation in the MiCA Regulation is covered in various articles and recitals, which emphasise the importance of aligning EU regulations with global best practices. Here are some relevant articles that touch on this topic: Recital 5: Highlights cooperation with international bodies such as the Financial Stability Board (FSB) and the Basel Committee on Banking Supervision to prevent regulatory arbitrage. Article 8(1): Recognises the importance of an exchange of information and cooperation with international authorities for the effective supervision of the crypto-asset market. Article 15: Emphasises the need for cooperation between competent authorities at national and international level to address systemic risks and promote financial stability.

[9] See Recital 9 of the MiCA text, which states that EU legislative acts in the field of financial services must be guided by these principles.

[10] In following this path, incidentally, the European decision-maker responds that EU legislative acts in the field of financial services are guided by the principle of 'same activity, same risks, same rules' and the principle of technological neutrality. Therefore, crypto-assets falling under existing Union financial services legislation remain governed by the existing regulatory framework, regardless of the technology used for their issuance or transfer, instead of being governed by this Regulation.

[11] Digital assets that cannot be transferred to other holders do not fall under the definition of crypto-assets. Therefore, digital assets that are accepted only by the issuer or offeror and that are technically impossible to transfer directly to other holders should be excluded from the scope of this Regulation. An example of such digital activities is loyalty programs where loyalty points can be exchanged for benefits only with the issuer or provider of those points.

[12] The ESFS is composed  of the European Systemic Risk Board (ESRB), the three European Supervisory Authorities (ESAs) – namely the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA) – the Joint Committee of the ESAs and the national supervisory authorities.

[13] Where the classification of a crypto-asset is not consistent with the Regulation or other Union legislation, the ESAs will have to use the powers conferred by Regulations (EU) No 1093/2010, (EU) No 1094/2010 and (EU) No 1095/2010 to ensure a uniform and consistent approach.

[14] In other words, the external value of a crypto-asset refers to the perceived value or market value that it has based on external factors such as supply and demand, investor sentiment, and other external influences. It is the value that investors and the market are willing to pay for the crypto-asset at any given time. This value is determined by the transactions of buying and selling the crypto-asset in the markets, such as exchanges and trading platforms. It can be very volatile and influenced by news, regulations, and market trends. In addition, it also often reflects investor speculation and overall sentiment, rather than just fundamentals. The intrinsic value of a crypto-asset is the value that comes from its fundamentals, such as utility, underlying technology, and functionality. In other words, it is the value based on the characteristics and real-world utility of the crypto-asset, regardless of the market price. This value is linked to the crypto-asset's ability to provide useful services or solve real problems, as is the case with Ethereum, whose intrinsic value comes from its ability to execute smart contracts and support decentralized applications. Intrinsic value can be influenced by the degree of adoption and implementation in real life, not just speculative trading.

[15] Among the reference documents to better understand these differences are Directive 2009/110/EC and of course the MiCA Regulation on cryptocurrency markets and the guidelines of ESMA, the European Securities and Markets Authority.

[16] See recital 19.

[17] DeFi (Decentralized Finance) applications are blockchain-built financial platforms and instruments that aim to replicate and enhance traditional financial services, such as lending, borrowing, trading, and insurance, without the need for centralized intermediaries such as banks or financial institutions. Some examples of DeFi applications include decentralized exchanges (DEXs) such as Uniswap and SushiSwap that allow cryptocurrencies to be traded without centralized intermediaries; decentralized loans and mortgages such as Aave and Compound that allow users to lend or borrow cryptocurrencies; stablecoins such as DAI that are designed to maintain a stable value, often pegged to a traditional currency such as the dollar; yield farming and staking, techniques to earn interest or rewards on cryptocurrency funds, for example through protocols such as Yearn.Finance; and decentralized insurance companies such as Nexus Mutual that offer blockchain-based insurance services. In essence, DeFi applications seek to democratize and make financial services more accessible, offering alternatives to traditional approaches and exploiting the potential of blockchain technologies.

[18] Algorithmic crypto-assets are crypto-assets that use algorithms to adjust their value, without being tied directly to a specific asset pool. Algorithmic crypto-assets may or may not be designed to maintain a stable value relative to a reserve of assets or assets; in the second case, it does not fall under the specific rules for asset-linked tokens or e-money tokens.

[19] Such exemptions should not include crypto-assets representing stored assets that are not intended to be withdrawn by the buyer after purchase. The limited network exemption does not apply to crypto-assets designed for a continuously growing network of service providers and must be reassessed by the competent authority whenever an offer, or the aggregate value of several offers, exceeds a certain threshold, as provided for in Article 4(2) of Regulation (EU) 2020/1503.

[20] Imagine that a technology company, TechCoin Ltd., decides to launch a new utility token called "TechToken," which will give buyers access to an exclusive software platform. While TechToken's offering may benefit from certain exemptions from Regulation (EU) 2020/1503, the company must still comply with European Union consumer protection regulations. According to Directive 2005/29/EC (Unfair Commercial Practices Directive), TechCoin Ltd. must provide clear and non-misleading information about the benefits and risks associated with TechToken. For example, the company must clearly explain what the token offers, how to access the software platform, and the potential risks, such as the volatility of the token's value or the possibility that the platform may never launch. In addition, according to Directive 93/13/EEC (Unfair Terms Directive), any clause in the TechToken purchase agreement that could be considered unfair or unfair is not binding. For example, if TechCoin Ltd. includes a clause that allows them to unilaterally change the terms of service without informing buyers, that clause could be considered unfair and invalid. The terms of the contract must be fair and clear, without putting consumers at a disadvantage. In a scenario without complying with the regulations, TechCoin Ltd. could publish a White Paper on the TechToken that does not provide enough details about the risks or uses exaggerated statements such as "Invest now and become a millionaire in a few weeks!" without clarifying the volatility of the token. In addition, the purchase agreement may contain a clause that allows unilateral changes to the terms without prior notice to buyers. In a compliant scenario, TechCoin Ltd. provides a detailed White Paper that clarifies the benefits and risks of the TechToken, including information on volatility and technological risks. The purchase agreement is fair and does not contain unfair terms, ensuring that any changes to the terms of service are communicated clearly and with advance notice to buyers. While TechCoin Ltd. may be exempt from certain specific requirements of Regulation (EU) 2020/1503, the regulations of Directive 2005/29/EC and Directive 93/13/EEC remain applicable to ensure that offers of crypto-assets comply with consumer protection standards, ensuring that consumers receive adequate information and that the terms of contracts are fair and not disadvantageous.

[21] AML regulations are laws and regulations designed to prevent funds derived from criminal activities from being "cleansed" and reinvested in the legitimate economic system. These regulations oblige financial entities and companies, including issuers of crypto-assets, to implement procedures to identify and report suspicious transactions and to monitor capital flows. CFT regulations aim to prevent and counter the use of funds to finance terrorist activities. Like AML regulations, these also require due diligence measures and the reporting of suspicious activity that could be related to the financing of terrorist groups. KYC measures are procedures used to identify and verify the identity of customers. This process helps to ensure that entities involved in crypto-asset trading know who they are dealing with, reducing the risk of abuse for illicit purposes. KYC measures include collecting identification documents, verifying identity, and assessing the risk associated with customers. In summary, issuers of crypto-assets must integrate these regulatory requirements to ensure compliance with anti-money laundering and counter-terrorist financing laws, implementing appropriate identification and monitoring procedures to prevent abuse and ensure transparency of transactions.

[22] In other words, in summary, credit institutions offering or requiring trading in asset-referenced tokens, while exempt from specific requirements such as authorisation, own funds and shareholder approval, must comply with transparency rules, providing clear and accurate information on tokens and the related risks. They must keep investor information up-to-date and ensure the safety of the underlying assets of the tokens. They must also comply with prudential rules for financial stability, anti-money laundering and anti-terrorist financing laws, ensure protection and fairness in transactions and maintain adequate internal controls and procedures. Finally, they must provide detailed prospectuses in public token offerings.

[23] Imagine a token linked to the U.S. dollar, issued by a company that has dollar reserves to guarantee the value of the token (e.g., 1 token = 1 dollar). If the issuing company offered 5% annual interest to hold the token, people could choose to accumulate these tokens and hold them for the long term to earn interest, rather than using them for transactions. This would make it look like an investment or store of value, creating potential problems for financial stability and liquidity, and moving away from the idea of the token being used as a medium of exchange. To avoid this, the regulation mandates that no interest is granted on these tokens, so people are incentivized to use them for transactions rather than accumulate them as a store of value.

[24] Directive 2009/110/EC, known as the Electronic Money Directive, established the regulatory framework for the establishment, management and supervision of electronic money institutions (ISMLs) within the European Union. With the new MiCA regulation, which came into force to regulate e-money tokens, these requirements and rules have been further detailed and updated.

[25] Specific exemptions include: Exemption for restricted networks: E-money issuance transactions may be exempted if they take place within restricted networks, i.e. if they are restricted to certain environments or specific users, such as loyalty schemes that cannot be used outside of a restricted commercial network. Exemption for transactions carried out by providers of electronic communications networks: Operators offering electronic communications services and issuing electronic money as part of their core services may be exempted from the Electronic Money Institutions Act, provided that the issuance of electronic money is only an ancillary part of their main electronic communications activity. Exemption for electronic money institutions with a limited quantity: Institutions that issue only a limited maximum quantity of electronic money can benefit from exemptions. The directive allows small entities that operate with very low volumes of electronic money to be exempted from the more stringent requirements applicable to larger electronic money institutions.

[26] See, for more detail, Article 58 of the MiCA.

[27] France, in fact, had a more developed regulatory framework than other countries. Crypto-assets were regulated under the PACTE law (Plan d'Action pour la Croissance et la Transformation des Entreprises), which required authorisation for crypto-asset offerings and custody services. Germany had also regulated crypto-assets through the Federal Financial Supervisory Authority (BaFin), which imposed specific requirements on service providers and required licenses for crypto-trading and custody activities.

[28] Incidentally, the right of persons established in the European Union to access crypto-asset services offered by companies located in third countries is not affected, provided that such services are provided on the initiative of the user established in the Union. This means that if a third-country firm provides crypto-asset services to an EU client at the latter's request, such services are not considered to be provided within the EU. On the other hand, where a third-country undertaking seeks to attract customers or potential customers to the Union, or promotes and advertises its crypto-asset services within the Union, those services shall be considered to be provided in the Union. In these cases, according to Regulation (EU) 2019/2033 on crypto-asset service providers and Directive (EU) 2018/843 (Fourth Anti-Money Laundering Directive), the third-country firm must be authorised as a crypto-asset service provider in accordance with European Union regulations.

[29] The Enhanced Controls for the Protection of the Financial System of the Union from Money Laundering and Terrorist Financing Risks include: Enhanced Verification of Customer Identity - Application of more thorough procedures for verifying customer identity and tracing the origin of funds, in accordance with the anti-money laundering and counter-terrorism rules provided for by Directive (EU) 2015/849 (AMLD4) and subsequent amendments (such as AMLD5). Continuous Transaction Monitoring - Implementation of constant and thorough monitoring of financial transactions to detect any suspicious or unusual activity. This obligation is set out in Directive (EU) 2015/849 and its supplements, as well as in regulations governing crypto-asset service providers, such as the MiCA Regulation. Collection of Additional Information on Clients and Beneficial Owners - Request additional information on clients and beneficial owners to ensure regulatory compliance and the prevention of illegal activities, as required by Directive (EU) 2015/849 (AMLD4) and the Financial Action Task Force (FATF) guidelines. Country Risk Assessment - Identification and assessment of the specific risk associated with third countries considered "high risk" due to the lack of adequate anti-money laundering and countering the financing of terrorism systems. This obligation stems from Directive (EU) 2015/849, which requires the adoption of enhanced measures when transacting with countries that have deficiencies in their regulatory regimes.

[30] The comparison between crypto-asset issuers and crypto-asset service providers stems from the distinction that the MiCA Regulation makes between the different legal roles and obligations. In fact, both operate in the crypto-asset market but play different roles. Service providers directly manage crypto-assets on behalf of users and, for this, must be authorized to operate, while issuers of crypto-assets can issue new crypto-assets without necessarily offering management or exchange services; therefore, they are not always required to obtain the same authorization, unless they meet certain conditions.

[31] See also Regulation (EU) 2019/2033.

[32] In other words: The MiCA Regulation includes the transfer of crypto-assets in the definition of regulated services. However, if the transfer involves electronic money tokens (EMTs), the service may also be subject to PSD2 rules and require specific authorization to provide payment services. Therefore, EMT transfers must be made by an entity authorized under PSD2, as well as MiCA-compliant.

[33] MiCA does not directly regulate crypto-asset portfolio management services. However, the main risks associated with this activity include the high volatility of crypto-assets, liquidity risks, regulatory risks, security vulnerabilities, and compliance issues. To ensure consumer protection, portfolio management service providers must comply with the broader regulations. In particular, they must carry out an assessment to determine whether the services or crypto-assets are suitable for clients, taking into account the clients' experiences, knowledge, objectives and ability to bear losses. This obligation is set out in Directive 2014/65/EU (MiFID II) and Regulation (EU) 2017/565, which impose the obligation of adequacy and to provide appropriate recommendations based on the client's profile. If clients do not provide information on their profiles, or if it is evident that crypto-assets are not suitable, providers should not recommend such services or crypto-assets and should not start providing portfolio management services. This provision complies with the regulations set out in Directive 2014/65/EU (MiFID II) and Regulation (EU) 2017/565, which require the adequacy of recommendations and prohibit the promotion of inappropriate products.

[34] With reference to the example above, let's assume that the CryptoTech company is launching not only TechCoin, but also another crypto-asset called TechToken. Even though these two crypto-assets are offered together, TechCoin's price and placement conditions must be considered separately from those of TechToken. So, if TechCoin is overpriced, while TechToken is undervalued, each situation must be handled individually and offerings must be evaluated separately by investors and regulators.

[35] The Commission is expected to carry out appropriate consultations, including at expert level, and that those consultations will be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making. In particular, in order to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council must receive all documents at the same time as Member States' experts, and their experts must systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.