| The Proposal for a Regulation of the European Parliament and of the Council on markets in cryptoassets, which amends Directive (EU) 2019/1937, ("Regulation on Markets in Crypto-assets", or the "MiCA Regulation" for short) was published on 24 September 20201.
The Proposal is part of the Digital Finance Package adopted on the same date by the European Commission as part of the Digital Finance Strategy for the EU financial sector2. This includes several regulatory proposals on digital currencies and digital operational resilience3, as well as a pilot regime for market infrastructures based on Distributed Ledger Technology (“DLT”)4.
The MiCA Regulation is, therefore, one of the four priorities for digital transformation identified by the European Commission. These priorities are to:
i) create a dedicated, specific and harmonised framework at European Union level for the issuance of crypto-assets not covered by European financial services legislation and for the provision of related services;
ii) support innovation and fair competition through a secure and proportionate legal framework;
iii) ensure consumer protection and the integrity of the markets in crypto-assets;
iv) ensure financial stability within the Single Market and mitigate the risks that may arise, for monetary policy, from crypto-assets that seek to stabilise their price by reference to a fiat currency that is legal tender, an asset, a commodity or a basket of those assets (known as “stablecoins”).
Scope and exclusion
The MiCA Regulation Proposal appears in this context and it will apply to entities engaged in the issuance of crypto-assets or the provision of services relating to crypto-assets in the European Union5.
Excluded from the scope of the Regulation are, first and foremost, crypto-assets that can be equated with financial instruments6, within the meaning of Article 4(1)(15) of the Directive on Markets in Financial Instruments (MiFID) II 7. The typical case involves “investment” crypto-assets (known as “investment tokens” or “security tokens”), which attribute economic rights linked to the performance of a given project in a similar way to typical financial instruments.
In this regard, it will remain essential to assess whether the features of the crypto-assets to be issued are comparable with or equivalent to those of a financial instrument subject to securities regulation. Examples of these features are representation, even if digital, transferability, negotiability on markets, homogeneity, or functional comparability with other typical securities. This assessment is necessary to define the scope of the rules that will apply to such crypto-assets, both when they are issued and with regard to the services provided in relation to them.
Crypto-assets equivalent to electronic currencies are also excluded from the scope of application of the Regulation (except in the cases provided for in the Regulation)8.
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