Europe Goes Crypto: The MiCA White Paper

This article was first published on the Fin Law blog.

In order to give the European crypto market more security and professionalism, the Regulation on Crypto-Asset Markets (MiCA) of the European Union will not only impose authorization and compliance obligations on crypto service providers -assets, but also to issuers and providers of crypto-assets. . Before the public offering and before the listings of crypto assets on crypto trading platforms, it should in future be necessary for responsible persons or companies to create a white paper which must have a legally prescribed minimum content before the offer or the quotation can begin. In addition to a significant increase in the transparency of initial coin offerings (ICOs) and other token sales, legislator MiCA hopes this will also significantly strengthen the accountability of providers of new crypto assets, which has been doing until now. default. The regulation of the MiCA white paper is closely modeled on the mechanisms known from the law on securities prospectuses.

What will crypto vendors need to disclose in the white paper?

Providers of crypto assets will need to provide potential investors with enough information through white papers to enable them to make investment decisions that are right for them. To do this, it is necessary beforehand that you provide information about yourself as a service provider or responsible for a listing or – if different – about the issuer of the cryptographic assets to be offered or listed. This includes information about your legal form, contact details and persons responsible for the company and, in the case of registrations, also about the operator of the crypto trading platform. In addition, sufficient information must be provided about the crypto-asset project on which the offer is based and details of the nature and procedure of the offer or listing must be published.

The whitepaper must also specifically state what rights and obligations are associated with the crypto values ​​and what technology is based on the crypto values ​​to be offered or listed. White papers should also provide information on the risks associated with crypto assets. Finally, providers must show in the white paper whether the consensus mechanism underlying crypto-assets has any adverse environmental or climate effects. According to MiCA, the European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) will need to develop technical standards for individual minimum requirements in the coming months to give the market concrete guidance on the details to be provided in white papers.

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What other requirements must suppliers meet?

In addition to the minimum content information, providers of cryptographic assets will need to include an explicit reference in the white paper to be published stating that the white paper has not been endorsed or endorsed by any authority and that the provider is solely responsible for the content of the white paper. This duty to inform stems from the MiCA’s liability regime for erroneous white papers. Suppliers who fail to publish the information required by MiCA in the whitepaper, or do so in an incomplete or misleading manner, are liable to investors for compensation for any resulting damages.

Although the white papers do not have to be approved by the authorities, they must be filed by the supplier with the competent authority in all the Member States in which the offer or the quotation must be available. The MiCA requires white papers to be written in the language of the provider’s home Member State or in a language commonly used in international financial circles.