Response to consultation on Guidelines on templates for explanations and opinions, and the standardised test for the classification of crypto-assets under MiCAR
1. Do respondents have any comments on the template for the purposes of Article 8(4) Regulation (EU) 2023/1114?
Crypto-asset box
‘Detailed explanation that the crypto-asset … is not an [EMT … an [ART]’
It is obviously difficult to explain what something is not from both a legal and logical standpoint – the problem of proving a negative.
In many cases, it should be simple enough to state that something is just not excluded by Article 2(4) and is not an EMT or an ART.
A suggested statement that would suffice to comply might be just stating that the crypto-asset does not purport to maintain a stable value either by reference to:
- an official currency [an EMT under Article 3(1)(7)]; or
- another value or right or a combination thereof [an ART under Article 3(1) (6)].
The case of an EMT is simpler given Article 48(1)(a) since it requires authorisation either as a credit institution or an EMI – put simply, those are objective criteria easily asserted by making no claim to be either.
It is our contention that a crypto-asset token that gives the right to a real-world asset (say real estate) but does not purport to maintain a stable value is clearly not an ART subject to Article 2(3) relating to NFTs and Recital 11 regarding fractionalisation.
Article 48(1) second sub-paragraph relating to ‘other persons’ (offers to the public and admission to trading of an [EMT]) requires the written consent of the issuer of the EMT – again, put simply, if this does not exist then the token is not an EMT.
‘Detailed explanation that the crypto-asset is not [a] … (a) financial instrument … (j) social security schemes’
It is obviously difficult to explain what something is not from both a legal and logical standpoint – the problem of proving a negative.
In many cases, it should be simple enough to state that the crypto-asset is just not something that is excluded by excluded by Article 2(4)(a) to (j).
2. Do respondents have any comments on the template for the purposes of Article 17(1) point (b)(ii) and Article 18(2) point (e) of Regulation (EU) 2023/1114?
Information about Opinion box:
‘Evidence of person(s) … ‘
What evidence is necessary for an in-house legal adviser who may (for example) not hold a practising certificate as/when it is not required.
Crypto-asset box:
‘Opinion, with detailed explanation …’
Our response to Question 1 (above) applies mutatis mutandis to the requirements to explain and/or prove a negative.
It would be disproportionate to require detailed explanations to prove negatives particularly with respect to Articles 2(4)(a) to (j) on the grounds of the excessive cost of external (or internal) legal advice of proving negatives.
3. Do you consider that the fields of the template relating to explanations as to regulatory status are sufficiently clear and would enable a proportionate completion in line with the simplicity or complexity of the structure of the crypto-asset to which the explanation or legal opinion relates?
Yes, subject to the explicit recognition that in many cases compliance with the requirements could be achieved by simple assertions that do not require the proof of a negative – this would be proportionate and avoid unnecessary legal costs.
The templates use boxes for the answers to the questions – it would be helpful to make it clear whether or not the use of the exact format is mandatory.
Complex answers will require the use of Annexes.
4. Do respondents have any comments on the standardised test?
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