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?
As a side note, Article 143(2) of MiCAR requires for crypto-assets other than ARTs and EMTs that were admitted for trading before December 30, 2024, a whitepaper, including an explanation (Art. 8(2) of MiCAR) on why the crypto-asset qualifies neither as ART nor EMT, only from December 31, 2027, onwards. Therefore, for all crypto-assets, a clear obligation for classification by the issuer is only mandated after December 31, 2027.
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?
We are pleased to see the introduction of a standardized template for the preparation of the necessary legal opinions. This template serves as a useful tool, simplifying the complex task of drafting these opinions and ensuring consistency in their structure and content. By providing a uniform framework, it will facilitate the comparison and analysis of different instruments, allowing market participants to more easily identify and understand the similarities and differences between various products. This, in turn, promotes transparency and efficiency within the market, making it easier for stakeholders to navigate the regulatory landscape.
Moreover, we welcome the flexibility in the choice of who can prepare the legal opinions. The allowance for both internal and external counsel to draft these documents provides companies with the option to utilize their in-house legal teams, which can be more cost-effective and efficient. At the same time, companies can still opt to engage external experts when specialized knowledge or an impartial perspective is needed. This dual option respects the diverse needs and resources of market participants, acknowledging that not all firms have the same capabilities or requirements.
Nevertheless, we believe it is of utmost importance that the application of the Markets in Crypto-Assets Regulation (MiCAR) is uniform across the market, including in cross-border scenarios. Consistency in regulatory application is key to maintaining a fair and predictable market environment. It is critical that the same instrument, when evaluated under similar conditions, receives the same classification. It should be avoided that one legal opinion identifies an instrument as a MiFID-regulated financial instrument, while another classifies the same instrument as a crypto asset under MiCAR. Such discrepancies could lead to confusion and uncertainty, undermining the regulatory framework's stability and effectiveness.
We recognize that each financial product may have unique characteristics and that the final determination of whether an asset qualifies as a crypto-asset or a financial instrument will depend on the specific details of each case. However, we cannot ignore the possibility that certain standard products or issuances may emerge, leading to the issuance of similar products. In such cases, it is essential that these products are categorized consistently to avoid regulatory arbitrage and ensure that market participants operate on a level playing field.
However, we see that, at least in the coming years, disclosing the opinions to the broader market would be problematic in terms of sharing trade secrets. In the newly developing crypto market, the creation of a new product is a business policy decision, and its exact structure is determined by business strategy. Since a central database of opinions is therefore not an option, we see it as a key responsibility of the regulatory authorities, to whom the opinions are submitted, to ensure consistent evaluation of identical products. If standardized products are developing, the classification should be published by the authorities. Cross-border cooperation is of utmost importance in helping to harmonize regulatory practices and support the development of a coherent and unified regulatory environment.
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?
NA
4. Do respondents have any comments on the standardised test?
The classification of a specific financial instrument under the Markets in Crypto-Assets Regulation (MiCAR) is a crucial step in determining its regulatory applicability. This classification not only affects the legal and compliance requirements that must be adhered to but also influences the overall market behavior and strategy of the entities involved. Given the significant implications, it is vital that this classification is carried out consistently across all market participants. A uniform approach ensures a level playing field, prevents regulatory arbitrage and fosters a more predictable and stable market environment.
In this context, we highly welcome the introduction of a standardized test designed to streamline and harmonize the classification process. The standardized test, which is visually represented through a clear and intuitive flowchart, serves as a practical tool for determining whether an instrument falls under the scope of MiCAR. This flowchart, through a series of straightforward Yes/No questions, guides users through the relevant criteria, making it easier to assess whether the legal conditions for MiCAR applicability are met. The simplicity and clarity of this tool not only facilitate understanding but also reduce the likelihood of misinterpretation, thereby promoting uniformity in regulatory assessments.
Nevertheless, we have a few suggestions to further refine the flowchart and enhance its effectiveness. Specifically, we believe that the last arrow, which currently points to the right, should be labeled 'No' to clarify the flowchart’s decision path. This label would help prevent any ambiguity regarding the conclusion reached at this point in the process. Furthermore, we suggest an additional modification to the text in the adjacent box to the left. By including the phrase 'only one official currency' instead of simply ‘one official currency’ the distinction between EMT (E-Money Tokens) and ART (Asset-Referenced Tokens) would be more explicit. This clarification ensures that the differentiation between these categories is made solely based on the presence of only one set of characteristics, as opposed to a combination of multiple features.
These adjustments, while seemingly minor, are crucial for ensuring that the flowchart accurately reflects the nuances of the regulatory framework. By making these distinctions clearer, the tool will better support market participants in making consistent and well-informed decisions. This, in turn, will contribute to a more coherent regulatory environment and help to avoid confusion or disputes over the classification of similar instruments.