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?
FECIF supports the template and acknowledges the effort of the ESAs in its elaboration. The template seems sufficiently comprehensive, although it is based on sources of law that do not yet exist (such as the case law of the European Court of Justice and national courts). Moreover, market developments are continuous, and templates must therefore be adapted to accommodate novelties in a timely manner. Finally, we consider that the sources of legal opinions should be extended to international bodies, in particular FSB, IOSCO and IAIS.
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?
FECIF supports the template and its structure. However, we consider that the sources of legal opinions should be extended to international bodies, in particular FSB, IOSCO and IAIS. In addition, it could be clarified when the legal opinion is considered to be ‘free from conflicts of interest’. As the legal opinion can be either in-house or external, clarification on conflicts of interest is very relevant for both investors and institutions.
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?
FECIF considers that the fields of the template relating to explanations are sufficiently clear in line with the simplicity or complexity of the structure of the crypto-asset, but it may be appropriate on a case-by-case basis to mention the legal risk involved when the doctrine of the local courts differs from the ESAs' guidelines on MiCAR. According to the Guidelines, any instruments that will be issued in the future will have to undergo these checks. One wonders how this will this relate to what already exists on the market and is not regulated and if there is a timeframe within which these assessments or certifications will have to be made. In our view, market developments and regulatory intervention need to be reconciled and existing instruments and regulations need to be connected.
4. Do respondents have any comments on the standardised test?
FECIF supports the standardised test is clear and very useful for both institutions and investors. However, it should be developed when a technology is similar to DLT. FECIF considers positively the Draft Guidelines mention that ‘the functional attributes of such technology should be considered, including the basis on which the records (the ledger) are held, shared and how consensus is achieved (i.e. the functioning of the consensus mechanism)’. But these are generic references that should perhaps be complemented with some illustrative examples.
In turn, with regard to the requirement to be considered a crypto-asset only when it ‘is a value or right referenced’, it would be useful to clarify the inclusion of crypto-assets with non-intrinsic value ‘having a value attributed to them by the seller / buyer or by market participants should be treated as digital representations of value’. This mention allows Bitcoin and similar products to be included in the MiCAR perimeter, in contrast to the positions held until now by some NCAs. In this regard, FECIF considers that it would be useful to clarify what is meant by ‘value or right referenced’.
Furthermore, the distinction between EMT and ART, as mutually exclusive concepts, requires clarification. The Draft Guidelines consider a crypto-asset to be an EMT when it is ‘referencing the value of an official currency’ and at the same time consider it to be an ART when it is ‘referencing a security or right or a combination thereof, including one or more official currencies’. In other words, can there be an ART that references an official currency value? If so, this should be clarified because in this case it overlaps with the concept of EMT.
We also point out that there is a possibility that issuers may act with a certain freedom if the circulation of CA is contained within them, as in that case they are not subject to specific controls. It should be noted that on the one hand regulation defines ‘traditional’ instruments, and on the other hand instruments exclusively based on technological application: in between there may be hybrid situations (according to the legislator itself). It is unclear whether the regulation in question also intends to include such hybrid situations in the regulatory meshwork or wants to treat them as such, thus bringing out ‘grey’ areas where bad, naturally creative finance could creep in. We expect the authorities to make up for the lack of rules on grey areas with new regulation.
Finally, we point out what appears to us to be a typo in the flowchart to Annex C of the guidelines: from the rhombus where it is asked whether the CA refers to the value of a single official currency - the middle of the bottom three - two arrows erroneously start out, both referring to an affirmative answer. The rightmost arrow should instead refer to the negative answer.