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?
The Digital Currencies Governance Group (DCGG) and its members welcome the efforts put forth by the European Supervisory Authorities (ESAs) to outline the template for the purposes of Article 8(4) of MiCA, proposed under these draft Guidelines. While we agree that this template is a useful tool for ensuring consistency in submissions and regulatory classifications across the EU, we are concerned that the templates under Articles 8(4), 17(1)(b)(ii), and 18(2)(e) of MiCA do not allow for sufficient room for the classification of more complex crypto products.
In particular, with constant innovation in the sector, some crypto-assets may exhibit features or functionalities that do not fit neatly into the categories laid out in the proposed template. Issuers of assets that do not clearly align with the definitions provided (e.g., for different types of asset-references tokens, for financial instruments or deposits, etc.) may encounter challenges in filling the template out in a manner that adequately reflects the nature of their product. Based on this, our recommendation is that the ESAs supplement the proposed legal opinion templates with additional guidance, benchmarks for detail provision and specific examples to address more complex crypto-assets without overburdening the issuers, overcomplicating compliance, yet still maintaining effective regulatory oversight.
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?
Please refer to our response to Question 1.
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?
In DCGG’s view, the fields relating to explanation of regulatory status appear to be clear. We appreciate that the template references the main frameworks for various types of financial instruments and assets, ensuring a strong foundation for regulatory classification. It is particularly beneficial that the guidelines cite specific legislative frameworks for different assets (financial instruments, deposits, funds, etc.), providing necessary legal context. However, to further enhance coherence and clarity, we recommend that the templates include more comprehensive regulatory references for each product. This could be achieved for example through an Annex detailing the relevant legal interpretations across individual member states, which is particularly useful in cases of diverging definitions and rules across national implementation. Such an addition would facilitate compliance for issuers by offering clearer guidance on jurisdiction-specific definitions and interpretations.
While the guidelines generally provide clarity, a potential limitation could also arise when multiple offerors (rather than the initial issuer) seek to offer the same crypto-asset. In such cases, the guidelines should allow offerors to pool resources, for example, through associations or consortia, to jointly obtain a single legal opinion. From our perspective, this approach would have substantial benefits such as cost efficiency, but notably consistency in interpretation. A joint legal opinion would help avoid the risk of different interpretations of the same crypto-asset (e.g., an ART) by multiple legal advisers. This would enhance uniformity in classification and reduce regulatory uncertainty. By incorporating provisions to allow joint legal opinions, the guidelines could better align with the practical needs of market participants and help promote consistent application of MiCA across jurisdictions.
4. Do respondents have any comments on the standardised test?
DCGG welcomes the ESA’s proposed approach to classification of crypto-assets on a case-by-case basis and the consideration of token-specific attributes through the standardised test. We see the proposed flowchart as a useful tool in the assessment of how a crypto-asset could be classified under MiCA, however, we would like to make the following remarks to suggest improvements of its efficiency:
- Classification based on national interpretations of EU legal frameworks: As also touched upon in our response to Question 3, when applying the standardised test, it is crucial for both legal entities and individuals to consider all potential sources that inform the interpretation of regulatory concepts. Since legal interpretations can differ among EU member states—such as the definition of a financial instrument under MiFID II (for example, Germany vs Malta) —there is a clear need for additional references to national legal texts to be provided with this test. This would enhance understanding of how regulatory concepts are defined within each jurisdiction. It is key for NCAs to harmonise these interpretations to prevent situations where the same crypto-asset is classified differently across different jurisdictions. Fostering ongoing communication among NCAs is essential for achieving proper standardisation and consistent classification practices under MiCA. Despite the flowchart’s intention to promote uniformity across member states, the possibility of regulatory arbitrage remains a significant issue which may undermine the effectiveness of the standardised framework, and should be addressed further.
- Technology “similar to DLT”: The proposed flowchart includes a question related to the technology used to transfer and store a crypto-asset, with the available responses being: “DLT”, “Technology similar to DLT” and “Other”. While we understand that this is based on the definitions laid out in the MiCA Level I text, we view the last two options as too broad, insufficiently detailed and might lead to inconsistencies in how issuers or regulators interpret what qualifies as "similar technology" to DLT. It is indeed part of the ESA’s mandate to fill in gaps left out in the Level I text in the form of additional guidance, detail and examples, and we believe this should be the approach in this case well. The ESAs should provide more precise definitions or examples of what technologies would be considered similar to DLT to avoid ambiguity in the classification process and prevent inconsistent interpretations.
- Unique and non-fungible tokens: By way of Article 2(3) and recitals 10 and 11, tokens that are unique and non-fungible (NFTs) are not defined as a MiCA crypto-asset and are not in scope of the Regulation. Notwithstanding, it is important to note that certain fractionalised NFTs (the so-called “f-NFTs”) that do not have the utility of a financial instrument or a MiCA- crypto-asset (and therefore do not merit such classification), but rather digital art or collectibles should also be included in this category, and the standardised test, for example through an additional question on use-case.The considerations provided by the European Commission in the MiCA Level I text already reflect this important nuance, as evidenced by the exclusion of NFT digital art, collectibles, product guarantees and real estate, from the scope of the Regulation. This goes to show the importance of utility, coupled with other key characteristics, in the classification of NFTs as a distinct asset class. In our view, the ESAs are now uniquely positioned to take this important nuance into consideration and provide much needed clarity on the classification of digital art/collectible f-NFTs.
While we understand the importance of adhering to the Level I text’s specific wording and consideration with regard to uniqueness and non-fungibility, it is important that NFTs are examined holistically through consideration of all characteristics, utility and functions present, and this should be explicitly stipulated in the guidelines to NCA to promote regulatory clarity in classification. In our view, fungibility alone does not present a sufficient determinant to classifying an NFT as a MiCA crypto-asset. A more in-depth assessment of characteristics and utility is needed in this context in order to ensure “true” NFTs do not end up being incorrectly captured by MiCA if they do not satisfy the definitions of different crypto-assets in scope of the Regulation, which could impact the overarching development of the space and lead to a disproportionate approach towards regulations.
- Oversimplification for complex crypto-assets: In line with our earlier responses, the crypto-asset sector is constantly growing and innovating, and more sophisticated new products continue to emerge on the market. While the flowchart’s main objective is sto standardise and simplify the classification process accounting for key definitions based on the MiCA Level I text, we are concerned that it may fail to capture emerging products and would oversimplify more complex crypto-assets that do not strictly fit into the proposed categories. We reiterate our support for a granular and thorough case-by-case assessment of such assets to ensure innovation and developments within the EU market are enabled and can continue to grow.