Linklaters | Jennifer Calver  –  Sophia Le Vesconte  –  Simon Treacy | Oct 13, 2022

Two years since the draft text was first released, the EU’s flagship Markets in Cryptoassets Regulation has now been finalised and is set to become law.

See:  EU agrees on landmark MiCA rules putting pressure on UK and US to regulation crypto assets too

• Under MiCAR, in-scope cryptoassets will be categorised according to their perceived risk as one of:
  • EMTs: e-money tokens, which are broadly stablecoins pegged to one official currency
  • ARTs: asset-referenced tokens, which are broadly stablecoins pegged to more than one official currency or other assets
  • Other: cryptoassets which are not EMTs or ARTs and so are subject to lighter-touch requirements.
• DeFi: Services provided in a “fully decentralised manner” should not be in the scope of MiCAR. However, MiCAR will apply to intermediaries that perform their services as part of wider DeFi arrangements.
  • For example, if a cryptoasset is issued to the public on a decentralised basis, the operator of the trading platform must produce the white paper for the cryptoasset and will need to be considered on a case-by-case basis.
• Who must comply: The final version of MiCAR applies to both issuers of cryptoassets offering their products into the EU and cryptoasset service providers (CASPs). CASPs must seek authorisation to offer their services in the EU. Having a crypto licence means applying rules on, for example, conduct, capital and safeguarding, as well as service-specific requirements.

See:  Brookings: The Future of Crypto Regulation (On Demand and Transcript)

• Alongside activities such as crypto custody and exchange of cryptoassets (see our previous blogpost), the following will also be regulated under MiCAR:
  • providing transfer services for cryptoassets on behalf of third parties
  • providing portfolio management on cryptoassets.
  • Custodians – incidents attributable to the custodian, although the burden is on the custodian to show that the loss happened independently of its services and operations. Their liability is also capped at the market value of the cryptoasset lost at the time the loss occurred.
    
• What’s next? It is expected to enter into force early in 2023 but not start to apply until 2024. Generally MiCAR will apply from 18 months after entry into force although the rules for stablecoins (i.e. ARTs and EMTs) will start to apply after 12 months.

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