Note On Markets In Crypto Regulation (MiCAR) – Fin Tech


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From VASP to CASP from a Liechtenstein perspective

  1. From VASP (Virtual Asset Service Provider) to CASP (Crypto
    Asset Service Provider) – on October 10, 2022, the European
    Parliament’s Committee on Economic and Monetary Affairs (ECON)
    endorsed the text for the MiCAR (Markets in Crypto Assets
    Regulation; Proposal for a Regulation of the European Parliament
    and of the Council on Markets in Crypto-assets, and amending
    Directive (EU) 2019/1937, COM/2020/593 final), which sets out a
    harmonized crypto regulatory framework that supports innovation and
    fair competition while ensuring market integrity and a high level
    of protection for retail users.

  2. This will also be relevant for Liechtenstein once implemented
    into the acquis communautaire of the European Economic
    Area (EEA) through an EEA Joint Committee Decision (JCD).

  3. Subject to final amendments, currently registered VASPs with
    the Liechtenstein Financial Market Authority (FMA) will have an
    18-month transition period pursuant to Art 123 MiCAR to implement
    subsequent changes to the so-called Liechtenstein Blockchain or
    DLT1 Act (TVTG2 ) and fully comply with MiCAR
    regulation.

  4. The Rules of MiCAR are similar to the already enacted
    Liechtenstein Blockchain Act (TVTG). Liechtenstein based and
    registered VASPs therefore will in general only have to make
    specific adaptions and may then passport from Liechtenstein into
    the entire EU and EEA market!

  5. MiCAR will regulate the following types of tokens pursuant to
    Art 3 MiCAR:

    • Asset-referenced tokens;

    • Electronic money tokens; and

    • Utility Tokens.


  6. Whereas the following tokens will in general fall outside of
    the scope of MiCAR:

    • Unique, non-fungible tokens (e.g., NFTs for art and
      collectibles, etc.);

    • Security tokens, which qualify as financial instruments under
      MiFID II (Markets in Financial Instruments Directive 2014/65/EU) as
      they fall under the MiFID II and associated regulatory
      regimes;

    • Automatically generated tokens offered without a peppercorn of
      consideration (i.e., airdrops, etc.).


  7. In addition, the following crypto asset services will in
    general be regulated:

    • the custody and administration of crypto-assets on behalf of
      third parties;

    • the operation of a trading platform for crypto-assets

    • Exchange of crypto assets for fiat currency that is legal
      tender and other tokens as well as vice versa;

    • the execution of orders for crypto-assets on behalf of third
      parties;

    • placing of crypto-assets;

    • the reception and transmission of orders for crypto-assets on
      behalf of third parties; and

    • providing advice on crypto-assets.

Conclusion:

  1. In summary, MiCAR is a new regulation being proposed by the
    European Parliament that aims to create a harmonized framework for
    crypto regulation in the EU and EEA. This regulation will be
    relevant for Liechtenstein once it is implemented into the EEA
    through an EEA Joint Committee Decision (JCD). Currently registered
    VASPs (Virtual Asset Service Providers) with the Liechtenstein
    Financial Market Authority (FMA) will have an 18-month transition
    period to implement changes to the Liechtenstein Blockchain or DLT
    Act (TVTG) and fully comply with MiCAR regulation.

  2. The MiCAR regulation will cover various types of tokens such as
    Asset-referenced tokens, Electronic money tokens, and Utility
    Tokens. Certain types of tokens such as Unique, non-fungible tokens
    (NFTs) and Security tokens will fall outside of the scope of MiCAR.
    Security tokens will be treated like financial instruments.

  3. Additionally, MiCAR will regulate various crypto asset services
    such as the custody and administration of crypto-assets on behalf
    of third parties, the operation of trading platforms for
    crypto-assets, exchange of crypto assets for fiat currency, and
    providing advice on crypto-assets.

  4. Contact us at Law Firm Bergt and Partners Ltd. | Bergt Law if
    you have further questions regarding MiCAR, its implications and
    how it may affect you and your business! You may directly reach out
    to us under

Footnotes

1. Distributed Ledger Technology

2. Gesetz über Token und vertrauenswürdige
Technologie-Dienstleister or Act on Tokens and Trusted Technology
Service Providers (TTTA.)

Originally published by 03 November, 2022

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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