¶ 3801
Overview
Scope of the chapter. This chapter examines the regulation of crypto-assets in the European Union. Its subject is Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets, 2023 O.J. (L 150) 40 ("MiCA"), together with the regulation that carries the travel rule into the Union's law for crypto-asset transfers, Regulation (EU) 2023/1113 of the European Parliament and of the Council of 31 May 2023 on information accompanying transfers of funds and certain crypto-assets, 2023 O.J. (L 150) 1 (the "Transfer of Funds Regulation" or "TFR"). It explains the scope of MiCA and the assets it leaves to other legislation, the three categories into which it sorts crypto-assets, the disclosure regime for offers and admissions to trading, the authorisation and prudential regimes for issuers of asset-referenced tokens and e-money tokens, the authorisation and conduct regime for crypto-asset service providers, the custody rules, the market abuse rules, the transitional regime that ended on 1 July 2026, the treatment of firms established outside the Union, and the information that must travel with transfers between service providers. It closes with a short account of the separate regime the United Kingdom enacted in 2026, a model custody provision and a checklist.
Why a United States practitioner needs the European regime. A client's digital assets often sit with an exchange or custodian that serves European customers, and many issuers of stable-value tokens issue through European subsidiaries. The legal relationship between such a client and the provider, the provider's duties as custodian and the client's position if the provider fails are governed in part by MiCA when the provider is a European crypto-asset service provider. A fiduciary choosing a custodian, a lender taking control of collateral held at a European exchange, and a family office whose members live in several Member States all meet the regime in practice. The chapter is written from that perspective. It does not attempt the full treatment a European regulatory practitioner would require. It cross-refers to the chapters that treat the private law of custody (chs. 9 and 10), anti-money-laundering obligations (ch. 33), the travel rule in other jurisdictions (ch. 34), stable-value tokens in the United States (ch. 37) and tax information reporting under the European directive known as DAC8 (ch. 32).
Form of the legislation. MiCA is a regulation. It is "binding in its entirety and directly applicable in all Member States." MiCA art. 149. National law therefore supplies only what the regulation leaves to it: the designation of competent authorities, the penalties regime, the length of the national transitional period within the outer limit the regulation sets, and, importantly for custody, the private law that gives effect to the segregation the regulation requires. See ¶ 3870.05 infra. The regulation entered into force on the twentieth day after publication in June 2023. Titles III and IV, governing asset-referenced tokens and e-money tokens, applied from 30 June 2024. The remainder applied from 30 December 2024. MiCA art. 149(2)–(3). Provisions conferring powers to adopt technical standards applied earlier, from 29 June 2023. Id. art. 149(4).
The layers of rules. MiCA is the first layer. The Commission adopts delegated and implementing acts on the basis of draft regulatory and implementing technical standards prepared by the European Securities and Markets Authority ("ESMA") and the European Banking Authority ("EBA"). ESMA and the EBA then issue guidelines and question-and-answer material. A practitioner reading MiCA without the technical standards will miss much of the operative detail, especially on white paper formats, conflicts of interest, complaints handling, liquidity of reserves and the content of applications for authorisation. This chapter cites the regulation and identifies where a standard or guideline governs, without reproducing the standards.
Sources. The text of MiCA, the TFR and the Anti-Money Laundering Regulation quoted in this chapter is taken from the Official Journal as published by the Publications Office of the European Union. Statements of supervisory practice are taken from ESMA and EBA publications identified in the text. Where a point rests on a secondary account, the text says so.
Organization. Section ¶ 3810 explains the architecture of MiCA and its scope. Section ¶ 3820 explains the three categories and how a crypto-asset is classified. Section ¶ 3830 treats crypto-assets other than asset-referenced tokens and e-money tokens. Sections ¶ 3840 and ¶ 3850 treat the two stable-value categories and the regime for significant tokens. Section ¶ 3860 treats the authorisation of crypto-asset service providers. Section ¶ 3870 treats custody, client assets, trading platforms and market abuse. Section ¶ 3880 treats the transition, firms established outside the Union, the TFR and the United Kingdom. Section ¶ 3890 collects planning points, a model provision and a checklist.