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MiCA: When is a white paper really required?

13 May 2024

On 21 May 2024, the MiCA Roundtable Vienna took place. As part of the roundtable, experts were invited to share insights on questions relating to MiCA. The following is a brief discussion by our founding partner, Oliver Völkel, of how Article 4 and Article 66 MiCA interact with one another. Oliver concludes that, although MiCA does not require a crypto-asset white paper to be published in cases of 'mineable' crypto-assets such as Bitcoin or Ether, CASPs are unable to provide services in relation to such crypto-assets as long as a MiCA-compliant white paper has not been drawn up and published voluntarily.

Title II MiCA: Instructions for Offerors

MiCA lays out rules for distinct actors in the markets for crypto-assets. In particular, it distinguishes between offerors of crypto-assets and crypto-asset service providers (CASPs). Offerors are natural or legal persons, or other undertakings, or the issuer, who offers crypto-assets to the public. CASPs are (licensed) legal persons or other undertakings whose occupation or business is the provision of one or more crypto-asset services to clients on a professional basis.

Title II MiCA covers offers to the public of ‘other’ crypto-assets, and admission to trading of such other crypto-assets. Title II prescribes in which cases a person “shall not make an offer to the public” or “shall not seek admission to trading” (Art 4, 5 MiCA). Addressees of these provisions are therefore not CASPs but the offerors, or persons seeking admission, respectively.

One of the principal obligations under Title II concerns the publication of a crypto-asset white paper pursuant to Art 4 (1) (b) to (d) MiCA.

Pursuant to Art 4 (2) MiCA exemptions apply in the following cases: (a) an offer made is made to fewer than 150 persons per Member State; (b) the funds raised do not exceed EUR 1 million over a period of 12 months; or (c ) the offer is addressed solely to, and the crypto-asset can only be held by, qualified investors.

Pursuant to Art 4 (3) MiCA Title II in its entirety shall not apply if: (a) the crypto-asset is offered for free; (b) it is automatically created as a reward for the maintenance of the distributed ledger or the validation of transactions;
(c ) the offer concerns a utility token to an existing good or service; or (d) in case of a limited network.

Bitcoin and other 'mineable' crypto-assets therefore do not trigger a white paper requirement under Art 4 MiCA.

Title V MiCA: Instructions for CASPs

Title V, Chapter 2 MiCA lays out obligations for all CASPs. Art 66 (3) MiCA requires CASPs to warn clients of the risks associated with transactions in crypto-assets. When (a) operating a trading platform, (b) exchanging crypto-assets for funds or other crypto-assets, (c) providing advice or (d) providing portfolio management, CASPs shall provide their clients with hyperlinks to any white papers for the crypto-assets in relation to which they are providing those services.

How is Art 66 (3) MiCA—a rule for CASPs—to be construed in light of the exemptions in Art 4 (2) and (3) MiCA—rules for offerors and persons seeking admission to trading? What if no white paper exists? What if an exception applies under Art 4 MiCA?

A first intuition could lead to the conclusion that in cases where no white paper must be published pursuant to Art 4 (2) or (3) MiCA, also no obligation can exist for CASPs to provide a link to a white paper under Art 66 (3) MiCA.

However, if the European legislator had wanted to limit the obligation under Art 66 (3) MiCA to cases where a publication of a crypto-asset is required by MICA, it could have easily done so (as is the case, for example, in Art 76 (1) MiCA: “the operating rules shall clearly state that a crypto-asset is not to be admitted to trading where no corresponding crypto-asset white paper has been published in the cases required by this Regulation”).

It must also be taken into account that, expressis verbis, the aim of Art 66 (3) MiCA is to “warn clients of the risks associated with transactions in crypto-assets”. If no white-paper exists, the CASP cannot warn its clients about the risks associated with a particular crypto-asset. If there is no white paper available for a specific crypto-asset, and a CASP is therefore unable to comply with Art 66 (3) MiCA, this therefore means that it cannot offer its services in relation to this crypto asset.

Providing crypto-asset services in relation to crypto-assets that are exempt from the obligation to draw up and publish a white paper—such as is the case for Bitcoin—is therefore dependent on a voluntary publication of a white paper relating to this crypto asset (which can be prepared by a third-party, it does not have to be prepared by the CASP itself).

Even Bitcoin will therefore require a MiCA-whitepaper in order to be serviceable under MiCA.

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