New requirements for crypto-assets and crypto-asset service providers

MiCA will regulate providers of crypto-asset services and issuers of crypto currencies. Crypto-asset services will encompass the following services on behalf of clients with respect to crypto-assets:

• custody and administration 
• operation of a trading platform
• exchange (for funds or other crypto-assets)
• execution of orders 
• placing
• reception and transmission of orders 
• providing advice 
• providing portfolio management 

• providing transfer services.

   

MiCA contains authorisation requirements and operating conditions for crypto-asset service providers similar to those that are in place for investment services providers under Directive 2014/65/EU on markets in financial instruments ("MiFID II"). However, it should be noted that MiFID II takes precedence over MiCA, meaning that crypto-assets that are also classified as financial instruments will be covered by MiFID II and not MiCA. 

The definition of crypto-assets in MiCA is rather wide and includes any digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology. However, there are some exemptions from the definition. For example, non-fungible tokens (NFTs) are excluded from the application of MiCA provided that such NFTs are unique and not fungible with other crypto-assets. The mere attribution of a unique identifier to a crypto-asset is not sufficient to classify it as unique and non-fungible. 

Issuers of crypto-currencies will be subject to provisions on transparency and disclosure for the issuance, offer to the public and admission of crypto-assets to trading. MiCA also contains measures to prevent insider trading, unlawful disclosure of inside information and market manipulation related to crypto-assets. 

Crypto-asset service providers will become subject to supervision by the competent authority of their home states once authorised. The home state competent authority may levy certain administrative penalties and other measures in the event of breaches of the rules. Such penalties and measures may be imposed on the crypto-asset service provider itself, as well as its employees and board members.  Other measures may include a ban on trading on own account and holding management functions in a crypto-asset service provider. 

In addition to MiCA, crypto-asset service providers will become subject to Regulation (EU) No. 2023/1113 on information accompanying transfers of funds and certain crypto-assets ("TFR II"). TFR II requires crypto-asset service providers to provide information on the originators and beneficiaries when transferring crypto-assets, and also to carry out enhanced customer due diligence on all transactions to or from personal crypto accounts. TFR II will as such extend the scope of the anti-money laundering and anti-terrorist financing rules that crypto-asset service providers are already subject to. 

MiCA comes into force in the EU on 30 June 2024 (those parts of MiCA that are mainly relevant for issuers of asset-referenced tokens and e-money tokens) and 30 December 2024 (the remaining parts of MiCA, including authorisation and operating conditions for crypto-asset service providers). 

MiCA includes a transitional rule whereby providers of crypto-asset services with existing operations in accordance with local law prior to 30 December 2024 may continue to operate until 1 July 2026, or until they are granted or refused an authorisation under the new regime transposing MiCA. Member states may decide not to implement this transitional period. Alternatively, they may shorten it. The European Securities and Markets Authority ("ESMA") has recommended that the transitional period should not exceed 12 months. 

TFR II comes into force in the EU its entirety on 30 December 2024. 

The Financial Supervisory Authority of Norway (Finanstilsynet) has proposed a new act (the "Norwegian MiCA Act") to transpose MiCA into Norwegian law and to appoint Finanstilsynet as the competent authority for the purposes of MiCA. TFR II will be transposed into Norwegian law through amendments to the existing Norwegian AML Act. 

It is still uncertain when MiCA and TFR II will enter into force in Norway. Under the current proposal for the Norwegian MiCA Act, there is scope for the Ministry of Finance to implement a transitional period, but it remains unclear if this will be done and how long the potential transitional period will be. Keeping the legislative process in Norway in mind, we estimate that the Norwegian MiCA Act will enter into force sometime during the first half of 2025. This means that market participants should already start to analyse their activities to determine whether they are within the scope of the new rules and prepare for an authorisation application if they are. 

MiCA and TFR II are directly applicable in Sweden and will apply from the dates set out above. The Swedish government has, in addition, proposed a new act implementing additional legislative measures, including inter alia, appointing the Swedish Financial Supervisory Authority as the competent authority for the purposes of MiCA. Furthermore, according to the proposal, providers of crypto-asset services with existing operations in accordance with Swedish law prior to 30 December 2024 may continue to operate until 30 September 2025, or until they are granted or refused an authorisation under the new regime transposing MiCA. The Swedish implementation act is expected to enter into force on 30 December 2024. 

MiCA and TFR II are also directly applicable in Denmark and will enter into force on the dates set out above. Furthermore, the Danish parliament has adopted additional legislative measures by Act No. 481 of 22 May 2024 that amend the Danish Financial Business Act (in Danish: lov om finansiel virksomhed), the Danish Payments Act (in Danish: lov om betalinger), the Danish Capital Markets Act (in Danish: lov om kapitalmarkeder), and certain other legal acts. The new legislation appoints the Danish Financial Supervisory Authority as the competent authority for the purposes of MiCA with authority to grant authorisations to providers of crypto-asset services and to collect fees from companies under its supervision. The provisions on issuance and offering of asset-based tokens and e-money tokens enter into force on 30 June 2024, whereas the additional regulation on the offering of crypto-asset services will enter into force on 30 December 2024. Under the new Danish legislation, providers of crypto-asset services with existing operations in Denmark (before 30 December 2024) who submit an application to the Danish Financial Supervisory Authority no later than 30 December 2024 may continue to operate until 1 July 2026, or until they are granted or refused an authorisation under the new regime transposing MiCA.