First Months of MiCAR: What Have We Learned and What Now | Martin Hanzl - EY Law Austria

[Music] all right welcome to the stage Martin Hansel with Law Firm e ey law Austria with first months of my my car what have we learned and what now yeah thank you very much um very excited to do a quick talk today about Micah EU crypto regulations so basically um what you have to think about if you want to do either token issuance uh in the future in uh in the EU and or um provide services as a crypto asset service provider my name is Martin I'm a partner at ey law uh and a lawyer have been involved in a crypto space since uh 2016 uh and if you want to connect with me you can do that via telegram or LinkedIn uh you can also wait until uh the talk is over to see if it's worth it because we'll also have the QR codes on the last slide in today's talk I would like to talk with you about three uh topics on the one hand basically the principles of Ma so what is actually in scope of M then uh the first two months two months of u m have passed or full applicability have have passed so what have we learned and then thirdly also what is going to come with Ma and what is basically uh kind of to look out for in the next few months and years just a quick refresher um in in Europe we have the markets in Europe markets in crypto assets regulation uh which basically is built upon two pillars uh we have regulation for um issuers and offerers of tokens and we have regulation for crypto asset service providers so basically any centralized exchange or centralized service provider that wants to offer uh services in relation to crypto assets be it custody uh exchange a trading platform or whatever um equally important as to what is in scope of ma is actually what is not in scope of ma right uh and you see here quite a few buzzwords um from defi decentralized Finance uh to security tokens uh Mia Tech providers and nfts um so what the tricky thing here is just because you call something decentralized um it doesn't really mean that from a regulatory point of view it it is also like really uh this this application is really decentralized and therefore not within the scope of ma uh because M actually requires you to be fully decentralized and no one really knows yet what that means um but basically uh what we can figure out is that if you have like a one one centralized entity that actually calls the shots you will very likely not be decentralized even though if you are on your road to decentralization or if you uh claim to be decentralized um same for security tokens or basically any Financial instrument um that would also not be in in the scope of MAA but actually in the scope of other EU supervisory laws which is for example miid 2 um that would be necessary here maybe also quickly looking at the different uh types of tokens that we have on the ma we have asset reference tokens and e-money tokens e-money tokens pretty straightforward um basically a usdt or a usdc asset reference tokens reference the reference um have a stable value to one underlying or a bundle or a basket of underlyings could be for example a precious metal or or a basket of of currencies and then we have other crypto assets which is definitely going to be the biggest part of uh crypto assets that we see in the market uh those are layer two coins but also layer one coins um until also like including uh including uh um utility tokens what actual requirements do we have for each set of tokens asset reference tokens and e-money tokens issue of those tokens actually have to get a license uh and have to get pre-approval of the regulator before being able to offer this um and they require an an EU based issue offer for other crypto assets which is going to be like if you as a token project uh intend on launching a token or if you uh yeah basically uh want to do a token sale uh those tokens don't require don't necessarily require any EU entity to do that though what we see right now in the market is that most of the token issues will actually establish some kind of EU presence for this offering and if you intend on handing out or giving out other crypto asset you will also um require will be required to publish a white paper which essentially includes some some kind of disclosure uh in information so the talk is actually what have we learned and what have we seen uh with mik so basically what we discussed right now and basically the the the the scope of M was just a refresher so what have we learned uh so far we've seen that MAA as such the indust is very very well accepted by the industry um there's especially for crypto asset service providers a run for licenses um because actually if you have a license under Ma you will be able to Market your service within the whole European union and the whole economic uh European economic area so over to over 450 million people but of course there's not only positive things about MAA um there are still a lot of questions that are unclear especially when we look at token projects or layer two projects we'll come to that later but like just thinking about bridges um or uh portals this is still very unclear kind of how that looks like from a regulatory perspective uh just a quick round through what has happened over the last uh year so to say we've seen that almost all of the top uh exchanges uh in terms of like focusing on crypto asset service providers for this slide uh all of the top exchanges have announced that they will get a ma license somewhere in the EU um are actively preparing so we don't expect anyone to actually uh um abandon the the EU Market because that has also been um uh on the table at least for some uh for some lers um what are the the learnings or what are what are the industry questions that we have seen for in terms of crypto asset service providers so basically the good thing is that we see that we can offer or crypto asset service providers will be able to offer all of their or almost all of their uh existing products and services under the scope of MAA and or under the scope of miit right so um everything that we are um used to seeing an un centralized exchanges like spot trading or crypto spot margin trading or also earn services in terms of like if you if you lock your assets and get an interest all of that will be possible also under MAA another thing that we've seen is basically that the corporate governance structures are quite hard to build up especially if you enter the EU market for the first time drafting all of those policies and then actually implementing those policies is not uh not that easy and has been been quite difficult for for a lot of the players so basically it's important to start early on um what are then industry questions that we get often from crypto asset service providers that actually relate to layer 2 projects as well or token projects as such is um and this is like probably the question that we get asked the most how do we treat non-compliant tokens like for example usdt or also other crypto assets that do not offer a white paper do we have to delist those tokens or not and here of course I'm a lawyer the question is not not not super clear so there are of course like gray areas and and some some there's some some possibility to maneuver but what we see in practice is that most of the listing policies of the large crypto exchanges actually will require tokens to have a white paper and will require um tokens uh to be appropriately licensed uh as soon as those exchangers get ma licenses so that is also why we see that there's quite a run for um for white papers of light from from layer 2 projects um to actually eliminate or reduce the risk of getting delisted with with crypto exchanges and a couple of other questions that we've seen uh in the industry is basically what do we do with EMTs um the question of kind of can we still do transfer services and of course do we have to delist usdt or not in the in the EU um you might some some some people of you might have already seen it um most of the exchanges actually opted to D list usdt which again shows that there is quite some um quite a quite a cautious approach of crypto asset service providers um so what are we seeing in the in the market for uh layer 2 projects and um token sales as such um here we see that for other crypto assets um Ma has been applicable or is applicable since the 30th of December 2024 so quite recent um and we've seen that no one really knows kind of especially if you if you um if you issued your token before the the 30th of 2020 the 30th of December of 2024 um how M will affect you and if you kind of have the risk of getting delisted immediately from crypto assets from crypto exchanges again what we see just the risk of getting deal listed and because uh CPS have quite uh quite hard listing strategies here is enough for most of the layer 2 projects uh to draw up white papers and we expect that this will actually increase over the next couple of of uh months even more so that at some point mid or end of this year most of the tokens especially of the larger projects will have ma compliant white papers and we would also expect that this that then becomes industry standard for crypto asset service providers to actually um to actually require a white paper also for those tokens issued before the 30th of December 2024 what else do we see in terms of layer 2 projects and token sales uh in with with M I would say three topics that we see that are heavily discussed right now of course token sales um we've all seen uh over the last years um that there haven't been too many token sales in the in the last year but but more like free air drops because there was simply no clear framework under which you were allowed to sell tokens to the public this changes now with the uh with ma because we have a clear framework under which you can actually sell tokens to retail clients as well and that's uh why we already see an uptic in in uh in Visage token sales and that people are actually preparing to sell tokens to retail clients what we also see is that even the the us is thinking about or kind of the SEC is apparently open to discussing this as well so um that's going to be very interesting kind of how many token sales we will be seeing in 2025 and two other topics to touch upon is basically looking at layer 2 projects layer 2 infrastructure seeing kind of is that something that is within the scope of MAA and here um we have been discussing or we're still discussing quite a few things intensively especially everything around bridges for example um whether the operation of a bridge could actually um result in custody services or something they like or transfer services or if you have a lock and mint bridge for example if that actually means that you're issuing tokens and all of that so those are questions um that we are discussing right now also with the regulator because I feel the common sense is clear no one wants that to be a regulated activity but we're trying to figure out how to structure it to not be a regulated activity in compliance uh with with MAA so that's that's basically um two of the discussions that we are looking at right now um and I see I've only 15 seconds left so uh please also feel free to connect with me on telegram or LinkedIn uh and uh of course if you have any questions please feel free to ask me later thank you Martin