The Markets in Crypto-Assets Regulation (MiCA) became part of EU law in June 2023. Its provisions, however, will not be fully applicable, i.e., mandatory and enforceable, until 30 December 2024. This period of time allows Member States, competent authorities and industry participants to prepare for compliance with the new rules. To facilitate a smooth implementation, MiCA includes transitional provisions applicable to current industry participants such as token issuers and crypto-asset service providers. This article provides an overview of these transitional provisions and highlights the important deadlines for current industry participants.
Transitional measures for public offers and listing of crypto-assets
MiCA requires persons who offer crypto-assets to the public to draw up a crypto-asset white paper, notify it to the competent supervisory authority and publish it prior to the start of the public offer. Marketing communications related to the public offer are also subject to certain content, notification and publication requirements. These requirements, however, do not apply to public offers that end before 30 December 2024. Issuers who intend to conduct public offerings up until the deadline should therefore thoroughly document the conclusion of their offers in order to safeguard themselves against potential penalties.
Persons who seek to list crypto-assets on an exchange are also subject to MiCA's crypto-asset white paper and marketing requirements. However, reduced requirements apply to crypto-assets that are listed before 30 December 2024. In particular, for these crypto-assets only marketing communications published after 30 December 2024 are subject to MiCA's content and publication requirements. In addition, operators of crypto exchanges must ensure by 31 December 2027 that a crypto-asset white paper, where required, complies with MiCA's content, notification and publication requirements.
Issuers of asset-referenced tokens
Under MiCA, issuers of asset-referenced tokens are required to obtain a license and to comply with certain crypto-asset white paper requirements. Credit institutions may issue asset-referenced tokens after obtaining the approval of a crypto-asset white paper by the competent supervisory authority.
Issuers (other than credit institutions) that issued asset-referenced tokens before 30 June 2024 may continue to do so until they are granted or refused a license under MiCA, provided that they apply for such license before 30 July 2024.
Similarly, credit institutions that issued asset-referenced tokens before 30 June 2024 may continue to do so until the crypto-asset white paper has been approved or has failed to be approved, provided that they notify their competent authority before 30 July 2024.
Notably there are no transitional measures for issuers of electronic money tokens (i.e., stablecoins), which under MiCA can only be authorized credit institutions or electronic money institutions. Accordingly, the provisions applicable to these issuers will apply from 30 June 2024.
Transitional regime for crypto-asset service providers
MiCA introduces a licensing regime for crypto-asset service providers such as crypto exchanges, custodial wallet providers and crypto brokers. Providers who actively offer services to EU customers must obtain a license from the competent supervisory authority before offering their services.
MiCA also provides for a transitional regime for crypto-asset service providers that are already authorized to provide crypto-asset services in accordance with the applicable law of an EU Member State (e.g., pursuant to a license or registration). These service providers may continue to offer their services until 1 July 2026 or until their license application under MiCA is granted or refused.
Member States, however, have the option not to apply the transitional regime or to reduce its duration where they consider that their current national regulatory framework is less strict than MiCA. It is not yet clear whether Member States will exercise this option; Member States have until 30 June 2024 to notify the EU Commission and ESMA of their decision.
Simplified license procedure
MiCA also gives Member States the option to apply a simplified procedure for license applications that are submitted between 30 December 2024 and 1 July 2026. This simplified procedure is available only to crypto-asset service providers that are already authorized to provide crypto-asset services in accordance with the applicable law of an EU Member State. These crypto-asset service providers should start preparing now to ensure that their systems and processes align with MiCA's provisions.
MiCA brings about significant changes to the crypto industry within the EU, with its provisions gradually becoming mandatory and enforceable by 30 December 2024. As Member States, competent authorities and industry participants prepare for compliance with the new rules, MiCA's transitional provisions play a pivotal role. These measures provide for some flexibility for token issuers and crypto-asset service providers, allowing them to continue certain activities until specific deadlines. In addition, the potential availability of a simplified license procedure should further facilitate a smooth implementation of MiCA. Token issuers and crypto-asset service providers should be aware of the transitional measures and deadlines that apply to them in order to ensure a seamless and compliant adaptation to MiCA's regulatory framework.