MiCA's Content Requirements for Crypto-Asset White Papers

With the introduction of the Markets in Crypto-Assets Regulation (MiCA), the regulatory framework for crypto-assets in the EU is undergoing a significant transformation. A key component of MiCA is the requirement for issuers of crypto-assets to create and publish a detailed white paper. This white paper must contain specific information to provide investors and authorities with a comprehensive understanding of the respective crypto-asset. This article provides an overview of the content that must be included in crypto-asset white papers, including special considerations related to asset-referenced tokens and e-money tokens. 

Content of the Crypto-Asset White Paper

The crypto-asset white paper must include a comprehensive collection of information aimed at offering investors and other stakeholders a clear insight into the crypto-asset project and the associated crypto-asset. This includes details about the offeror or the person seeking admission to trading, the issuer (if different), the operator of the trading platform (if applicable), the project itself, the public offering, the crypto-asset itself, information on the rights and obligations associated with the crypto-asset, the underlying technology as well as risks and environmental impacts.

Transparency and Fairness

The information must be fair, clear and not misleading. It is crucial that the white paper does not omit significant information and presents the information in a clear and understandable manner. To prevent investors from making ill-considered decisions based on exaggerated expectations, statements about the future value of the crypto-asset are not allowed. 

Clarification of Risks

The white paper must emphasize potential risks, including the possibility of crypto-asset value loss, restricted transferability, illiquidity, or the inability to exchange utility tokens for the goods or services promised in the white paper. In addition, the white paper also needs to contain a clear warning that the crypto-asset is not covered by the investor compensation or deposit guarantee schemes.

Summary

The white paper must include a summary that provides key information about the public offering of the crypto-asset or the intended admission to trading, presented in a non-technical language. This summary serves as an introduction but also includes a warning that investment decisions should be based on the entire white paper.

Specific Requirements for Asset-Referenced Tokens

Asset-referenced tokens are a type of crypto-asset that purport to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies. The issuance of asset-referenced tokens in the European Union generally requires an authorization from the competent authority of the issuer's home Member State. The authorization process includes a review and approval of the associated crypto-asset white paper. 

In addition to the standard information required for "normal" crypto-assets (i.e., information about the issuer, the token, the offering, etc.), the white paper of an asset-referenced token must include information on the stabilisation mechanism, on the investment policy of the reserve assets, on the custody arrangements for the reserve assets and on the rights provided to holders. Moreover, the summary of the white paper must outline the conditions for a potential token redemption and that the holders of the asset-referenced tokens have a right of such a redemption at any time.

Specific Requirements for E-Money Tokens

E-money tokens are similar to asset-referenced tokens, except that they reference the value of only one official currency. E-money tokens can only be issued by authorized credit institutions or e-money institutions. 

Similar to asset-referenced tokens, the white paper of an e-money token must also specify the identity of the person other than the issuer that offers the e-money token to the public or seeks its admission to trading as well as the reason why that particular person is involved. If the issuer also issues other crypto-assets, this must also be visible in the white paper. In addition, the issuer must state whether there is any connection between the issuer and the entity running the distributed ledger technology used to issue the crypto-asset. Furthermore, the white paper must contain information on the issuer's financial condition over the past three years.

Language and Format

The white paper must be written in an official language of the issuer's home Member State or in an internationally recognized financial language. If offered in other Member States, it must also be available in an official language of the host Member State or an internationally recognized financial language. The white paper must be provided in a machine-readable format. 

A list of disclosure items for crypto-asset white papers is available in the Annexes to MiCA. However, the European Securities and Markets Authority (ESMA), in cooperation with the European Banking Authority (EBA), has been tasked with developing technical standards to establish standard forms, formats and templates for crypto-asset white papers to promote consistency and comparability. These technical standards should be available by 30 June 2024.