Basic principles

1. Scope

MiCA applies to all natural and legal persons that are engaged in the issuance, offer to the public and admission to trading of crypto-assets or that provide services related to crypto-assets in the European Union.

An issuance refers to the first sale of a crypto-asset of an issuer. This can, but does not have to, take place within the framework of a public offering.
An offer to the public means a communication to persons in any form, and by any means, presenting sufficient information on the terms of the offer and the crypto-assets to be offered so as to enable prospective holders to decide whether to purchase those crypto-assets. Publishing information on a website can qualify as an offer to the public. An offer to the public is not necessarily limited to the issuer; it can be made by anyone who (re)sells the crypto-asset.
Admission to trading refers to the listing of crypto-assets on a (licensed) crypto-asset exchange in the Union. MiCA may therefore be relevant even if the issuer is not domiciled in the Union and there is no public offer within the Union.
Crypto-asset services are custody and administration, operation of a trading platform, exchange of crypto-assets for funds or other crypto-assets, execution of orders, placing, reception and transmission of orders, advisory services, portfolio management, and transfer services.

The scope of application thus covers a wide range of activities known on the market. If an exception to the scope applies (see below), or if an activity is not regulated under MiCA, the Regulation is not relevant. Such activities can therefore be carried out without observing the provisions in MiCA.

2. Concept of crypto-asset

The central concept of MiCA is the crypto-asset. MiCA defines crypto-asset as a 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. This broad term covers most commonly known cryptocurrencies, including the ten largest in terms of market capitalization at the time of publication of this series: Bitcoin, Ether, Tether, Binance Coin, USD Coin, Ripple, Cardano, Dogecoin, Polygon, and Solana.

To qualify as a crypto-asset, the cryptocurrency must digitally represent a value or a right. The term is broader than the concept ofvirtual currency introduced in EU law in 2020, which required (among other things) that the cryptocurrency is accepted as a means of exchange. All cryptocurrencies that qualify as virtual currencies also qualify as crypto-assets under MiCA.

3. Exceptions from the scope of application

There are several exceptions to the scope of MiCA. The exceptions relate either to the characteristics of the crypto-asset (e.g. NFTs, financial instruments) or the respective actors (e.g. reverse solicitation, group exception):

Non-fungible tokens (NFTs) are excluded from the scope of MiCA so long as they are unique and not fungible with other crypto-assets. The prototypical example would be NFT artwork. In contrast, if an NFT token standard such as ERC-721 or ERC-1155 is used to issue interchangeable NFT-based vouchers, the exclusion would not apply. Although these tokens would be non-fungible from a technical perspective, they would not be unique. Under MiCA, a substance-over-form approach applies. Relying on specific technical standards therefore cannot be used to circumvent MiCA's requirements.
Financial instruments are also excluded from the scope of MiCA. This is relevant if rights are embodied in a token that are typically associated with financial instruments, e.g. the right to interest and repayment as with a bond. In such a case, the token merely serves as a carrier medium for the respective right. Formally, such tokens qualify as crypto-assets; however, because other EU legal acts already regulate financial instruments, such tokens are exempt from MiCA. For example, MiFID II would apply to the distribution of tokenized financial instruments and the Prospectus Regulation would apply to the public offer of tokenized transferable securities. In addition to financial instruments, a number of other instruments already regulated by EU law are excluded from the scope of MiCA.
Reverse solicitation, the principle known from MiFID II, according to which non-EU firms are not required to obtain a license in an EU client's country of residence if the services are provided at the client's own exclusive initiative, can also be found in MiCA. It means that crypto-asset service providers established outside the EU can provide crypto-asset services to EU clients without obtaining a license under MiCA, provided that the services are provided at the client's own exclusive initiative. However, MiCA contains several provisions aimed against possible abuse of reverse solicitation. For example, reverse solicitation does not apply if the third-country firm directly or indirectly solicits clients or prospective clients in the Union. Even contractual clauses or disclaimers stating otherwise are disregarded under MiCA. In addition, third-country firms may not market new products or services to clients acquired by reverse solicitation without losing the benefit of the exemption.
Group companies are excluded from the scope of application under MiCA if they provide their services exclusively internally within the group for other group companies. Such group companies will therefore also not have to comply with MiCA. The provision is relevant for internationally operating service providers that divide functions among different group companies (for example, if they divide the infrastructure for custody and for operating a trading platform among several group companies). MiCA contains a safeguard against abuse of this provision: If activities are outsourced to other group companies, MiCA sets out detailed requirements that must be met.

4. New categories of crypto-assets

In addition to the general concept of crypto-asset, MiCA introduces three distinct subcategories of crypto-asset, namely asset-referenced tokens, e-money tokens, and utility tokens:

Asset-referenced token is a type of crypto-asset that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies. Asset-referenced tokens are therefore intended to maintain a stable value with respect to other reference values. The scope of application is wide: any other value and right can be considered, such as gold, real estate, fund shares, stocks, bonds or even other crypto-assets.
E-money token is a type of crypto-asset that purports to maintain a stable value by referencing the value of one official currency. E-money tokens are similar to asset-referenced tokens, except that they reference the value of only a single currency such as euros or U.S. dollars.
Utility token is a type of crypto-asset that is only intended to provide access to a good or a service supplied by its issuer. MiCA distinguishes between utility tokens where the good or service already exists or is already provided, and those where the issuance of the token serves as an advance sale for project financing.

Special provisions apply to the public offering of these crypto-assets, which we will highlight later. Not every crypto-asset falls into one of these categories, however. If a crypto-asset does not fall into one of them, the general requirements for the public offering of crypto-assets outlined below still apply.