Market Abuse

1. General remarks on the respective provisions

MiCA contains an insider dealing and market manipulation regime that is similar to that for financial instruments. On the one hand, it recognizes the requirement to publicly disclose insider information, the prohibition of insider dealing, the prohibition of unlawful disclosure of insider information, the prohibition of market manipulation and the requirement to prevent and detect market abuse.

These rules apply to all persons and all acts (and omissions) in connection with crypto-assets admitted to trading or for which admission to trading has been requested, regardless of whether they take place in the Union or in third countries. This extraterritorial application is noteworthy.

The insider dealing rules and market abuse provisions are also not limited to trading platforms, but apply universally. All trades are covered, all orders and actions, regardless of whether such a trade, order or action was made on a trading platform or not. The business model known as MEV (miner/maximum extractable value) will therefore soon be subject to a tight set of rules.

2. Requirement to publicly disclose inside information

Under MiCA, inside information includes any information of a precise nature, which has not been made public, relating, directly or indirectly, to one or more issuers, offerors or persons seeking admission to trading, or to one or more crypto-assets, and which, if it were made public, would likely have a significant effect on the prices of those crypto-assets or on the price of a related crypto-asset.

Issuers, offerors and persons applying for admission to trading must disclose inside information to the public without delay and in a manner that allows the public to access it quickly and make a complete, correct and timely assessment. This must not be linked to the marketing of their activity. The publication must be made on the website and must be available there for at least five years. Under certain circumstances, the publication of inside information may be postponed.

3. Prohibition of insider dealing

Under MiCA, insider dealing arises where a person possesses inside information and uses that information by acquiring or disposing of, for its own account or for the account of a third party, directly or indirectly, crypto-assets to which that information relates. No person shall engage or attempt to engage in insider dealing or use inside information about crypto-assets to acquire, or dispose of, those crypto-assets, directly or indirectly, whether for that person's own account or for the account of a third party. In addition, no person shall recommend that another person engage in insider dealing or induce another person to engage in insider dealing.

However, the prohibition of insider dealing does not apply generally, but only to persons who have inside information by virtue of their role (administrative, management, supervisory body, owner, or certain other roles), or persons who have obtained it as a result of criminal acts, or to all other persons if they know or should have known that it is inside information.

4. Prohibition of unlawful disclosure of insider information

No person in possession of inside information shall unlawfully disclose inside information to any other person, except where such disclosure is made in the normal exercise of an employment, a profession or duties. Instead, the requirement to disclose applies to the legal entities mentioned above.

5. Prohibition of market manipulation

No person shall engage in or attempt to engage in market manipulation. In this context, market manipulation comprises any of the following activities:

• unless carried out for legitimate reasons, entering into a transaction, placing an order to trade or engaging in any other behavior which:
  • gives, or is likely to give, false or misleading signals as to the supply of, demand for, or price of, a crypto-asset;
  • secures, or is likely to secure, the price of one or several crypto-assets at an abnormal or artificial level.
• entering into a transaction, placing an order to trade or any other activity or behavior which affects or is likely to affect the price of one or several crypto-assets, while employing a fictitious device or any other form of deception or contrivance;
• disseminating information through the media, including the internet, or by any other means, which gives, or is likely to give, false or misleading signals as to the supply of, demand for, or price of one or several crypto-assets, or secures or is likely to secure, the price of one or several crypto-assets, at an abnormal or artificial level, including the dissemination of rumors, where the person who engaged in the dissemination knew, or ought to have known, that the information was false or misleading.

In addition, MiCA defines other acts as market manipulation that do not involve false or misleading information or signals.