Whitepapers

1. General requirements for the public offer

MiCA sets out general requirements for the public offering of crypto-assets within the Union. A public offer 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. Any communication, including publishing information on a website, can qualify as a public offer if it contains sufficient information to enable prospective holders to make an investment decision. Recommendations by influencers in video messages or at events can also constitute a public offer.

A public offer of crypto-assets is subject to the following requirements:

• Only legal entities may publicly offer crypto-assets in the Union. The legal entity does not have to be established in the Union, however.
• A crypto-asset white paper must be drawn up, notified to the competent supervisory authority, and published prior to the start of the public offer. It must be publicly available for as long as persons hold the crypto-asset, i.e., potentially indefinitely. If an asset-referenced token is to be offered publicly, the white paper must also be approved by a supervisory authority (see further below).
• If marketing is conducted, the marketing communications must be: clearly identifiable; fair, clear and not misleading; consistent with the information in the white paper; reference the white paper; and contain certain disclaimers and statements set forth in MiCA. For documentation purposes, marketing communications shall also be posted on the offeror's website. No marketing may be conducted prior to the publication of the white paper.

In addition, all offerors must comply with certain general principles. These include, among other things, acting honestly, fairly and professionally, communicating in a fair, clear and non-misleading manner, avoiding and, if necessary, disclosing conflicts of interest, acting in the best interests of the holders of the crypto-assets, and generally treating all holders equally. Persons applying to trade a crypto-asset on a trading platform must, in principle, meet the same requirements as offerors.

The general requirements for the public offer of crypto-assets do not apply if:

• The crypto-asset is offered for free;
• the crypto-asset is automatically created as a reward for the maintenance of the distributed ledger or the validation of transactions;
• the offer concerns a utility token providing access to a good or service that exists or is in operation;
• the holder of the crypto-asset has the right to use it only in exchange for goods and services in a limited network of merchants with contractual arrangements with the offeror.

Even if one of the above exclusions is applicable, it does not mean that MiCA as a whole is inapplicable. The rules for crypto-asset service providers still apply. For crypto-assets used in the context of a limited network, MiCA provides a number of detailed rules.

A special feature applies to the excluded crypto-assets presented above if they are not listed on a trading platform. In this case, no admission under MiCA is required even for custody and administration services and transfer services. This is intended to completely exempt, for example, in-house crypto-assets from MiCA.

MiCA also includes exclusions based on the nature of the offering. A white paper is not required, and marketing communications do not need to be documented on the website if:

• an offer is made to fewer than 150 natural or legal persons (note: it is not the number of buyers that is decisive, but the number of persons to whom an offer is made); or
• over a period of 12 months, the total consideration of an offer does not exceed 1 million euros; or
• an offer is addressed solely to qualified investors where the crypto-asset can only be held by such qualified investors. Qualified investors are, for example, regulated companies, particularly large companies, public bodies or institutional investors.

2. Crypto-asset white paper

MiCA adopts the industry's practice of drawing up a white paper and prescribes what content it must contain. Anyone who drafts a crypto-asset white paper, even on a voluntary basis, must still adhere to MiCA's specifications regarding the form and content of the white paper.

In addition to information about the offeror (or the person seeking for admission to trading), the white paper must contain information about the issuer (if different), information about the operator of the trading platform (in cases where it draws up the white paper), information about the project, the public offering, the crypto-asset, about the rights and obligations associated with the crypto-asset, information on the underlying technology, information on the risks, and information about adverse climate and environmental impacts of the consensus mechanism used. The last point is the compromise of a debate that arguably could have led to the outright ban of the proof-of-work consensus mechanism at the European level.

The white paper must be written in a manner that is fair, clear and not misleading. It must not contain material omissions and must be presented in a concise and comprehensible form. It must contain certain statements and disclaimers and must not contain any assertions as regards the future value of the crypto-asset offered. As is known from the prospectus regime for transferable securities, the European regulators ESMA and the EBA will publish delegated acts on the exact structure of the white paper.

The crypto-asset white paper may only be used for a public offering by the person who created it. If other persons also make a public offer of the same crypto-asset, these persons may use the white paper only if express consent has been given.

The white paper must be submitted to the competent supervisory authority (FMA, BaFin, etc.) no later than 20 working days prior to the date of publication (and thus also prior to the start of the public offer). Marketing communications must be transmitted to the supervisory authority only upon request. Prior approval of the white paper (for crypto-assets that do not qualify as asset-referenced tokens or e-money tokens) is generally not required.

After publication of the white paper, the crypto-assets may be offered throughout the Union (if desired and previously communicated to the supervisory authority). The supervisory authority responsible for the crypto-asset will handle communication in this regard with the supervisory authorities of other EU member states. There is thus a Union-wide passport for the public offering of crypto-assets.

However, the one-time publication of the white paper is not enough. The white paper must be kept up to date as long as the public offering lasts or the crypto-assets are admitted to trading. If new circumstances arise, or if there are errors or inaccuracies in the white paper, it must be updated if this may affect the valuation of the crypto-assets. The amended white paper must be submitted to the authority at least seven working days prior to publication. Older versions of the white paper and marketing communications must remain publicly available on the offeror's website for at least ten years.

In the case of utility tokens for goods or services that do not yet exist or are not yet provided, the public offering may not last longer than twelve months. There are certain special features for the white paper of asset-referenced tokens and of e-money tokens (see further below). However, the structure of the white paper is essentially the same.

3. Right of withdrawal & liability

MiCA grants retail holders a right of withdrawal when acquiring crypto-assets in a public offering either directly from the offeror, or from a service provider placing crypto-assets for that offeror. No separate right of withdrawal is provided for asset-referenced tokens and e-money tokens in MiCA. Retail holders must be informed in advance about the existence of a right of withdrawal. A retail holder is any natural person who is acting for purposes which are outside that person's trade, business, craft or profession.

The right of withdrawal gives retail holders the right to withdraw from the purchase within 14 calendar days without incurring any fees or costs and without being required to give reasons. The right of withdrawal is only excluded if the crypto-asset was already admitted to trading prior to the retail holder's purchase.

Similar to the prospectus liability regime known under EU securities laws, MiCA establishes liability for the information contained in the white paper. This liability is stipulated in three places in MiCA: once for asset referenced tokens, once for e-money tokens and once for all other crypto-assets. The contents of the respective liability provisions are essentially identical. If the white paper contains information that is not complete, fair or clear or that is misleading, the company and the members of the administrative, management or supervisory bodies shall be liable to the holder of the crypto-asset for any loss incurred due to that infringement. This provision cannot be waived.

4. Public offering of asset-referenced tokens and e-money tokens

The public offering of asset-referenced tokens is generally subject to an authorization requirement under MiCA. Credit institutions do not need to obtain a separate authorization, but they still must draw up a crypto-asset white paper and have it approved by the competent supervisory authority.

The rules related to issuing asset-referenced tokens are relative extensive compared to the rules imposed on payment institutions, investment firms or other regulated entities. Issuers must have specific governance and operational measures in place. They also must maintain a reserve of assets backing the asset-referenced token and give token holders a permanent right of redemption. There are also specific rules on the custody of the reserve of assets. These rules help distinguish asset-referenced tokens from tokenized financial instruments, especially derivatives, which are outside the scope of MiCA.

There are exceptions to the authorization requirement. A license is not required if:

• over a period of 12 months, calculated at the end of each calendar day, the average outstanding value of the asset-referenced token issued by an issuer never exceeds 5 million euros, or
• the public offering is addressed solely to qualified investors and the asset-referenced token can only be held by such qualified investors.

In these two cases, only the general principles presented above apply (to act honestly, fairly and professionally; to communicate in a fair, clear and not misleading manner; to identify, prevent, manage and disclose conflicts of interest; to act in the best interests of the holders of the crypto-assets; and to treat all holders equally as a matter of principle). A white paper must still be prepared in such cases, but it does not have to be approved, but merely submitted to the supervisory authority. In this case, therefore, the same procedure applies as in the case of (normal) crypto-assets.

If an asset-referenced token is used as a means of exchange within a single currency area for more than 1 million transactions per day with an average aggregate transaction value of more than 200 million euros, no further asset-referenced tokens of the same type may be issued. It must also be ensured that the transactions are brought below the thresholds. This provision is intended to prevent tokens from establishing themselves as a substitute for the euro. If one puts these amount limits in relation to established payment service providers such as VISA, it can be seen that the amounts are extremely small.

Only credit institutions or e-money institutions are allowed to offer e-money tokens to the public. The obligation to publish a white paper also applies to e-money tokens, but unlike asset-referenced tokens, the white paper does not have to be not approved but is merely submitted to the supervisory authority, as is the case with other crypto-assets.

E-money tokens must be redeemable at any time by their holders at par value. No fees may be retained for this purpose. Interest may likewise not be granted under MiCA for holding e-money tokens. The interest ban also applies to crypto-asset service providers.

At least 30 % of the funds received by issuers in exchange for e-money tokens must be deposited in separate accounts with credit institutions; the remaining funds must be invested in highly liquid financial instruments with minimal market risk, credit risk, and concentration risk that are denominated in the same currency to which the e-money token relates. Issuers of e-money tokens must develop a recovery and redemption plan.