Magnus Jones’ Post

Tuesday, 2nd of July. Despite the wave of impending doom being prophesised last Sunday, it seems that it is still business as usual in the EU when it comes to retained listings of stablecoins by all crypto exchanges save 2. I will be focusing specifically on the meatier prize, being EMTs, in the following text due to character limits, but by and large, it is applicable 'mutatis mutandis' to ARTs. Let's now turn our attention to the really important date, which is the 30th of December. This is where things get interesting and merit a deeper analysis of the text of the law. First thing off the bat - the concept of 'authorised vs non-authorised stablecoins' (EMTs) is largely misconstrued. The definition of an EMT does not intrinsically require authorisation of any sort for crypto-assets meeting the definition to be classified as such - all that is required is that the crypto-asset purports to refer to the value of one official currency. That means that it's not the EMT itself which is being authorised - it's the issuer. So when is authorisation required for issuers? Issuers must seek authorisation/licensing as an EMI or credit institution if they intend on conducting an offer to the public, or seek admission to trading in the EU/EEA. If an issuer of an EMT conducts an offer to the public, for instance, without being licensed as an EMI or credit institution, then they are in breach of MiCA - and the EMT they have issued would therefore be issued by an issuer who is not in compliance with MiCA. Safe to say that trading platforms in the EU would not be eager to list such EMTs. But what if an issuer is simply issuing an EMT? They are not conducting an offer to the public within the Union, and neither are they seeking admission to trading. Can we call that a non-authorised EMT or issuer? Hardly, because the issuer of that EMT did not require authorisation in the first place. Example: Cheese GmbH established in Switzerland issues a crypto-asset referencing the value of the Swiss Franc. It is offered to the public solely in Switzerland, and Cheese GmbH never seeks admission to trading within the EU. Trading platform X, licensed as a CASP in France, admits to trading such an EMT out of its own initiative. Can it do so? Of course it can. First of all, the legislator differentiates 'seeking admission to trading' from 'admission to trading on the own initiative of the trading platform' - it does so by using the latter term under Article 5(2). Secondly, the legislator only has jurisdiction over issuers who conduct an offer to the public or seek admission to trading in the Union - which is why Article 48(2) extends the jurisdiction to any issuer who specifically issues an EMT referencing the value of an official currency of the EU (namely, the Euro), by stating that the mere issuance of such is deemed to be an offer to the public in the EU. An EMT referencing the value of the USD is not, upon issuance, deemed to be offered in the EU. (cont. in comments)

MiCA Round 1 - Here we go! 🚀 Several colleagues have already shared excellent posts on this topic, but yesterday marked a crucial milestone 💎 I- MiCA institutes uniform EU market rules for crypto-assets, covering those not currently regulated by existing financial services legislation. II- Issuers of asset-referenced tokens (ARTs) must obtain authorization in the EU, involving a detailed application process and adherence to specific compliance requirements. Furthermore,MiCA defines an ART as a crypto-asset that aims to maintain a stable value by referencing several currencies that are legal tender, one or several commodities, one or several crypto-assets, or a basket of such assets. Stablecoins typically fall within this definition. ✍🏻 III- A comprehensive white paper must be submitted for the issuance of ARTs, covering rights, technology, risks, environmental impacts, and reserve details, among other aspects. 📑 Transitional provisions allow non-credit institution ART issuers to continue operations if they apply for authorisation by July 30, 2024. Credit institutions must notify their competent authority by the same date to continue operations until their white paper is approved. 🏦 IV- E-money tokens (EMTs) can only be offered in the EU by credit institutions and electronic money institutions authorized in the EU 🚨 During the ‘implementation phase’ of MiCA (from entry into force until December 2024), ESMA, together with the National Competent Authorities (NCAs) of the Member States and the other European Supervisory Authorities (ESAs), is issuing the technical standards and guidelines that specify how the new rules will apply to issuers, offerors, and service providers of crypto-assets. 📆 Finally, It is important for holders of crypto-assets to be aware that, MiCA rules on the provision of crypto-asset services will not enter into application until December 30, 2024. 🤔 “Just Feel It…” 🎶 🌧️🚗☕️☕️🍫

NEW Numbers and Timeline! Today, the Financial Conduct Authority in the UK published its timeline for the implementation of a comprehensive crypto related regime. In addition, also released new numbers with rgds to a brand new consumer research. The timeline and the initiative is positive in itself as it provide clarity. However, the timeframe is lenghty and I notice the UK community is responding that it could apparently set back UK compared to EU/EEA with its MiCA framework entering into force by new year. However, in practice if you are doing a token related project in the UK you would most likely be addressing the EU market anyway and thereby also be covered by the MiCA rules. If you are not addressing the EU market, my question would be why stay in the UK?🤷♂️ In the same way as I am assisting Nordic as well as other European projects (spesifically DeFi related) to move out. If so, there are other jurisdictions that are much better positioned where you can deal with your project in a legal and compliant way and pay your taxes and VAT and all of that, instead of waiting for semi-clarity in Europe. Similar, it is not very surpricing to see that the UK Roadmap suggests that the final rules will be published mid-2026 and planned enter into force later the same year.. These things are «surprisingly» correlating with the timeframe of the FATF «recommendations» for CARF that also has a due date in 2026. From assisting governments and stakeholders all over the world on CARF strategies, compliance and implementation, a valid question is; do the relevant Government look into this «just to fulfill, comply and check the boxes» of FATF - i.e. to avoid fines. Or do the relevant authorithy ACTUALLY want to address and implement a crypto strategy? I have seen both in practice. I sincerelly hope UK understand the potential for provenue income with regards to this and not «only draw up» something on the paper. But actually grant sufficient resources to tax auth., criminal police, FCA, and other relevant Gov. boddies that are to control, enforce and provide guidance in a very fast growing landscape that for sure will develop significantly within 2026. Further on, UK also released new numbers today from a consumer survey that shows 🇬🇧12% of UK adults own crypto (Increase) 🇬🇧93% of UK adults have heard about crypto 🇬🇧Only 1 in 10 people say they did not do any research before purchasing crypto See full report here https://lnkd.in/d_sEdZfC See comments for link to the UK strategy. Government or project. What is your compliance and crypto strategy? Feel free to reach out if you want to discuss further in order to navigate in a 1-3, 3-5, and 5-10 year perspective. The world is changing, and we for sure will have crypto assets here in the next 10 years. The question is how are your strategies towards handling a fast growing market combined with extreme volatility? New money is here!

Are we missing something locally? It's very difficult to supplant the (Australian) view that the US government is anti-crypto, that the SEC's view is the only view and as a result things are moving very slowly in that jurisdiction. It's not. The US House of Representatives is scheduled to VOTE [my emphasis added] on a landmark cryptocurrency market structure bill this week. The Financial Innovation and Technology for the 21st Century Act is a bipartisan piece of legislation. The Act seeks to establish - 1. Regulatory jurisdiction (SEC vs CFTC) 2. Consumer protections 3. Balance innovation and clarity. The fact sheet published with the bill makes for interesting elected representative reading. It highlights "facts vs myths" - On securities... FACT: Not all digital assets are securities. While some digital assets can be offered as part of an investment contract and some may be tokenized, a clear framework for determining when a digital asset is not a security is critical. On financial crime... FACT: Blockchain technology allows for better transaction tracing and asset monitoring than what is available with traditional finance. On current regulatory regime suitability... FACT: The SEC’s existing regulatory regime is not designed to accommodate the registration and regulation of digital assets. The SEC has failed to provide the clarity these entities need to operate. On a "light touch" approach... FACT: The digital asset market structure legislation updates existing securities law to give the SEC full authority over digital assets that are offered as part of an investment contract. It further updates existing commodities laws to provide the CFTC with legal authority over digital commodity markets. On reform that goes too far... FACT: Congress is tailoring very specific sections of U.S. securities and commodities laws to ensure the SEC and the CFTC have the authority needed to regulate the digital asset markets. On partisan motivations... FACT: Federal financial regulators have called for additional authorities to properly manage and police the digital asset ecosystem. On use cases... FACT: Digital assets offer a variety of unique and novel use cases that both supplement traditional financial and technological systems and offer new products and services. On doing nothing as an alternative... FACT: A significant portion of Americans already own digital assets and the technology is not going away. If the U.S. does not provide a viable legal pathway to transact in digital assets, consumers will continue to engage in the digital asset ecosystem unprotected. Politically lines are being drawn, electorally views are being co-mingled and economically incentives are finding alignment. The trip to Consensus in Austin next week is particularly well timed.

As usual, the media outlets are taking a tidbit of information or opinion, and twisting it into something completely untrue. The European Securities and Markets Authority (ESMA) is not labelling MEV as market abuse. In its latest consultation paper on the RTS (secondary legislation) concerning market abuse, it is asking for feedback from the public on the position that certain MEV attacks, such as front-running *may* be seen as indicators of market abuse. It is reasonable to state that certain MEV attacks, such as front-running, may be seen as potential indicators of market abuse, unless proven to the contrary. At the same time, it is important to understand that MEV does not only consist of front-running; there are various forms of MEV, some of which are benign, others less so. MEV generally leads to needed efficiencies in decentralised markets, and a distinction must be drawn in this light i.e. we cannot brandish all MEV as good or bad without differentiation. Moreover, it is dangerous to equate terms such as 'front-running' to the same-worded term in TradFi, where in the latter, front-running a trade is almost impossible without the use of insider information or other fraudulent/malicious means. In any case, I urge, as always, the general public and interested stakeholders to submit their feedback to ESMA on this consultation paper, which should be one of the last ones. There is also going to be an interesting debate on Friday organised by Mikołaj Barczentewicz on MiCA's market abuse provisions and the excellent research he penned, which I'll be opening with some commentary. Feel free to message if you're interested in participating. https://lnkd.in/dHdYnAhZ

☀ Good Morning 🇬🇧 On Tuesday at 11:10am UK, I will be participating in an all stars ⭐ panel at Finance Magnates London Summit where we talk about the Public perceptions and confidence in cryptocurrency's safety and reliability with Soledad Contreras (thank you so much for having me here 🙏 ) Elise Soucie Watts Chris Tyrer Ioana S. Nikita (Sachdev) Lord 🤓 The Regulatory world does not stop of course (check my previous posts 😅 ): 🇪🇺 the adoption of thee Commission Implementing Regulation (EU) 2024/2861 of 12 November 2024 laying down implementing technical standards for the application of MiCA with regard to the technical means for the appropriate public disclosure of inside information and for delaying the public disclosure of that information. At Solidus Labs we are here to help and enable you to comply, reach out 🔥 💿 DORA has again been a topic with the European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) publishing a Decision on the information that competent authorities must report to them for the designation of critical ICT third-party service providers. In particular, the Decision requires competent authorities to report by 30 April 2025 the registers of information on contractual arrangements of the financial entities with ICT third-party service providers. Sebastian Higgs The 🇬🇧 have confirmed new rules to bolster the resilience of technology and other third parties providing key services to financial firms. “The CTP regime does not impose additional requirements on firms, but complements their existing requirements relating to operational resilience and third party risk management.” For most UK firms, the new CTP regime will not result in much change, as the UK already has operational resilience rules in place. The big question is which Critical Third Parties the Treasury will designate. 🇿🇦 South Africa has officially adopted the Travel Rule with an application. Under R5 000, simplified requirements can apply but information still need to be exchanged. Information is to be transferred before or simultaneously with the transfer. Risk based approach is to be adopted when it comes to unhosted wallet. Entry into force 30.04.2025 Nick Wright thank you for sharing the news 🗞 🇭🇰 The Hong Kong Monetary Authority (HKMA) warned its citizens that some overseas crypto firms are misusing the word “bank” to improve their trust quotient 🇰🇷 South Korea’s Financial Intelligence Unit (FIU) of the Financial Services Commission (FSC) has identified at least 500,000 to 600,000 potential KYC violations Upbit 🚀 And as always do not forget to join the Crypto Compliance and Legal TG group https://lnkd.in/ed9gh_xw where we share all the latest regulatory news, best practices, experiences and tips. If you fancy some cryptocompliance Xmas in London join us on the 23.11 Amélie Arras 😘 🏁 2 podcast releases with João Vieira dos Santos and with Giovanni Cunti: https://lnkd.in/dk3UcHBU #cryptocompliance

Stablecoins: the challenges of the post-MiCA era - https://lnkd.in/d4cMtBAy ---- The European Markets in Crypto-Assets Regulation (MiCA) closely regulates the public offering and admission to trading in the European Union (EU) of stablecoins, a category subdivided into asset-based tokens (ARTs) and electronic money tokens (EMTs). From June 30, 2024 , issuers of stablecoins, as well as persons offering them to the public or requesting their admission to trading on a platform, will have to comply with obligations of approval, good conduct, publication of a white paper, periodic information, commercial communication and internal organization. Stablecoins offered to the public or admitted to trading in the EU will also have to comply with certain requirements: these concern in particular the conservation of reserve assets, the granting of a right of redemption to their holders and the prohibition of grant interest. Issuers of significant stablecoins have additional obligations. And EMT issuers will need to be licensed as credit or electronic money institutions. It should be noted, however, that ART issuers (other than credit institutions) which have issued ARTs in accordance with applicable law before June 30, 2024 may continue to do so until approval to offer to the public or to request admission to trading of these ARTs is granted or refused, provided that they have requested this approval before July 30, 2024. However, this additional period is not granted to EMT issuers. On the other hand, the other provisions of the MiCA Regulation do not apply until 30 December 2024. In particular, it should be noted that crypto-asset service providers (CASPs) operating a trading platform must clearly state in their operating rules that a crypto-asset is not admitted to trading when no white paper concerning it has been published in cases where MiCA so requires. In other words, as of 30 December 2024, a CASP should no longer be able to admit to trading on its platform a stablecoin that does not meet the requirements of MiCA. This implies that, in theory, it can still do so until 29 December 2024. Furthermore, no explicit restrictions are placed on PSCAs with respect to other services they may offer in relation to stablecoins that are not MiCA compliant. At the very least, it is conceivable that these PSCAs will no longer be able to offer these stablecoins to the public from December 30, 2024. In this regard, an offer to the public consists of any communication addressed, in any form and by any means. , to persons and presenting sufficient information on the conditions of the offer and on the crypto-assets offered, so as to allow potential holders to make the decision whether or not to purchase these crypto-assets. It can be inferred that the offering of services on non-MiCA-compliant stablecoins would necessarily be considered an offering of these stablecoins to the public, except

Stablecoins: the challenges of the post-MiCA era - https://lnkd.in/d4cMtBAy ---- The European Markets in Crypto-Assets Regulation (MiCA) closely regulates the public offering and admission to trading in the European Union (EU) of stablecoins, a category subdivided into asset-based tokens (ARTs) and electronic money tokens (EMTs). From June 30, 2024 , issuers of stablecoins, as well as persons offering them to the public or requesting their admission to trading on a platform, will have to comply with obligations of approval, good conduct, publication of a white paper, periodic information, commercial communication and internal organization. Stablecoins offered to the public or admitted to trading in the EU will also have to comply with certain requirements: these concern in particular the conservation of reserve assets, the granting of a right of redemption to their holders and the prohibition of grant interest. Issuers of significant stablecoins have additional obligations. And EMT issuers will need to be licensed as credit or electronic money institutions. It should be noted, however, that ART issuers (other than credit institutions) which have issued ARTs in accordance with applicable law before June 30, 2024 may continue to do so until approval to offer to the public or to request admission to trading of these ARTs is granted or refused, provided that they have requested this approval before July 30, 2024. However, this additional period is not granted to EMT issuers. On the other hand, the other provisions of the MiCA Regulation do not apply until 30 December 2024. In particular, it should be noted that crypto-asset service providers (CASPs) operating a trading platform must clearly state in their operating rules that a crypto-asset is not admitted to trading when no white paper concerning it has been published in cases where MiCA so requires. In other words, as of 30 December 2024, a CASP should no longer be able to admit to trading on its platform a stablecoin that does not meet the requirements of MiCA. This implies that, in theory, it can still do so until 29 December 2024. Furthermore, no explicit restrictions are placed on PSCAs with respect to other services they may offer in relation to stablecoins that are not MiCA compliant. At the very least, it is conceivable that these PSCAs will no longer be able to offer these stablecoins to the public from December 30, 2024. In this regard, an offer to the public consists of any communication addressed, in any form and by any means. , to persons and presenting sufficient information on the conditions of the offer and on the crypto-assets offered, so as to allow potential holders to make the decision whether or not to purchase these crypto-assets. It can be inferred that the offering of services on non-MiCA-compliant stablecoins would necessarily be considered an offering of these stablecoins to the public, except

🗞 I thought I would be done with posting till "la rentrée" but the European Union Authorities have been on 🔥 #norestforthewicked 🚀 ESMA published a Q&A on staking where it states that "staking as such is not subject to specific requirements or licensing. If in the provision of staking services, the crypto assets, or the private keys giving access to them, are held by the staking service provider in custody, regulation apply. Indeed, in that case the provision of staking services is ancillary to custody services which are fully covered under MiCA. The provision of staking services therefore requires that the crypto asset staking service provider is authorised under MiCA to provide custody and administration of crypto-assets on behalf of client". This perfectly coincide with the release of our paper on the risks in staking and block building in ETH where we discuss legal and compliance aspects: https://lnkd.in/dKssGYqp 💡 3 European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) t published a consultation paper on Guidelines under Markets in Crypto-assets Regulation (MiCAR), establishing templates for explanations and legal opinions regarding the classification of crypto-assets along with a standardised test to foster a common approach to classification: https://lnkd.in/djBjC2vW. The first part of the test is to determine if there is a digital representation of a value or right, these being the necessary attributes of a crypto-asset as defined in Article 3(1) point (5) of Regulation (EU) 2023/1114, with value and right interpreted broadly, ‘right’ may include an entitlement to a payment or reward (e.g. a right to receive a discount on goods or services, or a voucher), a right to access a good or service, or a right of display (e.g. a tokenised visual). Cryptoassets with no-intrinsic value, but having a value attributed to them by the seller / buyer or by market participants9 should be treated as digital representations of value. The draft guideline also gives references to other applicable regulations to determine if the asset does not fall in another category such as financial instruments where it recommends to use the Guidelines issued by the European Securities and Markets Authority under Article 2(5) of Regulation (EU)2023/1114 🚀 And as always do not forget to join the Crypto Compliance and Legal TG group https://lnkd.in/ed9gh_xw where we share all the lattest regulatory news, best practices, experiences and tips Solidus Labs #cryptoregulations #cryptocomplianceandlegal #MiCAr