MiCA requirements for utility token/other crypto assets issuers including content of white paper

Transcript

[Music] hi everyone I'm anina vosa um yet another session with a lawyer um do any of you intend to do token offering in the future just to to assess the audience do you have any intention I mean I'm not a regulator right so raise your hand and and this is just an intention um so so you have certain intentions for launching a token um a purpose of a presentation is actually to to give you an overview so that you think twice whether you want

really to launch a token under the new MAA requirements um and if so then you think really in advance about the all of the requirements that you need to to meet how many of you have uh read make with CHP have an overview about okay so not not not not totally new to the subject which is which is really great anyway I could um certainly this is not a legal advice um I would give you some kind of overview about all of the tokens which are covered on the MAA this is an overview uh this these are all of the

tokens which are covered some regulated by m or not the purpose of the MAA was of course to regulate primarily the eone tokens and the asset reference tokens um and these are heavily regulated uh since the summer last year um and then there are all of the other crypto assets um including utility tokens um which we know from from the era of I how many of you are were aware of Ico or D and Ico or okay so also not new to the subject which is which is just great and then of course there are bunch of a bunch of um

tokens which do not fall under any of these uh categories specifically um nfds but attention not calling calling a token non funable token doesn't really make it a non funable token so you should be extreme careful to make sure that this one doesn't fall under uh the scope of mikov um and um security tokens all of the tokens that somehow promise um investment and return uh most likely will be covered by my will be most likely tokenized financial instruments so this is an overview of what's covered under

mikon um and this is a quick checklist of um choosing a jurisdiction not only for blockchain projects but um in general I would say we always start with Target investors or Target users this might be basic for a lot of you but I have seen so many projects approaching to us like uh Switzerland is a crypto-friendly jurisdiction let's do it from there but where where are you where are your investors based us um or Singapore um also special legislation for blockship project it's not so relevant anymore since we have uh M but then if you go to Europe you know you're covered by MAA anyway most likely if you

approach uh European solicit European investors European users um if there is attration of certain kind of projects that you would like to uh to launch what is the overall costs of running a business including Taxation and everything I see it it looks it looks boring but doing doing uh business in a proper way is normally quite boring think um economic can doing business condition and user experience of the projects which are already on site all of these criterias are extremely important no matter what you do launch an entire project or launch a token offering from a specific jurisdiction from a specific country um so yeah this was the overall goal of maika to harmonize the

regulation to protect the consumers this is the the timeline it complet kicked in it is already there from the summer title three and four in regard to e-money talk and asset reference tokens from the um 30s of December last year everything else in regard to CP and also all the crypto assets which is the subject of today's presentation um we still have um no uh we still have some transition period to to mention which which refers mainly to CPS and which is regulated at a national level

extremely extremely um in in in extremely different way from six months to um 18 months mainly um depending on the national legislation um so um these are the the so SoCal so-called benefits of me because that we have a unified framework for whatever you do issuing e-money tokens Arts other crypto assets utility tokens or other tokens which fall under other crypto assets for CPS of course the main advantage is or is supposed to be in theory that you do get licensed ones in one of the uh European Union countries and then you're allowed to passport your

services to other European countries where you're are going to um operate which means the national regulator who who has given a license to you is supposed to notify The Regulators in other countries and esma that you are going to to operate and this is how it is supposed to work but since the regulation is extremely new there are lots of lots of concerns how how the services are going to work cross border even inside the EU we're going to have unified register of marketplaces exchange of information between the countries so all good intentions um this is the overview regarding the transition period which is mainly

relevant for the CPS um these are the definitions of the of the eone tokens um but I guess this e-one tokens is uh what what you guys call stable coins um it is not not really a subject but just to give you an overview whenever whenever you think of like we issue a stable coin uh it used to be um easy in the past it is going to be heavily regulated it is already heavily regulated because the level of license is the same as e-money license um which means it is very let's say a play for uh a game for institutional players uh not for for startups anymore in in in my

opinion and the same would apply for um asset reference tokens um what we what we suggest projects from time to time for example we recent the help the project which tokenized physical diamonds I've supported a bunch of those projects before MAA um and one quite recently and since it was not specifically clear because the diamonds are unique compared to a lot of other Commodities uh which could be used to back asset reference tokens uh we thought okay even if it falls on the art you can still use the exemption of 5 million within within 12 months but we we moving slowly to the utility tokens

to the subject of the of the presentation this is all well known to you since you've done already over thinking of doing utility token offerings uh done iOS and these are all of the tokens which normally give somehow access to um kind of services which are going to be provided in the future and this should be seen really as a complex project not only from a legal or from technical perspective um in my opinion um looking at dozens and dozens of token offerings the most complicated part is even not the legal and the technical one but rather the um investors relation uh part um selling those tokens

to uh to um to your audience working on a community building and marketing has been the most difficult part of the project yeah that's why we put it on the top marketing and community building is the most important um and then all of the all of the other things including legal requirements which on the one hand should be considered in advance but on the other hand this might sound controversial for you from a lawyer um are not let's say um the key point in this project um because to to write a white paper even according to MAA standards to notify a regulator as not a rocket science but to build community uh to do proper

investors relations to have a product in a team which attracts investors is much more complicated work than writing a white paper even according to mik standards [Music] um so what are the possibilities a lot of a lot of projects um used to do not really a self issuance in the past but issuance via launch pad because they have already let's say standardized standardized mainstreamed processes for pretty much everything for all of the steps you need to do within the utility token offering and a guide you through all of the steps but then of course they take um in terms of um revenues no not

really revenues but in terms of funds that you are going to raise they could take quite a large percentage for what they do for you um and then control most of the processes that you do within within the uh token launch which has both advantages and disadvantages so that you consider um all advantages and disadvantages of the options but I I believe most of the projects have gone for for launch pads at least from from my observations what I have seen so far and we go to the amazing MAA requirements for for the for other crypto assets including utility tokens I walk you quickly through the content of the white paper which you can apparently

uh find find online or just uh ask J GPT about this is definitely not a rocket science um that there is a general information about the issue or the name legal form address Etc uh one important thing to mention is the issue doesn't necessarily have to be an entity um in EU but then there a bunch of requirements to comply with EU law uh um which would make um let's say exchanges which Leist those tokens or launch pads um rather accept European entities from practical perspective but this is not not a legal and not a regulatory requirement if you go through the

requirements how many of you are aware of financial instruments and prospectuses okay yeah colleagues of course yeah um to me all of the white people requirements they look so much similar to what's written in the prospectuses what's written in miid what's written in EU prospectus regulation um in regard to the all of the information about the issuer uh detailed description about the asset itself functionality rights associ associated with this uh crypto assets technical features and then um all of the risk factors as we know them from prospectuses um

um explaining all of the risk related to this specific token project markets um terms and conditions of the issuance how the funds are going to be used um how the project is going to comply how the target is going to be compliant with M um language of it that there are certain um in Mika itself in annexes there are certain wordings um which should be used within the white paper we have drafted already a bunch of white papers and to me it looks like really it is like a

prospectus and on average it is a document of around uh 30 uh Pages it should be made uh publicly available um good news are the rwome exemptions which which could be used because I believe drafting drafting a white paper and notifying the regulator and complying with all of the other requirements for a lot of projects which used to use utility token as way of fundraising um in the past um could be quite burdensome quite complicated require a lot of time and energy which they better would spend for um working on their

products um and they saw the exemptions the tokens Can Be offered for free um aut Crea this this can be non fungible talkking but again uh be extremely careful with uh calling your your token non non non funable most of them are not uh most of them are interchangeable from a legal perspective um I think one of the uh the few exemptions which are let's say the most common less than 150 natural legal persons per country less than one million within the within 12 months and qualified investors which are the typical exemptions as we know them from a you prospectus regulation

which makes the other crypto assets on MAA very similar to um uh financial instruments in terms how how they are regulated um and these are the applications extremely quickly I know will it presentation be shared with participants or not or yeah it it's good because then you could just have a look and and go through it otherwise it just doesn't make make sense to to let you know about all of them major requirements are the white paper and notification that you memorize it that that you know these are the major requirements um and all of the and and of course the marketing marketing

communication should be clear not misleading uh these are let's say main practical um um things which you should remember if you intend if you or any of your project that you're involved in intend to do uh utility token offering yes this is about marketing communication all of the other requirements which refer then rather to later trading listing of these tokens Yep this has been it we have some time for questions yeah go ahead sorry

yeah sorry under Miker is there a concept of reverse solicitation or something similar to that um that you can come in under sure in short um reverse solicitation under MAA is even worse than reverse solicitation under miit which is unfair but that the way it is and I think that what was mainly also intended uh somehow to protect the EU consumers what does it mean to for Third Country Services providers mainly for CPS because all of those um utility tokens and they're not mainly let's say offered by the projects themselves but rather offered by exchanges or launch page which lead them

um well technically There is almost no possibility to solicit new EU customers just to put it in a short in a nutshell really because even talking to to people um at conferences can be considered reverse solicitation if you go to from Switzerland to um Germany but the good news are also most of the CP which we CP which we talk with in in Switzerland they have applied for the national authorizations in a bunch of countries just to be able that they get their license somewhere uh some of them have applied already in Lenin which has um EA um access which is part of the extended EU um so even the Swiss cosp or other

Third Country CPS somehow they have already secured let's say their space that they will be hopefully we will know by the end of transition period uh licens and cost on the EU and will still list their tokens for the uh EU audience MH great yes it works okay okay thanks it's

complicated so just wondering is there regulation for meme coins like this Trump coin and things like that um um I've had I've had a flu recently you can still hear it in my voice I didn't it didn't really follow that quickly what what does it represent could you explain it I mean I follow that butas so then other well in EU if they if they would like to to offer it Ma is already there they should then have a white paper for other crypto assets yeah hi um those extenstions that you

mentioned are they like applied automatically or or what the no I would I would I would rather go to um um to loyers or to Regulators uh let's say there are in different countries of EU there are different different procedures you go to lawyers anyway to say we're going to do this and that could you confirm quickly that this falls under exemption this this are already let's say behavior in a good phase in case a regulator comes to you in some of the countries like switzland Lin Netherland there is a so-called subordination procedure subordination request procedure request for an action letter when you can write um an email and ask them to confirm like we are going to do

this and that um will this fall under the exemption in your opinion because I would suggest to do it if you have enough time before your talken launch because then you're on complete completely on the safe side um otherwise there is no need for approval no need for formal approval by regulator just the white paper and notification mhm so like in case of public offering in case of public offering of course if you don't use the exemptions but otherwise I either confirmation from a lawyer or best case from a regulator if there is a procedure like that to send an email and and receive a confirmation yes it seems to fall on exemptions yeah okay thank you okay

actually part of the line we can proceed to the panel because Yanina will continue to be in the panel and right afterwards we can also uh if they have some remaining questions I'm still there also during the meetings and the coffee breaks and yeah you they can ask [Music]