Crypto-asset activities
The Markets in Crypto-Assets (MiCA) Regulation (EU) 2023/1114 regulates:
- issuance of crypto-assets
- offering of crypto-assets to the public
- seeking of admission to trading of crypto-assets; and
- provision of crypto-asset services.
Crypto-assets are digital representations of value or of rights that can be transferred or stored using distributed ledger technology (DLT). Blockchains are one example of these technologies. The transfer and storage of crypto-assets is based on cryptographic encryption using public and private keys. In practice, the MiCA Regulation divides crypto-assets into two categories:
- crypto-assets that aim to stabilise their value by referencing another value or right or a combination thereof; and
- other crypto-assets.
The first category includes asset-referenced tokens (ARTs) and electronic money tokens (EMTs). An EMT is a crypto-asset that aims to stabilise its value by referencing one, and only one, official currency. An ART aims to maintain a stable value by referencing any another value or right. The reference for an ART can therefore be, for example, a combination of several currencies, i.e. a basket of currencies, but not only one official currency.
The second category includes all other crypto-assets. In particular, this means crypto-assets that do not aim to stabilise their value. The second category includes so-called utility tokens, which provide access to products or services offered by the issuer of the token.
Crypto-assets are neither financial instruments nor legal means of payment. They are, however, used as investment objects and for payment.
Crypto-asset services are services related to crypto-assets. Providing crypto-asset services in the European Union requires authorisation. Crypto-asset service providers authorised in Finland are entered in a public register maintained by the Financial Supervisory Authority (FIN-FSA). Crypto-asset service providers authorised in another EU Member State can provide their services in Finland on a cross-border basis. These service providers authorised in another Member State who have the right to provide their services in Finland are also entered in the FIN-FSA’s public register, in the so-called list of notifications.
The FIN-FSA recommends always checking a service provider of interest in the register of the FIN-FSA or other supervisor of a EU Member State. The MiCA Regulation does not provide legal protection in cases where the service provider is located outside the EU.
More information on various crypto-asset services is available in the section ‘Authorisations, registrations and notifications > Crypto-asset service providers’.
Issuing a crypto-asset means, in practice, creating a new crypto-asset. Issuing asset-referenced tokens (ARTs) and electronic money tokens (EMTs) requires authorisation. An issuer of ARTs and EMTs usually also acts as an offeror to the public or as a person seeking admission to trading. Offering to the public means communication in which sufficient information is given about the terms of the offering and the offered crypto-assets, so that prospective future holders can make a purchasing decision. Admission to trading means that the crypto-asset is traded on at least one trading platform.
Issuance, offering to the public or seeking admission to trading of crypto-assets other than ARTS and EMTs does not require authorisation. The MiCA Regulation contains some other requirements, however, for public offerors and persons seeking admission to trading of these crypto-assets. The main requirement is the obligation to draw up a crypto-asset white paper, namely an information document containing mandatory disclosures. Offering to the public or seeking admission to trading of ARTs and EMTs also does not require authorisation if the offeror or the person seeking admission to trading is a different person than the issuer. However, offering to the public or seeking admission to trading of ARTs or EMTs on behalf of the issuer requires the written consent of the issuer. Regardless of such an arrangement, the issuer of the ART or EMT retains the obligation to draw up a crypto-asset white paper.
A crypto-asset white paper should contain general information on the issuer, offeror or person seeking admission to trading, on the project to be carried out with the capital raised against the crypto-asset, on the rights and obligations attached to the crypto-assets, on the underlying technology used for such crypto-assets and on the related risks. The information contained in the crypto-asset white paper as well as in the relevant marketing communications, such as advertising messages and marketing material, and including through new channels such as social media platforms, should be fair, clear and not misleading. Advertising messages and marketing material should be consistent with the information provided in the crypto-asset white paper.
More information on the obligations related to issuance, offering to the public and seeking admission to trading of a crypto-asset is available in the section Authorisations, registrations and notifications > Crypto-asset white paper and Marketing of crypto-assets as well as in the sections ‘Authorisations, registrations and notifications > Authorisations and notifications related to Electronic money tokens (EMT)’ and ‘Authorisations and notifications related to Asset-referenced tokens (ART)’.
Titles III and IV of the MiCA Regulation, i.e. the provisions related to ART and EMT issuance, will begin to be applied from 30 June 2024. The European Banking Authority (EBA) has published a statement on recommended measures ahead of the application of the MiCA Regulation’s provisions related to ART and EMT issuance.
Most of the other MiCA Regulation provisions will come into force on 30 June 2024. The European Securities and Markets Authority (ESMA) has published a statement on recommended measures prior to the start of the application of the MiCA Regulation’s provisions related to crypto-asset services.
Nationally, provision will be made for a possible additional transition period for those crypto-asset service providers whom the FIN-FSA has registered as virtual currency providers and who have provided crypto-asset services before 30 December 2024.
National regulation and FIN-FSA Regulations and guidelines
Ministry of Finance law drafting project VM103:00/2023: Implementation of the Regulation on markets in crypto-assets (2023/1114, MiCA) and the Regulation on information accompanying transfers of funds and certain crypto-assets (2023/1113, TFR) (in Finnish)
FIN-FSA Regulations and guidelines 2/2023: Preventing money laundering and terrorist financing
FIN-FSA Regulations and guidelines 4/2023: Customer due diligence related to compliance with sanctions regulation and national freezing orders
The scope of application of Regulations and guidelines 2/2023 and 4/2023 will be revised with regard to crypto-asset activities in autumn 2024.
European Union regulation and international recommendations
Regulation (EU) 2023/1114 of the European Parliament and of the Council on markets in crypto-assets, i.e. MiCA Regulation
Regulation (EU) 2023/1113 of the European Parliament and of the Council on information accompanying transfers of funds and certain crypto-assets, i.e. TFR (Transfer of Funds Regulation)
European Banking Authority’s standards and guidelines on ART and EMT issuance
European Banking Authority’s guidelines on sanctions: Guidelines on internal policies, procedures and controls to ensure the implementation of Union and national restrictive measures | European Banking Authority (europa.eu)
European Banking Authority’s Questions and Answers (Q&A) tool
Financial Action Task Force (FATF): Updated Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers
European Securities and Markets Authority’s standards and guidelines on crypto-asset services:
- Consultation paper: Consultation on the Technical Standards specifying certain requirements of MiCA (1st package)
- Consultation paper: Second Consultation on the Technical Standards specifying certain requirements of Markets in Crypto Assets Regulation (MiCA)
- Consultation paper: Consultation on joint EBA and ESMA Guidelines on the suitability assessment under MiCA
- Consultation paper: Consultation on reverse solicitation and classification of crypto assets as financial instruments under MiCA
- Consultation paper: Consultation on the Technical Standards specifying certain requirements of MiCA (3rd package)
- Final report: Final Report on draft technical standards specifying requirements for cooperation, exchange of information, and notification between competent authorities, ESAs, and third countries under MiCA
European Securities and Markets Authority’s Questions and Answers (Q&A) tool: https://www.esma.europa.eu/esma-qa-search-page
European Commission’s implementing and delegated acts for MiCA Regulation: https://finance.ec.europa.eu/regulation-and-supervision/financial-services-legislation/implementing-and-delegated-acts/markets-crypto-assets-regulation_en
Unfortunately, fraud is particularly rife in the crypto-asset market. The FIN-FSA and the Police have provided tips on how to avoid scams:
Before making an investment decision, it is highly recommended to always check the service provider’s information carefully. If the service provider states that it is under the supervision of a certain authority, it is worth checking the accuracy of the claim in the register maintained by the said authority. If the service provider offers no information at all about a supervisor, it is recommended to avoid this provider and choose another service. Information on companies supervised by the FIN-FSA can be found in the public register. The European Securities and Markets Authority ESMA will publish later a register containing information on crypto-asset operators in the European Union and the European Economic Area.
In addition to lists of supervised entities, many authorities supervising the provision of crypto-asset services maintain a warning list of suspicious or unauthorised service providers. The FIN-FSA maintains a public warning list. IOSCO, the organisation that provides international standards for the securities markets, collects alerts from many different countries on its website.
After finding a reliable service provider, those interested in investing should be aware of other possible risks related to crypto-assets, such as insufficient information and cyber security, strong fluctuations in value, poor liquidity, and susceptibility to price manipulation. The European Supervisory Authorities last issued a warning about the risks of crypto-assets in 2022.
Crypto-assets also come with the option that the investor can, if they wish, store the crypto-assets themselves without any service provider, just like cash. When undertaking such activity, the investor should be familiarise themselves very well with the secure handling of crypto-assets, as the responsibility for storage rests entirely with the investor themselves.