On 17 January 2025, the European Securities and Markets Authority (ESMA) published a statement on the provision of certain crypto-asset services relating asset-referenced tokens (ARTs) and electronic money tokens (EMTs) (also known as stablecoins) that are not compliant with the Markets in Crypto-Assets Regulation (MiCAR).
Background
Since the application of Titles III and IV of MiCAR on 30 June 2024, the activities of issuing, offering to the public and seeking admission to trading of ARTs and EMTs are regulated activities in the EU under MiCAR.
The European Commission recently adopted a Q&A clarifying which crypto-asset services provided in the EU may constitute an offering to the public or an admission to trading of non-MiCAR compliant ARTs/EMTs and clarifying how these obligations apply to crypto-asset service providers (CASPs).
The ESMA statement of 17 January 2025 provides additional clarification to CASPs.
Expectations of CASPs and applicable timelines
- Cease trading non-MiCAR-compliant ARTs/EMTs and offering other crypto-asset services re non-MiCAR-compliant ART/EMTs which constitute an offer to the public. CASPs operating trading platforms for crypto-assets are expected to stop making available for trading all crypto-assets that would qualify as ARTs/EMTs but for which the issuer is not authorised in the EU (non-MiCAR-compliant ART/EMTs). Other crypto-asset services may also constitute an offer to the public of non-MiCAR-compliant ARTs/EMTs. In particular, CASPs offering in the EU services such as reception and transmission of orders, execution of orders for crypto-assets on behalf of clients and exchange of crypto-assets for funds or other crypto-assets are also expected to cease providing the relevant crypto-asset services and activities in relation to non-compliant ARTs/EMTs when their services constitute an offer to the public.
- Restrict certain existing services re non-MiCAR-compliant ART/EMTs. CASPs providing services that amount to offering to the public or seeking admission to trading are generally expected to prioritise restricting such existing services when they facilitate the acquisition of non-MiCAR-compliant ARTs/EMTs. Restrictions on existing services re non-MiCAR-compliant ART/EMTs are generally expected to be completed by the end of January 2025. However, to allow EU investors to liquidate existing positions in non-MiCAR-compliant ARTs/EMTs, CASPs can maintain crypto-asset services for these products on a ‘sell-only’ basis until the end of Q1 2025.
- Avoid new products/services involving non-MiCAR-compliant ART/EMTs. CASPs should avoid entering into new products and offering services involving non-MiCAR-compliant ARTs/EMTs.
- Communicate the impact of MiCAR to EU investors in non-MiCAR-compliant ARTs/EMTs. CASPs should launch effective communication campaigns to raise EU investors’ awareness of the impact of MiCAR’s application on ARTs and EMTs that are not authorised in the EU. For instance, while mere custody and transfer of these crypto-assets should remain possible, EU investors should be clearly informed of the restrictions attached to the provision of crypto-asset services involving non-MiCAR-compliant ART/EMTs.
Central Bank of Ireland
The Central Bank of Ireland (Central Bank) is the national competent authority (NCA) for MiCAR in Ireland. ESMA highlights that NCAs can assist CASPs with this compliance process. For example, ESMA recommends that CASPs unsure of a crypto-asset classification contact their relevant NCA for further guidance.
To mitigate potential disruptions and avoid disorderly crypto-asset markets, ESMA encourages NCAs to ensure compliance by CASPs regarding non-MiCAR-compliant ARTs/EMTs as soon as possible and by the end of Q1 2025 at the latest.
For further information on the ESMA statement, please see the ESMA website. For further information on MiCAR, please see our dedicated MiCAR webpage.
Contact Us
For more information, please contact Shane Kelleher, Louise McNabola, or your usual William Fry contact.
Contributed by Jane Balfe.