Markets in Crypto-Assets Regulation (MiCAR)

MiCAR brings issuers of certain types of crypto-assets into the regulatory framework. Specifically, MiCAR establishes new rules for issuers of crypto-assets known as "stablecoins" including ARTs, EMTs, along with new rules for utility tokens. 

As defined by MiCAR:

• ARTs reference multiple currencies, commodities or other crypto-assets;
• EMTs reference a single official currency and
• Utility tokens provide access to a good or service supplied by the issuer of that token.

From 30 June 2024, issuers of ARTs and EMTs have the following regulatory obligations: 

• A requirement to be authorised by their National Competent Authority (NCA)and to publish a white paper containing information on the relevant ART/EMT for consumers
• Conduct and governance requirements around marketing, disclosure of information and dealing with conflicts of interest and
• Prudential requirements to ensure sufficient liquidity and the ability to meet redemption requests.

MiCAR recognises that some ARTs or EMTs may be significant due to their size and other factors and as a result may present an increased risk. Accordingly, the European Banking Authority (EBA) will have supervisory responsibilities for issuers of significant ARTs and EMTs.

Issuers of ARTs and EMTs - engagement with the Central Bank

A legal person or other undertaking that intends to offer to the public or seek the admission to trading of ARTs should contact the authorisation team ([email protected]) at their earliest opportunity.

A credit institution that intends to offer an ART to the public or seek its admission to trading should engage directly with its supervision team at its earliest opportunity.

A credit institution or Electronic Money Institution (EMI) that intends to offer an EMT to the public or seek its admission to trading should contact their supervision team for further guidance.

EBA Statement on the application of MiCAR to ARTs and EMTs (July 2024):

In this statement:

• The EBA outlines it expects that any person which intends to commence ART or EMT activities to comply fully with MiCAR from 30 June 2024.
• The EBA notes that consumers considering buying an EMT or an ART should check whether the issue, offer, or admission to trading is carried out in accordance with MiCAR. 
• This information should be signalled clearly in the white paper for the crypto-asset and on the issuer’s/offeror’s trading platform/website, and also documented in the ESMA register (when available).  Authorisation information may also be verified on the website of the relevant NCA.
• It is important for consumers to be aware that if an issue, offer, or admission to trading of an ART or EMT is not carried out in accordance with MiCAR, the safeguards set out in MiCAR do not apply, and consumers should be extremely cautious in acquiring such crypto-assets.
• The EBA also notes that from the 30 June 2024, stakeholders carrying out ART/EMT activities should assess their compliance with MiCAR, and refrain from carrying out services which constitute offering to the public, seeking admission to trading, or placingnon-compliant ARTs/EMTs.

The Central Bank has not approved or been notified of any crypto-asset white paper for an ART or EMT under MiCAR issued by any Irish undertaking. 

EBA Statement - supervisory priorities for issuers of ARTs and EMTs 2024 /2025 (July 2024):

On 5 July the EBA published a separate statement for the attention of persons issuing to the public, offering to the public, or seeking admission to trading of  ARTs and EMTs and for consumers. The EBA also sets out key topics for supervisory attention across the European Union for issuers of ARTs/EMTs in 2024/2025.

CASPs shall require authorisation in order to operate within the EU. The types of crypto-asset services and activities covered by MiCAR include:

• Providing custody and administration of crypto-assets on behalf of clients
• Operation of a trading platform for crypto-assets
• Exchange of crypto-assets for funds
• Exchange of crypto-assets for other crypto-assets
• Execution of orders for crypto-assets on behalf of clients
• Placing of crypto-assets
• Reception and transmission of orders for crypto-assets on behalf of clients
• Providing advice on crypto-assets
• Providing portfolio management on crypto-assets
• Providing transfer services for crypto-assets on behalf of clients

At a high level, CASPs authorised under MiCAR will be subject to anti-money laundering, prudential and conduct requirements. 

Initial engagement stage

• Initial engagement meeting
• A presentation on the Applicant’s proposal to be submitted at least five working days in advance of the arranged meeting date. The Central Bank will provide details on the expected content of this presentation.
• At the meeting the Central Bank will outline:
  • The stages of the authorisation process
  • Its authorisation and supervision expectations and
  • The detail and purpose of the Key Facts Document (KFD)
• Following the meeting, the Central Bank will communicate any issues identified that need to be addressed if the application is to proceed to the KFD stage.

KFD stage

• The Applicant will submit a KFD (using the standard template and associated guidance). The CASP KFD supports a robust assessment in the pre-application stage.
• To facilitate and support firms in progressing applications under the new regulations, including Digital Operational Resilience Act (DORA), this KFD provides for a more prescriptive level of detail.
• Additionally, the ability of firms to engage in robust discussions on their proposal at this stage will have a critical impact on the authorisation timelines.
• The Central Bank will perform an assessment of the KFD to determine if the application is aligned with the Central Bank’s authorisation and supervision expectations.  There will be continuous engagement with the Applicant and additional information may be required.
• The Central Bank will communicate any issues identified that need to be addressed if the application is to proceed to the application phase.

Key Facts Document 

Submission Stage

• The Applicant will be invited to submit a CASP authorisation application form;
• Review of completeness by Central Bank within 25 working days;
• Any outstanding items to be submitted within timeframe set by the Central Bank.

Potential refusal to review (incomplete application)

• In accordance with article 63 of MiCAR the Central Bank may refuse to review applications which remain incomplete after expiry of timeframe by the Central Bank to submit outstanding items.

Assessment stage (complete application)

• The Central Bank will begin the 40 working day assessment of application;
• Additional information may be requested from the Applicant, resulting in one suspension of the assessment period (of no more than 20 working days).

Decision

• Communication of outcome of Central Bank assessment to the Applicant within five working days of decision to grant or refuse authorisation.

Potential CASPs Applicants should commence engagement with the Central Bank of Ireland in good time by emailing: [email protected].

MiCAR also introduces new rules that prohibit market abuse related to any type of crypto-asset transaction or service, including unlawful disclosure of inside information, insider trading and actions that are likely to lead to disruption or manipulation of crypto-assets.

MiCAR provides for a transitional period for CASPs that provided their services in accordance with applicable national law prior to 30 December 2024.

Article 143(3) MiCAR provides for a transitional period of up to 18 months, but allows Member States the discretion to reduce its duration where they consider the national regulatory framework is less strict than MiCAR. Following its public consultation on Member State discretions in MiCAR, the Department of Finance outlined in its feedback statement that the transitional period, shall be a maximum period of 12 months and will end on 29 December 2025.

See also: Impact of Markets in Crypto Assets Regulation (MiCAR) on Virtual Asset Services Providers

The EBA and ESMA have developed the majority of the level 2 and 3 texts which, will provide greater granularity on the provisions in MiCAR.

The texts are not yet finalised. However, in its July 2024 statement the EBA notes that the regulatory and implementing technical standards and guidelines applicable to the issuers and offerors of ARTs and EMTs are available on the EBA’s website. The EBA urges issuers and offerors to have regard to these documents and adjust as if those measures were fully applicable, in the case of technical standards pending their adoption by the European Commission and publication in the Official Journal of the European Union. This includes measures relating to white papers, governance, complaints handling, own funds, reserve assets, recovery and redemption plans.

Firms should regularly monitor EBA, ESMA and European Commission’s websites for updates on these texts.

See further information available on ESMA’s three MiCAR consultation packages and the EBA’s approach to its MiCAR policy mandate.  

The ESAs have developed respective Q&A tools which firms can utilise if they have a query regarding the application of MiCAR (refer to EBA and ESMA).  ESMA has also published a number of Q&A’s relating to MiCAR.

ESMA published a statement in which it notes that full MiCAR rights and protections will not apply to the provision of crypto-asset services until December 2024. ESMA also encourages preparations for a smooth transition to MiCAR across all EU Member States.

Additionally, in a letter addressed to the Economic and Financial Affairs Council (ECOFIN), ESMA Chair, Verena Ross, outlines that coordinated action from EU Member States will be paramount to ensure the smooth, convergent, and effective application of MiCAR.

Firstly, ESMA note that NCAs will need to establish as early as they can, supervisory procedures related to the authorisation regime set out in MiCAR. Secondly, ESMA expressed concern that extensive use of the transitional period for entities already providing crypto-asset services in the European Union would weaken the effectiveness of the MiCAR rulebook and so ESMA invited Member States to consider reducing the transitional period for entities that are already providing crypto-asset services from eighteen to twelve months.

Simplified procedure for applications for CASP authorisation

MiCAR (Article 143(6)) provides for a derogation from the authorisation requirements contained in Articles 62 and 63, which allows Member States to implement a “simplified procedure” for service providers authorised and operating under national law to provide crypto-asset services prior to 30 December 2024.

Following the above public consultation and as outlined in its feedback statement, the Department of Finance has decided not to exercise the discretion provided for in Article 143(6).

This position reflects the advice of European Securities and Markets Authority (ESMA), and recognises that Ireland’s existing VASP regime under the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021 as amended, is not comparable to the MiCAR CASP requirements.

ESMA delivers opinion on global crypto firms using their non-EU execution venues (July 2024)

On 31 July 2024, ESMA issued  an Opinion to address the risks presented by global crypto firms seeking authorisation under MiCAR for part of their activities (crypto brokerage) while keeping a substantial part of their group activities (intra-group execution venues) outside the European Union (EU) regulatory scope.  ESMA recommends that NCAs are vigilant during the authorisation process and assess business structures of global firms to ensure that they do not bypass obligations established in MiCAR, to protect consumers and ensure transparent and orderly functioning of crypto markets.  

The Central Bank has been designated as the NCA for the authorisation and supervision of entities that will be subject to MiCAR.

The Central Bank encourages firms that may provide services or products under MiCAR to engage with the Central Bank.

The Central Bank has commenced its preparation for the implementation of MiCAR and has established a cross-sectoral team to integrate MiCAR into the Central Bank’s supervisory and authorisation processes and methodologies.

On 18 July 2024, Derville Rowland, Deputy Governor, Consumer & Investor Protection hosted an industry briefing, which focused on the Central Bank’s approach to implementing MiCAR and also included an overview of:

• The Central Bank’s MiCAR Risk Appetite;
• The Central Bank’s MiCAR Authorisation and Supervisory expectations; and
• The potential next steps for firms preparing to engage with the Central Bank.

The Central Bank will in due course update this webpage regarding the authorisation and notification processes.

Finally, the Central Bank will continue to monitor developments related to crypto-assets in order to assess any risks to consumer protection and financial stability.

Consumer information related to crypto assets is available on our consumer hub.