This post first appeared as blog post at FIN LAW.
Which will take legal effect in the European Union in the course of 2024 Markets in Crypto Assets Regulation (MiCAR) stipulates that a white paper must be prepared when crypto assets are publicly offered or when crypto assets are admitted to trading on a trading platform. Depending on the qualification of the crypto value as a value-referencing or e-money token or as another crypto value, the white papers must meet certain requirements.
In this series, we discuss what to watch out for and the differences between the different categories of tokens. In the first part we deal with the so-called other crypto assets as value-referenced tokens and e-money tokens. MiCAR understands crypto-value to be a digital representation of value or rights that can be electronically transferred and stored using distributed ledger technology or similar technology.
The following series will deal with the extent to which the following content can also be applied to value-referenced tokens and e-money tokens.
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Minimum requirements for a MiCAR whitepaper
The content requirements for a white paper for crypto values basically have a lot in common with the securities prospectus. The white paper must provide information about the issuer as well as information about other key stakeholders in the project. This information includes in particular the most important company data (e.g. address, LEI), potential conflicts of interest and precise information on the financial development of the issuer over the last three years.
Furthermore, the white paper must contain a detailed description of the project. Among other things, this information group requires information on why the crypto value is being issued, which people are involved in the implementation of the project and information on the use of funds. Concrete information about the public offering of the crypto assets or the admission to trading must also be included. This information includes information about the issue price, total number of crypto assets or time limits on the offer.
In another section of the white paper, the rights and obligations associated with the crypto assets must be presented. The information about the technology underlying the crypto assets must also be mapped. As in common capital market legal documents, the white paper must contain issuer and crypto value-specific risks. Except for a standard notice that the crypto-asset may lose some or all of its value, no statement about the future value of the crypto-asset may be included.
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Formal and content requirements
There are currently no specific format templates or a maximum number of pages allowed. ESMA has until June 30, 2024 to develop corresponding technical implementation standards. Based on the MICAR, however, it can already be stated that the first page must contain a clear declaration that the white paper has not been approved by any competent authority in a member state and that the provider bears sole responsibility.
Following this declaration, the governing body of the provider or applicant must confirm that the white paper meets the requirements of MiCAR. A summary must then be included. This must provide essential information about the public offering of the crypto asset or about the intended admission to trading in concise and non-technical language. The white paper itself does not require approval. However, it must be sent to the competent supervisory authority no later than 20 working days before the date of publication. When submitting, information must also be provided as to why the crypto asset in question falls under MiCAR.
The whitepaper must be published on the provider’s or applicant’s website before the start date of the offer or approval. There it must remain available as long as crypto assets are held by the public.
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