This post first appeared as Blog post at FIN LAW.
When the Markets in Crypto Assets Regulation (MiCA) comes into force on December 30, 2024, the provisions on crypto asset white papers contained therein will also apply. At this point, providers who publicly offer crypto assets other than asset-referenced tokens or e-money tokens must, among other things, create and publish a corresponding crypto asset white paper and, in the case of a public offer, submit this to BaFin as the responsible authority present in Germany.
The information contained in the crypto white paper must not be incomplete, dishonest, incomprehensible or misleading. The ultimate aim of the regulations is to ensure that the crypto white paper contains all the necessary information so that the potential investor can make an informed purchase decision. But who would be liable if the crypto asset white paper was wrong in the sense mentioned above?
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Who is fundamentally liable
First, MiCA stipulates that those who assume responsibility for the crypto asset white paper are also the recipients of any liability for errors in the white paper in question. This is either the provider of the crypto asset or the person who has applied for the crypto asset to be admitted to trading, or the operator of the trading platform on which the crypto asset is to be traded. Interestingly, the term “issuer” was not included in the group of liability addressees as it would not be useful as there is often no identifiable issuer for this type of crypto asset.
In principle, all possible responsible persons mentioned above must be legal entities. In principle, they are only subject to limited liability to the extent that they are only liable with their company assets. This limitation of liability would also impact liability for an erroneous crypto asset white paper, meaning that young, capital-light companies that assume responsibility for the white paper in question would have very limited liability. In this respect, claims for damages due to losses caused by incorrect crypto asset white papers could well be in vain.
This means that management, administrative and supervisory bodies are liable
For this reason, MiCA also cumulatively makes the administrative body, management body or supervisory body of the white paper responsible liable to the holder of the crypto asset for damages arising from breaches of the above-mentioned obligations. In concrete terms, this means that the natural persons in the above-mentioned bodies of the legal entities can also be liable for damages caused by an incorrect crypto asset white paper.
MiCA itself excludes any limitation or even exclusion of this liability through the general terms and conditions of the person responsible for the white paper. A proper and careful creation of the required crypto asset white paper by a law firm specializing in the creation of MiCA white papers to avoid liability risks for the person responsible for the white paper is therefore advisable for everyone involved. This is particularly important because there is no time limit for this type of liability in MiCA, as is otherwise the case with prospectus and documentation obligations.
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