This must be in the MiCA whitepaper

This post first appeared as blog post at FIN LAW.

Which will have legal effect in the European Union from June 30, 2024 Markets in Crypto Assets Regulation (MiCA) stipulates that a white paper must be prepared when asset-based tokens are publicly offered or when such tokens are admitted to trading on a trading platform. In the first part of the series, we dealt with the content requirements for a white paper in the event of an offer or approval of crypto assets other than asset-referenced tokens or e-money tokens.

In this part, we look at the requirements for a white paper for asset-referenced tokens. Such a token means a non-e-money token crypto asset whose value stability is intended to be maintained by reference to another asset or right or combination thereof, including one or more official currencies. In principle, issuers may only be credit institutions or legal entities that have received an authorization under MiCA.

Content requirements for a MiCA whitepaper for asset-referenced tokens

The substantive requirements for a whitepaper for asset-referenced tokens basically have a lot in common with the substantive requirements for the whitepaper for crypto assets other than e-money tokens and asset-referenced tokens supplemented by specifics for asset-referenced tokens. The white paper must first contain information about the issuer. This information includes in particular the most important company data (e.g. legal form, address, company ID) as well as precise information on the financial development of the issuer over the last three years, provided the issuer has existed for that long.

Since issuers generally require authorization or have to be a credit institution, information about the competent supervisory authorities should be included. Information about the asset-referenced token must then be included, such as the characteristics of the token and details of any natural or legal person involved in the operation of the token. Specific information about the public offering of the asset-referenced tokens or admission to trading must also be included. This information includes, for example, the total number of tokens or time limits of the offer.

In another section of the whitepaper, the rights and obligations associated with the asset-referenced token must be presented, as well as information about the technology on which the token is based. In the section relating to the rights and obligations associated with the tokens, a detailed description of the token-related claims of the holders against the issuer with regard to the assets must be included.

Include dedicated asset reserve section in MiCA whitepaper

The whitepaper for asset-referenced tokens must include a dedicated asset reserve section. The asset reserve is the basket of reserve assets used to secure the claim against the issuer. The reserve is intended to ensure that the claims of the holders of asset-based tokens do not come to nothing and that the corresponding assets are also available.

Accordingly, the issuer shall include in the MiCA whitepaper information on the composition of the asset reserve as well as a detailed description of the mechanism for aligning the value of the asset reserve with the claims related to the asset-referenced token, including legal and technical aspects. The specific mechanisms for issuing and redeeming asset-referenced tokens must also be described in the whitepaper. If the issuer has invested part of the reserve assets, it must provide information about this and describe the investment policy for the reserve assets.