This post first appeared as Blog post at FIN LAW.
The Markets in Crypto Assets Regulation (MiCAR) will gradually take effect in the member states of the European Union from June 30, 2024. Accordingly, national legislators must also adapt to this and adapt their laws to the regulatory requirements. Since MiCAR is a regulation that is directly applicable in all member states, member states have very limited scope for influence. Essentially, the national adjustments are likely to relate to the administrative procedure within the relevant Member State.
Accordingly, the recently published draft bill for the Financial Market Digitization Act of the Federal Ministry of Finance with regard to the MiCAR white paper primarily provides for provisions on the administrative procedure, as well as regulations on violations of the regulatory provisions. While the first parts of the blog series analyzed the requirements for a white paper that arise directly from MICAR, the following examines how the national legislature plans to implement the regulatory requirements with regard to MiCAR white papers with its draft bill.
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Regulated in the new Crypto Market Supervision Act (KMAG).
The draft bill for the Financial Market Digitization Act provides for the introduction of a law for the supervision of markets for crypto assets (Crypto Market Supervision Act – KMAG). This law serves to implement MiCAR and also regulates the supervision of markets for crypto assets in terms of regulation. BaFin is designated as the responsible supervisory authority for the regulations.
The Crypto Market Supervision Act once again expressly makes it clear that the KMAG does not apply to financial instruments that are not covered by crypto regulation. Companies that plan to offer asset-referenced tokens to the public or apply for their admission to trading must submit an application to BaFin in accordance with MiCAR. In addition, a corresponding white paper must be created and published. In this context, the KMAG stipulates that BaFin can require providers and applicants to change their MiCAR white paper if it does not meet the content or formal requirements of the regulation.
BaFin may also require providers and applicants to include additional information in their MiCAR white paper if this appears necessary for reasons of financial market stability or to protect the public. The same applies to e-money tokens and marketing communications.
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Violation of the MiCAR white paper
The KMAG also provides provisions in the event that a provider violates the crypto whitepaper regulations provided for in MiCAR. BaFin can order that a public offer or admission to trading be suspended for up to 30 days if there is reasonable suspicion that MiCAR has been violated.
It can also prohibit a public offer or admission to trading if the requirements set out in MiCAR are violated. This is particularly the case when asset-referenced tokens are offered publicly without an approved white paper. If a corresponding white paper is not kept available or is not kept available for the prescribed period, or if addenda to a MiCAR white paper are not transmitted or published, incorrectly or incompletely, then this constitutes an administrative offense punishable by a fine.
The same applies if the MiCAR white paper is not updated if a material new factor, a material error or a material inaccuracy has occurred. The same also applies if the MiCAR white paper is not published on the website or is not published for at least ten years.
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