Shaping the future of MiCAR: ESMA consults on draft guidelines on the classification of crypto-assets as financial instruments

The consultation paper aims to collect feedback from stakeholders and market participants on the appropriate implementation of Regulation 2023/1114 of 31 May 2023 on markets in crypto-assets (MiCAR), which was published in the Official Journal of the EU on 9 June 2023 and will fully come into force on 30 December 2024.

These guidelines aim at providing national competent authorities and market participants with more clarity about the delineation between the respective scopes of application of MiCAR and MiFID II to ensure consistent approaches at national level regarding which crypto-assets should be considered financial instruments and therefore be subject to the appropriate regulatory frameworks and notably the MiFID II framework. These guidelines are expected to be published by 30 December 2024.

The background to these guidelines is that MiCAR excludes from its scope crypto-assets that are: (i) unique and not fungible with other crypto-assets (such as non-fungible tokens); and (ii) crypto-assets that qualify as financial instruments as defined in MiFID II, such as transferable securities, money-market instruments, units of collective investment undertakings, derivatives and emission allowances. However, Member States have followed different approaches in transposing MiFID II and, notably, the definition of financial instruments which in MiFID II is based on a list of instruments rather than a set of criteria. For example, some Member States have employed a restrictive list of examples to define, in particular, transferable securities, while others have used concept-based definitions. As a result, the definition of financial instruments is not uniform across the EU, and it may be subject to different interpretations by national authorities and market participants.

The draft guidelines presented in the consultation paper outline ESMA’s proposal on the conditions and criteria that should be used for determining whether a crypto-asset should qualify as a financial instrument and therefore fall within the scope of sectoral regulations and notably the MiFID II framework. The draft guidelines adopt a case-by-case and substance over form approach, meaning that the legal qualification of the crypto-asset should not be determined by its underlying technology, but by its actual features and rights, and provide guidance on the classification of crypto-assets as transferable securities, money-market instruments, units of collective investment undertakings, derivatives and emission allowances, as well as on the categorisation of crypto-assets under MiCAR, including asset-referenced tokens, electronic money tokens, utility tokens and hybrid tokens.

ESMA invites interested parties to provide their views, comments and opinions on the draft guidelines by 29 April 2024.