Milan

Legal Uncertainty in the Application of Title II MiCAR

This session explored the interpretative challenges of applying Title II MiCAR, especially regarding borderline assets like memecoins and utility tokens. While MiCAR introduces a whitepaper regime as an alternative to prospectus rules, key definitions such as “offer to the public” and “utility token” remain unclear. Platforms are struggling to determine when the obligation to file a whitepaper applies, and whether exemptions can be reasonably claimed for tokens with limited or no utility. The group emphasized that without additional guidance, this ambiguity could lead to liability exposure under Article 15 MiCAR for platforms that list such assets without proper disclosures.

Third Party Whitepaper Drafting: Liability Matters and Collective Action

This discussion focused on the rising trend of trading platforms submitting whitepapers for tokens with no cooperative issuer or offeror. While this may allow listing of high-volume assets, it exposes CASPs and their management to significant liability under Article 15 MiCAR. The session explored potential solutions, including a shared legal entity to pool liability and produce compliant whitepapers. Attendees debated the feasibility of such collective action, including governance, IP rights, and antitrust considerations. While no consensus was reached, there was broad agreement that industry coordination is needed to manage risks and maintain EU competitiveness.

Call to Actions 

• ESMA should issue detailed guidance on key terms such as “offer to the public,” “utility token,” and “admission to trading,” to ensure consistent interpretation across Member States.

• National Competent Authorities (NCAs) should align on the treatment of borderline cases (e.g. memecoins) and avoid diverging exemption practices.

• CASPs should proactively treat whitepaper publication as a prerequisite for token listing unless a clear exemption is confirmed, to mitigate legal liability under Article 15 MiCAR.

Call to Actions

• CASPs should explore establishing a voluntary legal entity to collectively draft whitepapers and share liability for tokens without cooperative issuers, minimizing fragmentation and duplicative effort.

• Industry bodies should develop benchmarking or scoring tools to standardize and validate whitepaper quality and reduce liability risks.

• ESMA should clarify whether third-party drafters are liable under Article 15 and formally define their role under Article 6, distinguishing them from issuers, offerors, and trading platforms.

Prevention and Detection of Insider Dealing: Extent and Practicalities

This session discussed the complexity of complying with MiCAR’s Title VI obligations around insider dealing. Unlike traditional markets, crypto trading occurs 24/7 across fragmented and often anonymous environments, with minimal regulatory guidance on employee surveillance and trade monitoring. The group examined how to balance privacy concerns with regulatory expectations, highlighting the lack of clarity on who qualifies as a PPAET and what systems must be in place to detect abuse. The discussion concluded with a call for further dialogue with NCAs and ESMA to develop practical standards tailored to crypto’s unique dynamics.

Call to Action

• ESMA and the European Commission should define the scope of PPAETs under Title VI to provide legal clarity and avoid inconsistent enforcement.

• The industry should launch a working group to establish best practices for employee monitoring, including wallet declarations, insider lists, and structured disclosure policies.

• Regulators and market participants should collaborate to develop a risk-based surveillance framework that integrates on-chain analytics with off-chain data while respecting employee privacy laws.