Trends and Developments

Contributed by: Markus Fellner, Florian Kranebitter and Florian Henöckl Fellner Wratzfeld & Partners see p.23

New Developments in Financial Services in Europe and Austria – A Roadmap Introduction

Fintechs are still on the rise. However, 2022 was not an entirely good year for the sector, especially coins. The price development of bitcoin has shown that things do not always trend upwards. So what is surely the most famous cryptocurrency has fallen far short of expectations.

Regardless of the volatility of the exchange rate, which even a cursory glance at the history of its value makes clear, El Salvador has introduced bitcoins as legal tender. Further, 2022 also saw the largest bankruptcy of a crypto-exchange, FTX. The background to the insolvency of FTX is currently being examined, in particular with regard to tracing assets for creditors. The bankruptcy is not the first of a crypto-exchange, but perhaps the one with the most far-reaching consequences. From a legal point of view in particular, it is now necessary to clarify which existing (regulatory) provisions are applicable and what conclusions can be drawn and lessons learned. Even if the developments of the last year are to be viewed critically, problems in the wider global economy, which have no connection to the fintech sector per se, should not be misunderstood as specific to fintech.

European framework

The European Commission proposed its Digital Finance Strategy on 24 September 2020, which should introduce a regulatory framework for Markets in Crypto-assets (MiCA), a pilot regime for trading and settling in crypto-asset market infrastructures (DLT-Pilot) and a framework on digital operational resilience to prevent and mitigate cyber threats (DORA). This new regulatory framework is scheduled to come into force in 2023/2024 and will have a significant impact on the development of fintechs over the next few years, which is why this newly introduced framework should be examined in more detail and compared with the current legal situation in Austria.

MiCA

MiCA is part of the European Digital Finance Strategy. The intention of the legislature is to harmonise rules for crypto-assets at EU level by (i) providing legal certainty for crypto-assets not covered by existing EU legislation, (ii) enhancing the protection of consumers and investors, and (iii) ensuring financial stability. The regulation seeks to promote innovation and the use of crypto-assets.

MiCA therefore lays down uniform rules for the following (Article 1 of the proposed MiCA):

• transparency and disclosure requirements for the issuance and admission to trading of crypto-assets;

• the authorisation and supervision of cryptoasset service providers, issuers of assetreferenced tokens and issuers of electronic money tokens;

• the operation, organisation and governance of issuers of asset-referenced tokens, issuers of electronic money tokens and crypto-asset service providers;