AUSTRIA trends and deve LoPments

Contributed by: Markus Fellner, Florian Kranebitter and Florian Henöckl, Fellner Wratzfeld & Partners

• consumer protection rules for the issuance, trading, exchange and custody of cryptoassets; and

• measures to prevent market abuse to ensure the integrity of crypto-asset markets.

The scope of regulation of the proposed framework covers asset-referenced tokens (ART), electronic money tokens (EMT), and other crypto-assets not covered by existing EU law. ART are defined as a type of crypto-asset that purports to maintain a stable value by referring to the value of several fiat currencies that are legal tender, one or several commodities or one or several crypto-assets, or a combination of such assets (Article 3 paragraph 1 subparagraph 3 of the proposed MiCA). EMT are, pursuant to Article 3 paragraph 1 subparagraph 4 of the proposed MiCA, a type of crypto-asset the main purpose of which is to be used as a means of exchange and that purport to maintain a stable value by referring to the value of a fiat currency that is legal tender.

The personal scope of MiCA, pursuant to Article 2 of the proposed MiCA, covers issuers of crypto-assets or those that provide services related to crypto-assets in the European Union. However, financial instruments under Article 4 paragraph 1 subparagraph 15 of Directive 2014/65/ EU are excluded from the scope of application of the proposed MiCA (Article 2 paragraph 2 subparagraph (a) of the proposed MiCA).

In a nutshell, the following steps have to be taken by an issuer of crypto-assets, other than ART or EMT:

• it must be established in the form of a legal person;

• it must provide a white paper setting out the information requirements according to Article 5 of the proposed MiCA;

• a notification and publishing of the cryptoasset white paper according to Article 7 and 8 proposed MiCA must be made; and

• it must comply with in particular the following requirements (laid down in Article 13 of the proposed MiCA): act honestly, fairly and professionally and communicate in a fair, clear and not misleading manner.

As set out in Article 5 of the proposed MiCA, which contains in detail the content of the crypto-asset white paper, the issuer of crypto-assets has to provide various information about the crypto-asset to enable consumers and investors to make an informed decision. The information to be provided comprises:

• the issuer itself;

• the main participants;

• the design of the project’s crypto-asset;

• the crypto-asset itself (its type, the characteristics of the offer to the public with the number of crypto-assets offered, its issue price, and the terms and conditions of subscription including the attached rights and obligations of the crypto-asset); and

• a structured summary.

The European Parliament takes the approach of protecting consumers and investors by ensuring that information is provided about the product itself, enabling consumers and investors to make an informed decision.

It is true that more available information about crypto-assets will enable market participants to make better-informed decisions. Thus, the violation of Article 5 of the proposed MiCA will qualify for a special liability clause under Article