When must the ticket to the market be obtained?
The National Bank of Slovakia is the institution that issues all tickets to the market, i.e., grants the necessary authorizations under Markets in Crypto-Assets Regulation (MiCA) and oversees compliance with all obligations imposed by MiCA.
Businesses allowed to provide virtual currency exchange or virtual currency wallet services in the Slovak Republic before December 30, 2024, will be allowed to provide these services until June 30, 2026, at the latest. After this date, they can continue performing these activities only with proper authorization under MiCA.
Therefore, if you obtain a license for virtual currency exchange or virtual currency wallet services, which is significantly easier than complying with MiCA, before the end of this year, you can carry out these activities until June 30, 2026. Those who do not obtain authorization to provide a virtual currency exchange or virtual currency wallet by December 30, 2024, must obtain authorization under MiCA.
Who needs a ticket to the market?
MiCA applies to legal entities that issue crypto-assets, offer them to the public, and admit them to trading or providing services related to crypto-assets within the European Union. Based on this definition, two categories of entities can be identified.
The first category is crypto-assets issuers–legal entities that develop and/or place crypto-assets on the public market, including those that merely facilitate the sale of a crypto-asset on the public market. The second category is crypto-asset service providers, i.e., legal entities whose business is to provide one or more crypto-asset services to clients on a professional basis and who are authorized to provide such services.
What does MiCA regulate?
MiCA regulates the issuance and acceptance of crypto-assets for trading; establishes licensing of crypto-asset entrepreneurs, asset-referenced token issuers, and e-money token issuers; clarifies regulatory obligations for asset-referenced token issuers, e-money token issuers, and crypto-asset service providers; introduces consumer protection in the issuance, trading, exchange, and custody of crypto-assets; and introduces the licensing of crypto-asset service providers, issuers of asset-referenced tokens, and issuers of electronic money tokens.
In the past, it was said that MiCA is supposed to regulate cryptocurrencies but this is not true. The scope of MiCA is much broader than just cryptocurrencies such as Bitcoin or Ethereum, as it also includes the aforementioned asset-referenced tokens, which are crypto-assets with the purpose of preserving the stable value of the token by referencing another value, right, or combination of value and right, including one or more official currencies (for example, a token of tokenized real estate, where investors can buy an investment token that has a fractional property right associated with it).
What obligations does MiCA bring?
The framework of obligations that MiCA brings is very large. The crypto-asset issuers who intend to offer asset-referenced tokens and e-money tokens publicly must obtain authorization to issue them. Each token must have a white paper prepared when obtaining authorization to issue it, which contains, among other things, information on the underlying technology and the risks associated with the token, and must also have a so-called recovery plan. In addition, issuers of tokens with an issuance value of more than EUR 100,000,000 will be obliged to report quarterly on, for example, the number of holders and the average number of daily transactions.
The crypto-asset service providers who intend to offer crypto-asset services must also obtain a license to offer and provide them. They are required to produce many administrative documents, including a three-year business plan, a description of the custody and administration policy, a description of the operating rules of the trading platform and the system to detect market abuse and, last but not least, pay an application fee, which can be several thousands of euros. In contrast, credit institutions, typically banks, may provide crypto-asset services they intend to offer and provide without authorization if they provide the National Bank of Slovakia with information on the crypto-asset services at least 40 working days before the first provision of these services.
Why not wait to get a ticket to the market?
The National Bank of Slovakia recommends that applicants for any authorization should be legally represented, and we fully agree. Preparing the documentation related to the authorization application is long and demanding, and it is advisable to entrust it to experienced lawyers. However, we strongly advise all issuers and providers of crypto-asset services not to delay obtaining authorization from the National Bank of Slovakia, as the preparation of a complete authorization application may take up to several months.
This article was brought to you by FALATH & PARTNERS law firm.
(source: Falath & Partners Law Firm)
