On 4 February 2021 the Portuguese Presidency of the Council held a first working group during its term in office to continue Member States’ discussions over the proposed regulation on markets in crypto-assets (MiCA). Two main issues on the agenda included discussion on selected issues related to asset-referenced tokens (ART) with payment purposes and those related to scope. In order to steer the discussion the Presidency prepared two non-papers, setting out some of its suggestions and further questions for the delegations to consider:

  • Provisions applicable to all ARTs: the Presidency outlined its proposals for clarifying the concept of ARTs and further strengthening the framework applicable to them. To this end, the Presidency proposes to maintain the definition of ARTs as included in the Commission’s proposal, as sufficiently balanced but it proposes to introduce a sub-category of ARTs with payment purpose. The Presidency further notes that the Commission’s proposal remains to some extent ambiguous on the nature of the liability that issuers of ARTs have towards the holders of ARTs and proposes to clarify that ARTs should always be structured as secured liability collateralised by the reserve. In terms of reserve assets, the Presidency proposes to clarify that issuers are not allowed to incur in mismatches between the assets referenced by the ART and exposures of the reserve. In accordance with the Commission’s proposal, holders of ARTs should have the right to redeem the crypto assets permanently. The Presidency proposes to clarify that such right of redemption is set against the defined basket of currencies/commodities/crypto-assets that are referenced by the ART. Noting complexities linked with implementation of a right to redeem in the context of multi-asset ART, the Presidency proposes two alternative solutions that would facilitate that process.
  • ARTs with payment purpose: noting that identification of ARTs with payment purpose is not a straightforward task, the Presidency proposed three alternative options for Member States’ consideration, based either on fixed thresholds or discretionary approach and allowing flexibility for the classification of an ART to change over time. The Presidency addressed in its note its perceived pros and cons in respect of two alternative options to introduce more stringent requirements for ARTs with payment purposes – i.e. classifying them as e-money or creating a separate sub-category of instruments, supporting and further outlining the latter.
  • Scope and definitions: while the Presidency proposes to maintain the broad scope of the Commission’s proposal, it also seeks to address any shortcoming that might be stemming from the broad application of MiCA. It discusses in more detail the differences between various categories of persons that might be subject to the MiCA obligations, and in particular distinction between the issuer, offeror and person seeking admission to trading. It proposes some amendments in order to further clarify the concepts of issuers and offerors, and to clearly differentiate the latter from the concept of a crypto-asset service provider.
  • Decentralised, unidentifiable and third-country crypto-asset issuers: noting that there are crypto assets without a centralised issuer or when such issuer is not identified, the Presidency proposes to shift compliance with Title II MiCA requirements to offers, persons seeking admission of such crypto-assets to trading or upon a crypto-asset service provider operating a trading platform (when admitting a crypto-asset to trading on its own initiative). The Presidency also notes complexities linked with enforcement of an obligation to comply with the MiCA requirements by third-country crypto-asset issuers and proposes that a person responsible for compliance of Title II is located in the EU. Specifically, it proposes that compliance with Title II MiCA, as regards requests for admission to trading from a person in third country, should be ensured by the crypto-asset service provider operating the trading platform. Finally, the Presidency proposes to clarify the exemptions from the requirements of Title II MiCA.