ALFI responds to the ESA’s consultation on guidelines for the classification of crypto-assets, under Article 97(1) of MiCAR

This consultation proposes guidelines under the Market in Crypto-Assets Regulation (MiCAR) setting out:

• Templates establishing the form of explanation accompanying white papers for the issuance of crypto-assets other than ART/EMT;
• Templates establishing the content and form of the legal opinion on the qualification of ARTs; and
• A standardised test for the classification of crypto-assets.

In our response to this consultation, ALFI provided comments, proposed alignments and raised some concerns as the views of the investment fund industry, in a segment focused on cross-border distribution within the European Union and globally:

1. Diverging interpretations across member states/regulatory uncertainty: Given the local transpositions of MiFID across Europe and the reliance thereof, in the qualification of crypto-assets under MiCAR, it is important to avoid a legal opinion in one member state to unilaterally qualify as a crypto asset, an instrument that would have qualified as a financial instrument under the MiFID transposition in another member state.
2. Single standard template: Given the similarities between the two templates proposed in Annex A and B, ALFI believes that both the explanation and the legal opinion could be documented, using the same template, to avoid unnecessary complexity.
3. Considerations for hybrid instruments: ALFI welcomes the approach by ESMA for the classification of hybrid tokens, consisting in prioritising their qualification as financial instruments under MiFID -- rather than only considering their multi-faceted nature – as soon as a hybrid token embeds features of financial instruments. To allow for particular care be given to hybrid instruments and their respective qualification, both the template and the standardised test should allow for specifically documenting the characteristics of hybrid instrument, and the resulting qualification.

View the ALFI response.