# MiCAR Hands On: Your Guide for the European Crypto Regulation | Martin Hanzl - EY Law Austria

- Channel: [Ethereum Denver](https://streameth.org/ethereum-denver)
- Date: 2024-10-09
- Duration: 19:07
- Topics: blockchain, web3, ethereum, Entertainment
- Watch: https://streameth.org/watch/yt-SJYlMvvx5ac
- YouTube: https://www.youtube.com/watch?v=SJYlMvvx5ac

## Description

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## Transcript

hello also from my side U for the next talk about regulation and now we will talk about MAA the marketing crypto assets regulation which is the upcoming EU regulation and I will try to make it as handson as possible so that you really kind of understand and get a feeling of what e crypto regulation looks like my name is Martin uh I am based in Europe in Vienna uh if you want to connect with me here's my telegram handle and my LinkedIn uh if you want to wait for that until after the talk and see if I deliver you can do so too uh you will have my my contact info at the end again um I would like to talk with you today about uh three topics um first of all kind of what is Mea uh what is the market in crypto asset regulation and why is this actually a thing that you should pay attention to um then operating a m MAA licensed business what does it actually mean for you and at the end also m is a regulation and it brings challenges but it also brings opportunities and I would like to uh have a look at those opportunities together with you so first of all what is M and why does it make sense to have a look at m m is like in the EU now we have 27 member states and in each member State there's a different set of regulations for crypto which makes it extremely difficult to operate uh a crypto business in the EU as of now with MAA this will change because there will actually be a uniform um EU regulation for crypto assets and for crypto asset businesses so mik could actually be a golden ticket for you to enter the EU Market with access to more than 450 million people so that sounds pretty good I think um and who will be actually affected by MAA or in other words words what is the scope of the the markets in crypto assets regulation I like to think about it um as kind of two pillars uh on the one hand you have the pillar of issues of crypto assets that fall under the scope of MAA um that could be issues of unbacked crypto assets asset reference tokens and e-money tokens and what those tokens actually look like and the mik we will have a look on the on the next slide and service providers in the content of um crypto services so those service providers could like provide classic services such as custody exchange for crypto funds uh exchange for Fiat or also portfolio management um advice to crypto or anything like that um and both of them like service providers that provide any services in terms of crypto assets and also issues of crypto assets will have to comply with the with the regulation of uh with the rules and regulations set forth in M um equally important as what is in scope of MAA is what is not in scope of M and in very in a lot of cases um if this is might even the the more challenging question kind of how do I structure my business uh in a way that I do not fall within the scope of ma especially if it's a if it's an edge case I put on a slide here a few of the buzzword that you probably already heard and kind of everyone says it's outside of scope of ma or it's inside of scope of M and I think a lot of those things actually depend on the on the concrete use case and the the most important thing here is defi on the one hand U MAA is a regulation that actually addresses issuers um issuers and service providers so like centralized entities that means that if you operate a business that is totally decentralized um you do not fall within the scope of me but then the question arises what is actually decentralized in the sense of M and that is a very hard question to answer because um Ma just outlines in its legal text that if you are fully decentralized you do not fall within the scope of M but no one actually says what fully full decentralization looks like so like from a practical point of view what we've seen in in practice is that uh Regulators tend to uh look at um at the at the different cases kind of whether there is for example a Labs cor a Labs corporation that um gets revenue from the project um and then also kind of has a management uh pay salaries Etc if those things are um are there and if you have like this Corporation if you have like a body um that works for the project it might make it might be the case that um Regulators will see will see that or will will argue that your project is not fully decentralized so what we did here in practice is um had rules and regulations in place to really make sure um that like decisions are ma are being made on a fully decentralized level by way of governance votes or something like that to make it very very clear to the regulator that projects are decentralized and therefore do not fall within the scope of MAA or existing um supervisory regulation another thing that is not part of MAA is actually security tokens so everything that is that falls under the scope of Trad FY of traditional financial instruments will not be covered by MAA but by existing regulation um equally important is also the exemption that mere Tech providers um are not do not fall within the scope of ma here again it very much Depends for example if you provide a custody solution um whether you are um whether you have for example the the private keys and you hold those private keys for or someone else then you might provide custody Services Under the scope of M or if you really only provide the tech then it it could be the case that you do not fall uh in the scope of ma and another interesting uh question or another interesting point here is nfts are as such not in scope of MAA but here again uh the text outlines only only nfts that are also non fungible from a legal uh point of view and not only kind of non-fungible from a tech point of view so that's uh that's again the question that that you have to look at it from a legal perspective again so I already touched upon like that there are three different categories of crypto assets uh under ma um so what do they look like what do they entail um we have asset reference tokens and e-money tokens I mean e-money tokens are pretty simple um tokens that such as usdt or usdc fall in this category and asset reference tokens are tokens that reference the value of an underly lying or a basket of different underlying so that is actually something very interesting because this could be a token that has an investment function um and could is very similar to derivative products of financial of the of the current uh Financial um trefi sector actually um and could be an interesting investment opportunity also or business opportunity also for for the crypto space um both of those tokens are fully regulated by MAA and require you to have a presence in the EU whereas other crypto assets such as um like L1 or L2 coins um or also other utility tokens are less heavily regulated um and don't do not necessarily require you to have like a headquarter or any any kind of presence within the European Union however if you want to address uh and want to actively sell this token also to EU customers or want your token to be listed on an EU exchange or EU broker um you will have to notify uh that that your token as well to to one of the EU Regulators um and draw up a white paper uh because crypto asset service providers are required to do so and um so for for that just like from a practical point of view it makes sense if you think about selling a token also to EU customers to comply with white paper requirements in the firstand already from from a also from M perspective because it's not that uh it's not that difficult to to comply with these requirements and you could you are then fully set to um also sell your your token to EU businesses uh what's the timeline for M um just very briefly uh the rules and regulations for asset reference tokens and e-money tokens will be applicable as of the 30th of June uh this year and all of the rest of the regul ation will be applicable as of the 30th of December uh this year so everything around crypto asset service providers or utility tokens um or other crypto assets will be effective as of the end of this year so you might now wonder or you might now see that maybe you have a project that falls within the scope of MAA uh or potentially could fall within the scope of MAA um and one what is it like to fall in the scope of M what do people actually think about when they discuss um yeah M next steps we see actually that almost all of the the projects um focus focus on these three questions as well kind of the first one if you have if you are a crypto asset service provider should I still go for a national registration as a virtual asset service provider for example now and then transform this virtual asset service provider registration into to MAA into a crypto asset service provider um uh license um the here it very much depends on what you're doing and kind of how fast you want to be active in the EU whether this still still makes sense or whether you should just simply wait for M and go uh straight for a m license the second question that we discuss with a lot of different projects and this is probably the the the more interesting and more important question is the choice of jurisdiction because I actually said at the beginning the cool thing about ma is that we have like one uniform regulation throughout the whole European Union right so we don't have like 27 different sets of Regulation which is true but um it still makes a difference where you're headquartered and where you have uh like uh where where where the project sits locally um and some of the the things that we discuss with projects here in terms of the choice of jurisdiction is um what are the customers that you want to attract for example if you want to go for trefi customers or institutional investors the reputation of the of the jurisdiction that you're choosing is actually quite important especially in terms of AML compliance for example kind of do I go for a a country where I know that they they stand for high AML compliance or do I go for a country which does not stand for AML compliance um then another big question is the expertise of the competent regulator kind of are there already a lot of crypto projects in um in this jurisdiction does the regulated that I have to explain my business model to know what they're talking about or do I have to kind of start from scratch and tell and explain every single thing to them then um probably also kind of the the different the number of applicants and also the personal resources that uh The Regulators have because again this will very much influence uh the the speed of your pro of your application last but not least um access to talent pool kind of is it a jurisdiction or a city uh where there are already like a few finex based where there is a lot of a big talent pool that I can access or is it like a city where people like to relocate to or is it hard to attract talent to the city and last but definitely not least of like the the big pullet points is like tax consideration of course like uh from corporate tax rates to the possibility of to obtain tax rulings uh other tax efficient structuring options and also R&D uh and other subsidies that that um your project might be eligible to so what we see in practice in in terms of jurisdiction is that um a lot of projects are either focusing on Estonia Malta um or uh Estonia Mal the Netherlands uh Austria or Ireland are kind of um jurisdictions that a lot of people are are discussing um with and kind of where they are um in in in uh the first talks and why is that so especially Austria and Netherlands might be uh some surprising surprising to some of you but this is especially the case because only the Austrian and the Dutch regulator uh published a road map to Mika uh a few a few weeks ago where they already outlined kind of when they will accept uh M applications that it is already possible to pre-alignment with the regulator so that you can actually be one of the first ones to obtain a m license so because if you uh think back um M will be applicable for crypto asset service providers for example as of end of this year and if you already have the possibility to pre-alignment now with the regulators and and submit uh your application and the second half of this year instead of the 30th of December this year uh it is very likely that you will you will get a license much earlier uh and than than in other jurisdictions which is why um uh quite a few projects are now considering Austria and and the Netherlands for their their headquarter for the mik operations if you now after this talk for example kind of wanted to uh start a a project and kind of think um well maybe I need to follow uh uh M or maybe I need to actually uh uh apply for a m license um where do you stand or where do others stand um we see that there's like two categories um like EU based crypto companies which are um at the end of this this circle kind of usually already having a ma Gap assessment uh drafting documents already and pre-aligning those documents with the regulat as where possible whereas um projects that are not based or not headquartered uh within the EU they are typically at the beginning of this circle kind of um starting to um focus on MAA that they have the Strategic decision that they want to go for a m license or actually are still evaluating whether it makes sense for them to go for a m license or whether they they would try to to um to to operate without a ma license and maybe not not actively engage in the European market um last but not least we have been talking about challenges we have been talking about kind of uh that you have to do a lot of um compliance also and and with with MAA uh but M does not only bring challenges but also opportunities um so I would like to to briefly also touch upon these uh to to show you that regulation is not all bad um like on the one on the first point I already touched upon this MAA can actually be your golden ticket to the EU with 450 million people Market um which makes it pretty easy to really sell your products or your services within the EU then secondly there also now the possibility to offer new products under meikum uh we already briefly talked about the asset reference token think about kind of a token that references um like the value of of gold for example like a gold token I mean there are already projects that do that um but so far it's not quite clear how that works from a regulatory standpoint and on Ma those products could actually be structured in a way that they fall um under the scope of an asset reference token and then they could be marketed within the EU um on this basis so that is pretty exciting um and another thing is also that for example leveraged s reference token are a thing so um there might be a possibility to really have like leveraged tokens within the EU um as structured under M um also with MAA crypto just becomes so to say more legit because um it will be easier for crypto projects to obtain banking licenses uh banking uh access to banking services um this is actually explicitly also outlined in MAA um that M licensed entity should have it easier to obtain a a banking uh to to obtain banking services um and also institutional and more traditional investors uh will be attracted to crypto and will actually engage more more in crypto products um and maybe just one more thing uh to to point out here um is the collaboration with trfi because what we seees also um that MAA does not only hold the possibility for you to actively um service the whole European market but really also to form collaborations with credit institutions with um other uh like investment firms uh Etc because they're really now getting interested in tapping into the crypto Market uh now that it becomes more regulated in the EU so that is definitely also something where we see that there is a lot of potential uh with MAA and that that's why I'm pretty excited about mik uh I hope some of you are too um and I would be happy if uh we stayed in touch so now you can decide uh if it was worth uh connecting or not um and if you have any questions please feel free uh to uh ask them any afterwards and yeah happy to [Applause] discuss