The uniform regulation covers practically the entire spectrum of crypto-assets.

 

The regulation contains many exceptions, mainly regarding authorized credit institutions.

 

Crypto-Assets, other than asset-referenced tokens or e-money tokens could be offered to the public

• issuer is legal entity
• issuer has drafted a crypto-asset white paper and sent it to the competent authority of their home Member State (in Hungary probably it will be the the Hungarian Central Bank-MNB), but no prior approval is required
  • this is general in the regulation: liability cannot be excluded in the white paper document, but the proposal does not regulate whether liability can be limited and, if so, to what extent

In case of Crypto-Assets, other than asset-referenced tokens or e-money tokens: consumers shall have a period of 14 calendar days to withdraw.

 

Asset-referenced tokens:

• only legal entities that are established in the Union shall be granted an authorisation therefore it becomes a permit-required activity
  • exception:
    • (a) over a period of 12 months, calculated at the end of each calendar day, the average outstanding amount of asset-referenced tokens does not exceed EUR 5 000 000, or the equivalent amount in another currency;
    • (b) the offer to the public of the asset-referenced tokens is solely addressed to qualified investors and the asset-referenced tokens can only be held by such qualified investors.
  • authorised to do so by the competent authority of their home Member State (expected MNB), total time required: about 6 months
  • a crypto-asset white paper is required
  • competent authorities shall withdraw the authorisation, if the issuer has not used its authorisation for 6 successive months
  • Own funds requirements (which is higher):
    • 350 000 EUR
    • 2% of the average amount of the reserve assets (issuers of asset-references tokens shall at all times constitute and maintain a reserve of assets).
    • Competent authorities of the home Member States may require issuers of asset-referenced tokens to hold an amount of own funds which is up to 20 % higher or permit such issuers to hold an amount of own funds which is up to 20 % lower
  • Issuers of asset-referenced tokens or crypto-asset service providers shall not provide for interest or any other benefit
  • Any natural or legal person or such persons acting in concert, who intends to acquire, directly or indirectly, a qualifying holding in an issuer of asset-referenced tokens or to further increase, directly or indirectly, such a qualifying holding so that the proportion of the voting rights or of the capital held would reach or exceed 10 % shall notify the competent authority for authorisation

Electronic money tokens:

• issuer shall be authorised as a credit institution or as an ‘electronic money institution’
  • exception:
    • (a) e-money tokens that are marketed, distributed and held by qualified investors and can only be held by qualified investors;
    • (b) if the average outstanding amount of e-money tokens does not exceed EUR 5 000 000, or the corresponding equivalent in another currency, over a period of 12 months, calculated at the end of each calendar day.
  • any e-money token that does not provide all holders with a claim shall be prohibited.
  • upon request by the holder of e-money tokens, the respective issuer must redeem, at any moment and at par value, the monetary value of the e-money tokens held to the holders of e-money tokens, either in cash or by credit transfer Redemption may be subject to a fee only if stated in the crypto-asset white paper. The redemption shall be managed within 30 days, if not:
    • entities ensuring the safeguarding of funds or any natural or legal persons in charge of distributing e-money tokens on behalf of issuers of e-money tokens shall pay
  • no issuer of e-money tokens or crypto-asset service providers shall grant interest or any other benefit

Crypto-asset service providers:

• crypto-asset services shall only be provided by legal persons that have a registered office in a Member State of the Union
• no issuing, only related services
• authorised to do so by the competent authority of their home Member State (expected MNB), total time required: about 4 months
• Competent authorities shall withdraw the authorisations, if the crypto-asset service provider has not used its authorisation within 18 months of the date of granting of the authorisation, or has not provided crypto-asset services for nine successive months
• Any natural or legal person or such persons acting in concert, who intends to acquire, directly or indirectly, a qualifying holding in an issuer of asset-referenced tokens or to further increase, directly or indirectly, such a qualifying holding so that the proportion of the voting rights or of the capital held would reach or exceed 10 % shall notify the competent authority for authorisation
• Minimum capital requirement: based on type of crypto-asset services, but minimum 50 000 EUR

In summary, it can be concluded that it is expected that from late 2024, the fragmented regulation will become unified in the European Union and activities related to crypto-assets used in everyday practice will become subject to authorisation.

In Hungary, the competent authority is expected to be the MNB, on the basis of which a strict practice with regard to authorizations is expected.

 

 

 István Szőke dr. / Harglaw