As of 30 December 2024, the EU has become one of the first major jurisdictions with a comprehensive regulatory framework on cryptoassets, based on the new EU Markets in Crypto-assets Regulation (MiCA). Among other things, MiCA introduces a set of harmonised rules on offering of regulated crypto-assets (spelling as used in the legislation) and the provision of regulated crypto-asset services to customers based in the EU.
Unlike in the UK, where the regulatory framework on financial promotions has been an essential part of the rulebook applying to advertising of regulated instruments and services for some time (see here for more), the EU has never had a set of regulatory requirements focused specifically on advertising of regulated instruments/activities.
Instead, key pieces of EU financial regulation (like MiFID II, Prospectus Regulation etc.) contain a set of regulatory requirements focused on one of the following: (i) setting minimum disclosure requirements under which regulated financial instruments (like transferable securities) can be offered to EU investors, and/or (ii) setting authorisation requirements for entities engaging in the provision of regulated financial services.
By following in the footsteps of its predecessors, MiCA creates the same two-tiered regulatory framework that sets minimum requirements on:
- offering of regulated crypto-assets
- authorisation and ongoing operation of persons providing crypto-asset services to EU customers.
Both have an indirect effect on advertising of crypto-assets/crypto-asset services to EU residents.
Offering of crypto-assets
MiCA regulates the offering of and provision of services in relation to the following three categories of crypto-assets:
- asset-referenced tokens (stablecoins whose value is pegged to the value of one or several underlying assets)
- e-money tokens (stablecoins whose value is pegged to the value of one fiat-currency)
- other non-exempted crypto-assets.
For more on each of these categories, the broader scope of MiCA as well as relevant exempted categories of crypto-assets, please see our dedicated article.
Offering regulated crypto-assets to EU investors generally triggers the application of different regulatory requirements to the offeror under MiCA.
White paper
First, before offering regulated crypto-assets to EU investors, an offeror (regardless of whether or not they are EU-based) is required to prepare and publish a white paper. Under Article 6 MiCA, this is an information document containing relevant information about the issuer, the crypto-asset, associated risks, underlying technology and the key terms of the offer.
By mirroring the main principles of the EU Prospectus Regulation, MiCA provides for a number of exemptions from the white paper obligation for certain types of public offerings of crypto-assets. These include offers targeting fewer than 150 individual investors, offers targeting only qualified investors, as well as offers of crypto-assets that are offered to EU residents for free. To see more about the offering requirements under MiCA and related exemptions from the white paper obligation, see our dedicated article.
Offerors are required to send the draft of the white paper to their national competent authorities (NCA) at least 20 days prior to publication of the offer in the EU. There is no approval required, however, NCAs have the power to require amendments to the white paper or suspend the offer or trading of the crypto-assets where there is reasonable suspicion that the white paper does not meet minimum content requirements specified under MiCA.
Marketing communications
In addition to compliance with the white paper obligation, offerors of crypto-assets are required to ensure compliance with minimum requirements for marketing communications (like promotional banners, messages and ads) which are aligned with the information contained in the white paper.
To that end, offerors of crypto-assets are required to ensure that the information contained in their marketing communication materials is fair, clear and non-misleading. They also need to include a statement clearly drawing investors’ attention to the fact that the white paper is not approved by an NCA. Offerors are required to submit their marketing communications to their NCAs for inspection on request.
Bespoke regime for stablecoins
In addition to the white paper obligation that applies to all non-exempted offers of regulated crypto-assets in the EU, a number of additional regulatory requirements apply solely to persons offering asset-referenced tokens (ARTs) or e-money tokens (EMTs) in the EU.
Besides being required to comply with additional content requirements when it comes to the white paper, offerors of ARTs are required to apply for a licence and meet requirements to become an authorised issuer of ARTs under MiCA. By a way of exemption, EU authorised credit institutions are allowed to act as ART issuers provided they ensure compliance with minimum requirements under MiCA. Offering EMTs to EU investors on the other hand, is only possible for EU authorised credit institutions and e-money institutions that are the only two categories of regulated entities allowed to act as EMT issuers under MiCA.
Unlike the offering of non-exempted crypto-assets, which is generally possible for both EU and non-EU based entities, offering of both ARTs and EMTs is reserved solely for EU-based entities.
Advertising crypto-asset services
Advertising crypto-asset services that constitute regulated crypto-asset services under Article 3(1)(16) MiCA does not constitute a regulated activity in itself. However, solicitation of EU residents by virtue of advertising of regulated crypto-asset services within the EU Single Market, can trigger a licence obligation under MiCA.
Therefore, where a non-EU entity that provides, for instance, a crypto-custody service in its home jurisdiction promotes its service offering to EU residents, this can trigger a licence obligation in the EU for the provision of regulated crypto-custody services within the meaning of Article 3(1)(17) MiCA.
As the MiCA go-live date was approaching, this topic was of particular importance for the crypto industry in the context of one noteworthy exemption from the licence obligation, the reverse solicitation exemption. Under this exemption, non-EU firms are not required to obtain a licence under MiCA where they provide regulated crypto-asset services at the exclusive initiative of an EU resident (e.g. an EU customer goes to the website of a non-EU crypto exchange). With the aim of providing clearer guidance to the industry on what constitutes solicitation of EU residents in this context, the European Securities and Markets Authorities (ESMA) has provided several examples of in-scope and out-of-scope activities in its Guidelines on reverse solicitations under MiCA.
To that end, ESMA has clarified that the term “solicitation” shall be construed broadly and in a technologically neutral way, so that it can capture any promotion or advertisement of crypto-asset services to EU residents by any means, including via brochures, emails, banners, social media ads, messaging platforms, telephone calls etc. In addition, national Member State laws may sometimes complement and clarify the MiCA framework. For instance, French law, which already regulated crypto-asset services before the adoption of MiCA, provides detailed clarification on this point: the French Consumer Code explicitly defines a prohibited act of solicitation for crypto-asset services when conducted without a licence as "any direct or indirect advertisement disseminated electronically that aims to invite a person, through a response or contact form, to request or provide additional information, or to establish a relationship with the advertiser".
One relevant example also mentioned in the ESMA Guidelines includes the promotion of crypto-asset services in the form of sponsorship deals, for instance where a non-EU based crypto-asset service provider enters into a sponsorship deal with a sports team in the EU (quite common practice in recent years). Despite the fact that ESMA has acknowledged that MiCA does not prohibit third country firms from sponsoring EU sports teams, it does clarify that in this case, a third country firm would not be able to rely on the reverse-solicitation exemption from the licensing requirement. Here again, French law serves as a relevant example, complementing MiCA and aligning with ESMA's position. Under French Consumer Code, any form of sponsorship or patronage that directly or indirectly promotes crypto-asset services is expressly prohibited unless either the sponsor or the sponsored entity holds the required regulatory licence.
Despite the EU's attempt to harmonise the offering and promotion of crypto-assets, which has brought considerable clarification, Member States may have additional requirements or guidance which should also be considered.
