Crypto Regulation: What Does MiCA Mean for Cryptocurrency Projects? – Part I

At Intercompany Solutions, we always strive to provide all of our clients with the best services possible, tailored specifically to your needs. With the emergence of digital entrepreneurship, cryptocurrencies are currently a hot topic. Specifically, the ever rising amount of altcoins offers new opportunities almost daily. So you can see how the crypto market is booming and creating possibilities for people everywhere to thrive. If you are currently invested in cryptocurrencies and would like to expand your business overseas, or if you would like to set up a Dutch business within this specific market, we can definitely help you with company establishment. 

Our company is specialized in the establishment of Dutch companies for foreign entrepreneurs and investors, making it possible for anyone to conduct business with the European Union (EU). We can provide you with all the necessary services to incorporate and register your new Dutch company. After that, we can also aid you with a wide range of other services, such as opening a Dutch bank account, legal and fiscal advice, administrative and secretarial services and services aimed at helping your Dutch company grow continuously. We always work on the basis of predetermined rates, combining your needs to create a package deal that covers all services you will be needing from us. Our company establishment packages start from only €1499, which is an all-in amount. Please feel free to contact us with any questions you might have, we will gladly answer them for you.

The rise of cryptocurrencies

As you might have noticed, cryptocurrencies are gaining traction worldwide as an alternative to fiat money. More and more consumers and businesses are investing in cryptocurrencies, ranging from some well-known coins such as Bitcoin and Ethereum to completely new altcoins that can sometimes offer exciting promises in the accompanying whitepapers. Crypto is a moderately safe way to invest, or even store money, as opposed to a regular bank. Banks are quickly losing their credibility and stable image and people are generally looking for alternatives to be able to store their money in a safe place. Of course, the rise of cryptocurrencies has also provided space for many entrepreneurs to start businesses within the industry, such as token issuers and various service providers. This, in turn, has led to the wish to be able to regulate these types of businesses better within the EU. 

The regulation of crypto-assets has been a growing topic of debate in recent years, leading to various legal approaches within the EU. To address this, the European Commission proposed a new Regulation on Markets in Crypto-Assets (MiCA) on 24 September 2020. The aim is to create a specific regulatory framework for all crypto-assets on the blockchain.

This regulation is part of the European Commission's so-called ‘Digital Finance package’, which aims to make innovative financial products more available to EU citizens while ensuring strong protections for both investors and the stability of the EU’s financial system. The Digital Finance package focuses on four key areas: reducing market fragmentation, adapting EU laws to support digital innovation, promoting digital finance, and managing risks from new technologies. Regulators believe that this crypto-friendly legislation will help set industry standards and improve information-sharing between market players, encouraging more collaboration between new start-ups and established financial companies.

Markets in Crypto-Assets Regulation (MiCAR)

The Markets in Crypto-Assets Regulation (MiCAR) marks the first EU-wide legislative package aimed at regulating cryptocurrencies and crypto-related services. These rules and regulations apply to both issuers of crypto-assets and providers of crypto-services, establishing consistent standards across the EU. MiCAR was officially published on June 30, 2023. It also contains specific laws and regulations that govern crypto-asset service providers (CASPs). The European Markets in Crypto-Assets Regulation (MiCAR) is especially relevant and is further explained in additional supporting regulations.

The introduction of MiCAR is the EU’s first attempt at a unified regulatory approach for cryptocurrencies and crypto-services, targeting both issuers and service providers and ensuring EU-wide alignment. Published on June 30, 2023, MiCAR aims to reduce regulatory fragmentation within the EU, encourage innovation and competition in the digital financial sector, and manage associated risks.

Making regulations more efficient and closing gaps

Through MiCA, the European Commission aims to close regulatory gaps by creating a unified framework for all crypto-assets that fall outside current financial regulations, like the Markets in Financial Instruments Directive II (MiFID II) and the Electronic Money Directive 2 (EMD2). MiCA establishes clear EU definitions to specify when crypto-assets, asset-referenced tokens (stablecoins), utility tokens, and crypto-asset service providers (CASPs) are involved. It also introduces transparency by requiring token issuers to provide key information. For added security, MiCA sets minimum capital requirements for issuers of asset-referenced tokens to ensure price stability and guarantee that investors' redemption requests are met. Market abuse and manipulation rules in the Market Abuse Regulation (MAR) will also apply to all crypto-assets under MiCA. With these steps, the EC aims to support innovative investment products while managing crypto-related financial risks.

MiCA not only sets standards for token issuers and service providers but also addresses the growing issue of regulatory fragmentation across Europe. For instance, countries like Malta and Estonia have introduced national rules with licensing requirements for crypto-asset service providers, while other member states with strong blockchain markets, like Germany, the Netherlands, and Luxembourg, require providers to register with local financial authorities. This means market participants need to follow each country’s rules to offer crypto services across the EU. As an EU regulation, MiCA takes priority over national laws and creates a single licensing system for CASPs, standardizing requirements for token issuance and trading. This new legislation will allow companies to access the entire European market with a single license.

The main goals of MiCA

Like every regulatory framework out there, MiCA has been created to achieve certain ambitions and goals regarding cryptocurrency and its potential regulation. The idea is that MiCA will offer some benefits and securities to all parties involved in the trade of crypto-assets. In essence, MiCA has four main goals which are as follows:

• To provide legal certainty for crypto-assets that are not yet covered by European financial regulations
• To place all crypto-asset issuers and service providers (CASPs) under a single regulatory framework
• To replace national rules for crypto-assets that lack EU-wide regulations
• To create specific regulations for stablecoins

As you can see, MiCA’s goals are all interconnected. The first goal aims to ensure legal clarity, establishing a clear framework to guide how crypto-assets are regulated so that these markets can grow in a stable and overseeable way within the EU. The second goal is aimed at supporting innovation within the market. To encourage the development of crypto-assets and broader use of Distributed Ledger Technology (DLT), MiCA aims to create a balanced regulatory framework that promotes fair competition and innovation, which will make it possible for a larger amount of people to start their own projects and coins.

The third goal is to ensure consumer and investor protection, as well as market integrity. Since crypto-assets not covered by current financial laws carry risks similar to traditional financial products, MiCA aims to offer similar ways of protection. The fourth goal is to maintain financial stability. As crypto-assets evolve, some—like stablecoins—have the potential for widespread use and could affect financial stability. MiCA includes protections to address potential risks that stablecoins could pose to stability and monetary policy.

Legal requirements

Several requirements of MiCAR have been expanded upon by the European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) through delegated regulations. These include rules on licensing and notification processes, handling complaints, managing conflicts of interest, ensuring business continuity, sustainability indicators, the crypto-asset white paper, and other scope-related issues. In January 2024, the AFM held a meeting with market participants to discuss MiCAR. Questions from these participants were addressed before, during, and after the meeting. The AFM plans to use these questions to help guide its preparations and to provide clearer guidance to the market.

Transition period

Please note that CASPs that were operating under national rules before December 30, 2024, will go through a transition period. To keep offering crypto-asset services, they’ll likely need to obtain a MiCAR license or notification by June 30, 2025. Until then, they will follow national regulations. If you would like to know what this means for you exactly, you can always contact us to discuss your situation and see, whether you need to take action immediately or on short notice to stay safe and be able to continue doing business.

Requirements for companies offering crypto-assets

There are certain requirements mentioned in MiCA that will be put in place for all companies that offer crypto-assets, throughout the entirety of the EU. There are only some exceptions for a few European countries that have their own crypto-asset rules, like Malta and France. But in general, the admission and issuance of crypto-assets in European capital markets are currently governed only by the listing rules of individual trading venues. The draft of Markets in Crypto-Assets Regulation (MiCA) will change this by introducing uniform disclosure and investor protection requirements for institutions issuing crypto-assets, similar to those for regular financial instruments. This article covers MiCA’s provisions for all crypto-assets that are neither asset-backed nor e-money tokens. 

We will focus on the three main requirements for companies offering crypto-assets. The term “crypto-assets” is broad and includes cryptocurrencies like Bitcoin and Ethereum, e-money tokens such as USD Coin and Tether, asset-backed tokens, and utility tokens like Filecoin and Binance Coin. We will focus specifically on cryptocurrencies and utility tokens for now, but we might cover the rest in a future article. Just for clarification: cryptocurrencies are digital assets that are used as currency on a blockchain, while utility tokens are something like prepaid vouchers that give access to products or services. Crypto-assets that are already regulated by other laws, such as financial instruments, electronic money, and deposits, are not covered by MiCA. NFTs are also not yet included in the regulation. Institutions issuing and offering cryptocurrency to EU residents, known as ‘issuers,’ must meet several requirements under MiCA. Below, we will explain the three most important requirements that you will need to meet, if you are such a party.

Requirement 1: A legally incorporated company

As we discussed above, when MiCA is actually implemented, institutions issuing crypto-assets and offering tokens to the European public, or aiming for admission to trading platforms, will need to meet three key requirements. The first requirement proclaims that the issuer must be registered as a legal entity within the EU. This legal entity acts as the central organization responsible for fulfilling any commitments made to investors. This means the company is liable if any statements are misleading. As a result, cryptocurrency issuers must be more cautious when making claims or projections about the price of a token or its associated project. 

This helps ensure that consumers and investors are less likely to encounter unrealistic forecasts about the price of a token or the future of a blockchain project. In the Netherlands, such a legal entity might be a Dutch BV or NV, for example. This central organization will be responsible for fulfilling the promises made to investors when the token is issued. This creates accountability in the event of fraud or misrepresentation. Therefore, the requirement for company registration encourages issuers to be more realistic in their public statements, avoid making unrealistic projections about their token’s future, and prioritize the interests of token holders.

Requirement 2: Whitepapers

The second requirement for offering cryptocurrency is that issuers must prepare and publicly release whitepapers. A whitepaper is a comprehensive document designed to inform readers about a specific product or service. In the case of cryptocurrency, a whitepaper describes the general goal and workings of a coin, what it can do, how it benefits crypto in general and what future goals and ambitions are for the coin. Under MiCA, token issuers will be responsible and held accountable for all statements and any inaccuracies within their whitepapers. These whitepapers must provide clear and transparent information about the issuer and the team behind the token's development.

In addition, the whitepapers should include detailed information about the project for which the tokens are being issued. This includes the rationale behind the issuance, how the proceeds will be used, and all potential risks to both the institution and the product. Furthermore, the whitepaper should explain the technical aspects of the underlying technology and how the tokens will be used and traded, so everyone can understand its usefulness (or lack of it).

Please note, that whitepapers are not mandatory for projects that distribute tokens for free, such as through 'airdrops,' or for issuers offering tokens only to professional investors. MiCA requires issuers to ensure that all required information in the whitepaper is accurate and reliable, as they will be legally liable for the content. The whitepaper must clearly state the number of crypto-assets being issued, their price, and subscription terms, along with a full description of the rights and obligations tied to the issued tokens. Issuers must exercise due diligence to guarantee that the information they provide is correct. Everyone who is interested in the coin or token should know exactly what they are buying, or investing in – that is the main goal of a whitepaper.

Requirement 3: Admission to the market

The third and final requirement is that issuers of crypto-assets must submit their whitepapers to the national competent authority (NCA) at least 20 working days before publication. In the Netherlands, this authority is the Netherlands Authority for the Financial Markets (AFM). The submission should include an explanation as to why the tokens cannot be classified as financial instruments under the Markets in Financial Instruments Directive II (MiFID II), if this is applicable, as this would mean they would fall outside the scope of MiCA.

Unlike financial instruments, which require approval from NCAs through a prospectus, whitepapers for crypto-assets do not need formal approval. However, the NCA will review the submission to ensure compliance with MiCA regulations. The NCA also has the authority to intervene if necessary, including prohibiting or halting trading in the event of irregularities. Additionally, issuers may request that the NCA forward their submission to the relevant authorities in other Member States where they also intend to offer their tokens.

Additional responsibilities

Please be informed that in addition to the three main obligations, issuers of crypto-assets are required to adhere to the general principles of fairness and reasonableness in all their interactions with buyers and other third parties. They are also required by law to establish administrative systems, to prevent internal conflicts of interest and be able to document everything that is going on. Issuers are also responsible for storing funds raised through token issuance in certified credit institutions or with crypto custodians, ensuring the security of these funds. 

Furthermore, to protect investors' crypto-assets, issuers must implement robust security systems and protocols. There have been incidents in the past where certain owners of platforms, for example, ran off with the money and assets of buyers. Many buyers have lost huge amounts of money due to such situations. Therefore, MiCA also includes provisions to protect consumers, mandating that issuers provide a 14-day right of withdrawal for buyers of tokens. This right applies only if the crypto assets have not yet been made available on a trading platform.

Are there any exceptions mentioned in MiCA?

Once MiCA is enacted, whitepapers are expected to be one of the most costly components for the public issuance of crypto assets, as they require the involvement of legal, financial, and IT experts. However, thankfully, the regulation includes certain exceptions that can reduce these costs for issuers. These exceptions can apply to either the creation, the communication and/or the publication of whitepapers.

According to the draft regulation, whitepapers are not required when:

• Crypto assets are issued for free, such as through crypto airdrops used for advertising purposes
• The public issue is small, involving fewer than 150 people per Member State or totaling less than EUR 1 million
• Crypto assets are offered only to professional (expert) investors
• Crypto assets are issued as rewards for maintaining networks, like in mining
• Unique, non-fungible tokens (NFTs) are distributed, such as those used for selling digital artworks online

These exceptions are designed to ensure proportionality for public emissions that are limited in value or scope, helping prevent small-scale projects—especially those led by start-ups and SMEs—from being burdened by high administrative costs. This is particularly important for fostering innovation while still maintaining regulatory standards.

Would you like to offer crypto-related services with a Dutch company?

Starting a crypto-related company is possible from anywhere on the planet, which makes this a very flexible way to do business. However, it is very advisable that you have at least some basic knowledge about cryptocurrencies and the way these are created and offered, before you start anything. There’s a reason why regulations such as MiCA are necessary: there is a lot of fraud and scamming involved in the cryptocurrency world, simply because most people don’t understand the technology yet and are easily misled. Even if you hire someone who can create a token for you, how do you know for sure that person won’t eventually turn on you?

So do research about crypto and inform yourself well enough to make pragmatic decisions. One such decision is the location of your new company. Setting up a business from home can be tempting, but it’s also wise to look for locations that are significant in some way. The Netherlands, for example, consistently scores very high in many prominent and well-known business indexes. The country is also known for its bi-or trilingual workforce, plenty of opportunities for foreign entrepreneurs and investors and its welcoming and friendly business climate. It will be easy for you to find business partners when you operate from the Netherlands, as well as staff and reliable other third parties. Intercompany Solutions can set up your Dutch business in just a few days, all we need are some basic documents:

• A valid form of identification
• The full name(s) of all future shareholders
• A valid Dutch registration address
• A unique company name
• A power of attorney to act on your behalf

If you can send us these documents, we can take care of the registration process for you remotely. We will first have a notary public incorporate your business officially. You will need to deposit the minimum share capital at this point. Afterwards, we contact the Dutch Chamber of Commerce and your newly found Dutch company is registered in the Trade Register. You will receive your registration and VAT number, and you are ready to start doing business immediately. Of course, Intercompany Solutions can help you further at this point, with a wide range of professional services aimed at helping you achieve success.

The many services we can offer you

Intercompany Solutions has assisted hundreds of foreign entrepreneurs from over 50 different nationalities. Our clients range from small one-person startups to multinational corporations, and everything in between. Our processes are aimed at foreign entrepreneurs and, as such, we know the most practical ways to assist with your company registration. We can assist with the full package of company registration in the Netherlands:

• Company establishment in the Netherlands
• Opening of a local bank account
• Application for VAT or EORI number
• Application for a variety of permits
• Application for a visa or start-up permit
• Startup assistance
• Financial services
• Administrative services
• Secretarial services
• Legal assistance
• Tax and financial services
• Media
• General business advice

We are constantly improving our quality standards to continually deliver impeccable services. 

Intercompany Solutions helps you set up your Dutch crypto business from the start

If you would like to know about our services, feel free to take a look around on our website, or read one of the many testimonials from our recent clients. We have assisted thousands of foreign entrepreneurs in the establishment, operation and growth of a Dutch business. These clients come from every corner of the world and can be ranging from starting entrepreneurs to owners of already established and highly successful multinational companies. We can assist you with any question or issue you might have, ensuring that you can focus on your core business and not have to deal with problems that lay beyond your scope of expertise.

Our team can establish your Dutch company for you and help you will all sorts of other matters, such as opening a Dutch bank account, applying for a crypto permit at the AFM, applying for a wide range of other permits, helping you with potentially immigrating to the Netherlands, assisting you with your periodical and annual tax return and so on. If you ever have a question you cannot seem to answer yourself, or you simply would prefer to obtain professional advice about an issue, please feel free to contact us anytime. We are here to assist you in any way we can.

Sources:

https://eur-lex.europa.eu/legal-content/NL/TXT/HTML/?uri=CELEX:52020PC0593

https://www.afm.nl/nl-nl/sector/themas/digitalisering/micar

https://watsonlaw.nl/expertises/crypto/mica/

https://watsonlaw.nl/en/mica-introduction-to-the-markets-in-crypto-assets-regulation/