Warning about MiCA transitional periods and misleading information in relation to white papers

The Croatian Financial Services Supervisory Agency (Hanfa) is hereby informing the public about potential misleading information by cryptocurrency providers.

Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets and amending Regulations (EU) No 1093/2010 and (EU) No 1095/2010 and Directives 2013/36/EU and (EU) 2019/1937 (hereinafter: MiCA) entered into force on 29 June 2023, with the deferred application of the provisions on electronic money tokens (EMT) and asset-referenced tokens (ART), which will apply from 30 June 2024, and the deferral of provisions concerning the issuance of other types of crypto-assets and the provision of crypto-asset services, which will apply from 30 December 2024.

The Republic of Croatia currently does not have a national framework for the issuance of crypto-assets, which are not a financial instrument in the context of the Capital Market Act, nor for the provision of services related to the issuance of crypto-assets.

The crypto-asset business and the provision of services in relation to crypto-assets that do not qualify as financial instruments are currently subject only to the general rules relating to contractual relations laid down in the Civil Obligations Act and the provisions of the Anti-Money Laundering and Terrorist Financing Act.

The Act implementing Regulation (EU) 2023/1114 is currently being drafted, and it will operatively set the entire regulation at the national level.

Hanfa is warning the public to exercise caution in the case of crypto-asset offers stating that the crypto-asset white paper has been issued in accordance with MiCA, and particularly if during promotion, or as part of it, it is claimed that the white paper has been submitted to the competent authority for information and/or approval.

After 30 December 2024, when offering to the public of a crypto-asset other than an asset-referenced token or e-money token or when seeking admission to trading of such crypto-assets in the Union, offerors or persons seeking admission to trading should draw up, notify the competent authority and publish an information document containing the information they are obliged to disclose (”crypto-asset white paper“). In addition, certain provisions, including the white paper provision, do not concern public offers of crypto-assets that expired before the end of this transitional period.

Hanfa does not authorise crypto-asset white papers, nor will it authorise them after the end of the transitional period.

Following the entry into force of the above provisions, the crypto-asset white paper shall contain the following clear and prominent statement on the first page: “This crypto-asset white paper has not been approved by any competent authority in any Member State of the European Union. The offeror of the crypto-asset is solely responsible for the content of this crypto-asset white paper“, in accordance with Article 6(3) of MiCA.

It is important that holders of crypto-assets and current or prospective clients of crypto-asset services are aware that, in addition to the risks associated with crypto-assets, the MiCA rules on the provision of crypto-asset services will not apply until 30 December 2024. Therefore, crypto-asset holders and clients of crypto-asset service providers will not benefit from EU-wide regulatory and supervisory safeguards or redress mechanisms embedded in MICA during this period, such as the possibility to lodge formal complaints with their national competent authorities against crypto-asset service providers and the possibility to require redress for the damage they have suffered because the crypto-asset white paper information relevant for the assessment of crypto-assets is incorrect or incomplete.

Consequently, Hanfa is warning the public that it is not authorised to receive crypto-asset white papers and, consequently, to verify that they include all the necessary information required by MiCA.

Be aware of misleading information in the offers of crypto-assets and related products, in particular those aggressively advertised to the public through the use of advertising materials and other information that may be vague, incomplete and inaccurate.

In view of the aforementioned timeframe, consumers are recommended to be informed, before investing in crypto-assets, of any risks associated with such assets, as well as of any safeguards and rights that belong to them, in particular in the period prior to the application of the provisions of the MiCA relating to ARTs and EMTs and the provision of crypto-asset services.

Further information is available in the ESMA Statement from October 2023, which clarifies the MiCA timeframe and encourages market participants and NCAs to start preparing for the transition, the Joint Statement on crypto-asset risks issued by the European Supervisory Authorities (EBA, EIOPA and ESMA) in March 2022, as well as in the CNB Statement of July 2021 and Hanfa statements of 8 July 2021 and of 5 October 2022.