We’re planning to offer our crypto trading services to people in different countries, not just in Europe.
How does MiCA affect our business when we deal with customers outside Europe?
Understanding the Legal Question
The user is inquiring about the impact of the Markets in Crypto-Assets Regulation (MiCA) on a crypto trading service that intends to operate globally, not limited to European countries. The context of the question suggests the user’s need to understand the regulatory implications of MiCA on their business, particularly concerning clientele located outside of Europe. The user’s goal is to ensure compliance with MiCA while pursuing international expansion.
Ambiguities in the Legal Question
Jurisdiction of the Crypto Trading Services: It is not specified whether the business is established within the European Union or if it operates from a third country.
Target Countries for Services: The question lacks specificity regarding which countries outside Europe the service intends to operate in, which could affect the applicability of MiCA.
Service Offerings: The exact nature of the “crypto trading services” is not detailed, which can lead to varied interpretations of how MiCA might apply.
Existing Compliance Structure: There’s no information on the current compliance measures taken by the business, particularly concerning international regulations.
Customers’ Profile: The question does not specify whether the services are intended for retail customers or professional investors, which could have different implications under MiCA.
Assumptions for the Legal Analysis and the Plan for the Junior Lawyer
Note: The junior lawyer is what we call a subsystem of Hotseat that completes helper tasks
Assume the crypto trading service business is based within the European Union and subject to MiCA regulations.
Assume the service plans to expand to both retail and professional customers internationally.
Assume the crypto trading services include both exchange services and custody services for crypto-assets.
Assume the business has existing compliance infrastructure that is aligned with European regulations and may need adaptation for services offered in other jurisdictions.
Assume the target countries for expansion do not have prohibitive regulations against crypto trading services based in the EU.
Plan for the Junior Lawyer:
Scope of MiCA Regulation:
Review Article 2 to understand the territorial scope of MiCA, focusing on whether the Regulation applies to services offered to customers outside the EU.
Examine Article 59 for the authorization requirements for crypto-asset service providers within the EU and their applicability when offering services internationally.
Obligations under MiCA for International Service Offering:
Analyze Article 7 to determine the conditions under which marketing communications regarding crypto trading services need to comply with MiCA for international clients.
Study Recitals 85 and 86 for insights into MiCA’s intention and extent when dealing with cross-border services.
International Compliance and Due Diligence:
Consult Articles 65 and 66 to explore the obligations of crypto-asset service providers regarding cross-border cooperation and due diligence.
Consider Article 107 and related Recitals to comprehend cooperation mechanisms with third-country authorities that could impact international crypto trading services.
Interaction with Third-Country Regulations:
Investigate Recital 8 to determine MiCA’s standpoint on international cooperation and convergence for crypto-asset services and the implications for a business offering services outside the EU.
Customer Information:
Research Articles 66 and 67 to verify the information and disclosure requirements for international clients and whether they align with MiCA’s stipulations for EU-based customers.
Report Construction:
Assemble a comprehensive report detailing the findings from the above sections, focusing on the MiCA impact assessment for international operations and recommendations for compliance strategies for global expansion.
Definitions and Terms from MiCA:
Crypto-asset: A digital representation of value or rights which may be transferred and stored electronically, using distributed ledger technology or similar technology.
Crypto-asset Service Provider: A legal person whose occupation or business is the provision of one or more crypto-asset services to clients.
Cross-border Services: Services provided by a regulated entity from one jurisdiction to clients in another jurisdiction outside its domestic market.
Professional Investor: An investor with the experience, knowledge, and expertise to make their own investment decisions and accurately assess the risks involved.
Retail Customer: An individual customer who does not meet the criteria to be considered a professional investor and is afforded higher protection due to their inexperience or lack of professional knowledge.
Question Clarity Rating
Somewhat clear
Clarity Rating Explanation
The question provides a general sense of the user’s business model and the intent to understand MiCA’s applicability outside the EU. However, it lacks specifics about the types of crypto-asset services offered and how the business interacts with EU residents, which are crucial for assessing MiCA’s reach. There is no mention of establishment within the EU or the kind of crypto-assets involved, which necessitates significant assumptions to provide a comprehensive answer.