With the formal approval by both the Council of the European Union (on 16 May 2023) (2) and the European Parliament (on 20 April 2023) (3), the new MiCARegulation (4) has successfully passed the last legislative hurdles before publication in the Official Journal. According to standard legislative procedure provided for in Article 297(1)TFEU,theRegulationwillenterintoforce20daysfrompublication.
By way of derogation, however, the Regulation will only fully become applicable a er an 18-month period according to Article 126 of the Regulation, in order to ‘allow for the adoption of regulatory technical standards, implementingtechnicalstandardsanddelegatedactsthatarenecessarytospecifycertainelements’(recital79).
e Regulation is adopted on the legal basis of Article 114 TFEU, the internal market competence of the EU. According to Article 4(2)(a) TFEU, this competence is shared between the Union and the Member States However, the la er can only exercise their competences ‘to the extent that the Union has not exercised its competence (…) or to the extent that the Union has decided to cease exercising its competence’, according to Article 2(2)TFEU.MemberStates’legislativepowersarethuspre-emptedintheareascoveredbythisRegulation.
In addition, the choice of legislative instrument of a regulation over a directive (both would have been possible under Article 114 TFEU), means that MiCA has general applicability as it will be binding in its entirety and directly applicable in all Member States without any discretionary margin for national transposition (Article 288 TFEU). isservesthepurposeofEU-wideharmonisationofrulesandavoidsfurtherfragmentationofthemarket.
1.AssociateProfessorinEULaw,LundUniversity
2.See .here
3. on the proposal for a regulation of the European Parliament and of the Council on Markets in European Parliament legislative resolution of 20 April 2023 Crypto-assetsandamendingDirective(EU)2019/1937(COM(2020)0593–C9-0306/2020–2020/0265(COD)).
4.ProposalforaRegulation onMarketsinCrypto-assets,andamendingDirective(EU)2019/1937,COM/2020/593 nal
An introduction to the main features of the MiCA Regulation was already given by Giulio Soana in an earlier WeekendEditionofEULawLive(5),andthereforewillnotberepeatedhere.Instead,Iwillfocusonsomeofthe aspects that were not yet covered, such as the supervisory framework and the corresponding sanctions available under MiCA. In addition, I will address the EU’s global reach and leading role with this legislative step as other internationalpartnerscouldpotentiallybefollowingsuitwithsimilarlegislationinthenearfuture.
e MiCA Regulation uses a sophisticated combination of ex-ante and ex-post rules, ensuring the a ainment of its objectives, namely legal certainty, innovation, consumer and investor protection, and nancial stability. e per se obligations imposed on the various service providers ex-ante, with particular regard to the transparency and disclosure requirements, authorisation, and other obligations, are put under the supervisory framework establishedbytheRegulation.
e relevant supervisory bodies under this framework include the European Securities and Markets Authority (ESMA), the European Banking Authority (EBA) and the competent authorities in the Member States (Article 81). e ESMA and the EBA work in close cooperation to assist and coordinate national authorities in their supervisory tasks (Article 84). In addition, the Regulation provides for the establishment of colleges, speci callyassignedtothesupervisionofso-called“signi cant”issuersoftokens(Article90).
e MiCA Regulation uses a sophisticated combination of ex-ante and ex-post rules, ensuring the a ainment of its objectives, namely legal certainty, innovation, consumer and investor protection, and nancial stability
e classi cation as ‘signi cant’ – as opposed to non-signi cant – also happens ex-ante and places additional obligations on the market players concerned, as already discussed by Giulio Soana. ese are largely aimed at the prevention of market abuse (Title VI), i e , before an infringement happens, in order to safeguard consumer protectionand nancialstabilityasawhole.
In addition to the ex-ante mechanisms provided for in the MiCA Regulation, an array of ex-post rules, such as sanctions and other nes, may be imposed on the service provider once an infringement has indeed taken place. Asidefromtheirclearex-postnature,suchmechanismsalwayshaveadeterrenteffectaswellandthuscontribute to the shaping of the market in an ex-ante manner. e sanctioning regime is also administered and monitored bythesameauthoritiesmentionedabove.
As such, ex-ante and ex-post rules under this Regulation are tightly intertwined as they go hand in hand with each other and are handled under the same supervisory bodies e following will explore the role of the differentauthoritiesinvolved.
Article 82 of the Regulation provides a list of non-exhaustive minimum supervisory and investigative powers of MemberStates’competentauthorities esepowerscanbecategorisedintotwomaintypes:
1 Ex-ante powers to ensure transparency (such as the provision of information or the disclosure of documents);
2. Ex-post regulation of and management a er infringement (such as the suspension or prohibition of services).
In particularly urgent cases, where crypto-asset services are provided without authorisation – or at least a reasonable assumption thereof exists – competent national authorities can ‘order the immediate cessation of the activity without prior warning or imposition of a deadline’, according to Article 82(1)(k). An equivalent provision existsforasset-referencedtokensore-moneytokensissuedbyaperson(Article82(1)(v))
In addition, according to Article 82(1)(k), the competent authorities of Member States have the power to ‘ carry out on-site inspections or investigations at sites other than the private residences of natural persons, and for that purpose to enter premises in order to access documents and other data in any form, where a reasonable suspicion exists that documents and other data related to the subject-ma er of the inspection or investigation mayberelevanttoproveaninfringementofthisRegulation’
With regard to the prevention of market abuse involving crypto-assets asregulatedunderTitleVIoftheRegulation,competentauthoritieshaveadditionalpowers,including:
•seizureofdocumentsanddata(Article82(2)(c));
•thefreezingorsequestrationofassets(Article82(2)(f));aswellas
• the imposition of a temporary prohibition on the exercise of professionalactivity(Article82(2)(g)).
ese powers and corrective measures shall ensure the adequate protection of consumers on the market by being informed through public (corrective) statements and an otherwise smooth operation of the market e competent national authorities shall collaborate in their activitieswithotherauthorities(Article85)aswellastherelevantjudicialauthorities In addition, they shall conclude cooperation agreements with supervisory authorities of third countries for the purpose of informationexchangeandenforcementissues(Article90)
According to Article 82(2)(d), the competent national authorities have the powers to refer ma ers for criminal investigation, and shall, for this purpose collaborate with the relevant judicial, prosecuting, or criminal justice authorities (Article 83). e la er may then impose criminal sanctions
Administrative sanctions and other administrative measures may be taken by the competent authorities of the Member States according to Article 92. Sanctions for the various infringements of the MiCA Regulation may include, but are not limited to, public statements, cessation orders, as well as pecuniary sanctions or nes. e la er heavily depend on the pro ts gained or losses avoided due to the infringement and/or annual turnover. In addition, other factors shall be taken into account, suchasintentornegligence,accordingArticle93.
In determining the sanctions/ nes to be imposed, competent authorities have great exibility, which is however dependent on the provided scope set by the respective Member State. e la er have the discretion to further raise the levels of sanctions indicated by the Regulation according to Article 92(7). is additional exibility may prove crucial as theabsolutevalueofcurrenciesandpro ts uctuateovertime.
Sanctions for the various infringements of the MiCA Regulation may include, but are not limited to, public statements, cessation orders, as well as pecuniary sanctions or nes
e EBA assumes supervisory competences for issuers of any asset-referenced and e-money tokens which are deemed‘signi cant’bythelegislator.Signi canceis de nedinArticles39and40forasset-referencedtokensand Articles50and51fore-moneytokens,dependingonanumberofcriteria,interalia:
•thesizeofthecustomerbase(atleasttwomillion);
•thevalueofthetokensissued(atleastEUR1billion);
•thenumber(atleast500,000)andvalue(atleastEUR100million)oftransactionsperday;or
•thesizeofthereserveofassets(atleastEUR1billion).
In addition, a cross-border element has to be ful lled (similar to the rules on free movement), of at least seven MemberStatesbeinginvolvedwheresuchtokensareusedbytheissuer.
According to Article 90, colleges are set up for those signi cant issuers of asset-referenced and e-money tokens, consistingoftheEBA,theESMA,aswellascompetentauthorities,andalongsidetheEuropeanandnationalcentral banks. e colleges are tasked with the preparation of non-binding opinions (Article 100), the exchange of information(Article107),theagreementanddelegationoftasks(Article120),andthecoordinationofsupervisory examination programmes (Article 30(9)). ese are without prejudice to the responsibilities of the competentauthorities.
Aside its general investigative powers (Article 105), the EBA also has powers to carry out on-site inspections (Article 106), as well as a range of supervisory measures (Article 112) and the imposition of nes (Article 113), similartothoseofthecompetentauthoritiesinMemberStates.
Due to the notion of signi cance, however, such nes will amount to a much larger sum than those imposed by competent authorities at national level, particularly when associated to the annual turnover of the respective issuer of tokens (Article 113(3) and (4)). In addition, periodic penaltypayments(Article114)maybeimposedforeachdayofdelaying compliance with the obligations under this Regulation, subject to average daily turnover. Any such nes or periodic penalty payments imposed bytheEBAaresubjecttoreviewbytheCourtofJustice(Article118)
In particular serious cases of potential infringements of the provisions of this Regulation by a ‘signi cant’ issuer of tokens, an independent investigationofficershallbeappointed(Article116)
Last but not least, the EBA may also charge supervisory fees according to Article 119, covering its expenditure for supervision as well as reimbursement for costs incurred by competent authorities in carrying out tasksdelegatedtothemunderArticle120.
Overall, the powers of the EBA can be considered as wide-reaching for those issuers of asset-referenced and e-money tokens concerned that fall within its ambit. e exibility in margins and scope provided for in the legislationaddsthenecessaryfuture-proofandrelevance.
Undoubtedly, the new MiCA Regulation will set a European standard for consumer and investor protection in theinternalmarket Inaddition,theregulationis partofawiderpackageondigital nance(6),andassuchwillbe complemented with further legislation at EU level. Examples include the proposed Digital Operational ResilienceAct(DO )(7) aswellasaregulationondistributedledgertechnology(DLT)(8)
However, digital trade in this area is not limited to national borders – or those of the EU for this purpose – consideringavirtuallyin niteworldwideweb,whereserviceproviderseasilyescapescrutinyfromabroad,wheretraceability of market abuse is rendered almost impossible, and where laws are difficult to enforce outside the regulated territory. In addition, the volatility of the entire sector was exposed by recent (signi cant) market failures (such as FTX) (9) without any relevant international framework to apply to such a scenario, let alone to prevent ormitigateitseffects.
6.See .here
7. Proposal for a on digital operational resilience for the nancial sector and amending Regulations (EC) No 1060/2009, (EU) No 648/2012, (EU) No 600/2014and(EU)No909/2014,COM/2020/595 nal
8.ProposalforaRegulation onapilotregimeformarketinfrastructuresbasedondistributedledgertechnology,COM/2020/594 nal 9.See .here
Overall, the powers of the EBA can be considered as wide-reaching for those issuers of asset-referenced and e-money tokens concerned that fall within its ambit. e exibility in margins and scope provided for in the legislation adds the necessary future-proof and relevance
With the currently fragmented landscape of crypto-assets and digital nance, a global approach in regulating them becomes ever more necessary, as was observed in a White Paper of the World Economic Forum from May 2023 (10). Such a global standard, which is ensuring risk-mitigation without jeopardising the bene ts of the new technology, would largely depend on collaboration between nationStates worldwide in their efforts to regulate, monitor, and enforcelegislationinthe eld.
With the MiCA Regulation, the European legislator has thus not only set a European standard but has also providedablue-printforpossiblestandardsworldwidetobeapplied on the market in crypto-assets. is is particularly thecaseforitsinnovativesupervisoryandsanctioningframework, which, if proven to be effective, could well inspire international partners to follow suit and align their legislative a empts and thus contribute in se ing a new globalstandardforregulatingcrypto-assets.
e MiCA Regulation provides a landmark piece of legislation in the EU’s regulatory approach to digitalisation in general and digital nance in particular. Speci cally the supervisory and sanctioning framework discussed above is innovative for regulating the market in crypto-assets. e different supervisory authorities at national and EU level are neatly intertwined in their cooperation with each other.
e Regulation also provides for a sophisticated combination of ex-ante and ex-post rules to be employed in order to shape and regulate the market. ose include a variety of different fees and charges, which further allow for a certain amount of exibility to account for changes over time as long as the particular technology of crypto-assets exists
With the currently fragmented landscape of crypto-assets and digital nance, a global approach in regulating them becomes ever more necessary
Beyond the EU’s package in digital nance and the European digital market, it is anticipated that the MiCA Regulation will also contribute to se ing a new global standard for regulating crypto-assets. Such a global approach is indeed needed in order to tackle more efficiently the global challenges posed by the internet and the potential market failures it produces beyondnationalborders.
Beyond the EU’s package in digital nance and the European digital market, it is anticipated that the MiCA Regulation will also contribute to se ing a new global standard for regulating crypto-assets
19 June to 23 June 2023
Monday 19 June
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Official publication was made of a preliminary ruling request lodged by the Bundesverwaltungsgericht (Germany) concerning the labeling of a processed foodstuff as being organically produced:HerbariaKräuterparadies(caseC-240/23)
Preliminary reference on the compatibility with EU law of the penalty of forfeiture as an automatic consequence of the exclusion of an economic operator from the award of a public service contract
Monday 19 June
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Official publication was made of two cases concerning preliminary ruling requests from the Consiglio di Stato (Italy) whereby the compatibility of national legislative rules with Articles 38(1)(f), 48, and 75 of the Legislative Decree No 163 of 2006 with Articles 16, 49, 50 and 52 of the Charter of Fundamental Right, Article 4 of Protocol No. 7 to the ECHR, Article 6 TEU, and the principles of proportionality, competition, freedom of establishment and freedom to provide services enshrined in Articles 49, 50, 54, and 56 TFEU is sought: Consorzio Nazionale Servizi (C-189/23); Consorzio Leonardo ServizieLavori(C-226/23).
Monday 19 June
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Semmelweis Egyetem, a university in Budapest, Hungary, led an action against the Council of the European Union regarding Council Implementing Decision (EU) 2022/2506, which was published in the OJ: Semmelweis Egyetem v Council (CaseT-138/23).
Court of Justice to rule on the identi cation of relevant markets and obligations of a dominant undertaking, withinthemeaningofArticle102TFEU
Monday 19 June
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A case concerning a preliminary ruling request from the ConsigliodiStato(Italy)wherebythereferringcourtisseekingclari cationontheconceptofabuseofadominantposition,within the meaning of Article 102 TFEU, in particular as regards the identi cation of the relevant markets and any obligations ofanundertakingthatisdominantinoneormoredigitalmarkets, was published in the OJ: Alphabet and Others (C-233/23)
Monday 19 June
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e Commission put forward new rules seeking to promote fair taxation, combat tax fraud, and facilitate cross-border investmentacrosstheEuropeanUnion
Monday 19 June
e EU and Kenya have announced the conclusion of the negotiations for an Economic Partnership Agreement (EPA), theaimofwhichistoboosttradeingoodsandcreateneweconomic opportunities, with targeted cooperation to enhance Kenya’seconomicdevelopment
Tuesday 20 June
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e Council adopted its general approach on a proposal for a regulation on wholesale energy market integrity and transparency(REMIT),whichaimstosupportopenandfaircompetition in the European wholesale energy markets by banning tradingbasedoninsideinformationanddeterringmarketmanipulation.
Tuesday 20 June
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e Council adopted its general approach on a proposal for a naturerestorationlaw Suchaproposalaimstoprescriberecoverymeasuresthatwillcoveratleast20%oftheEU’slandand 20%oftheseaareasby2030,andallecosystemsinneedofrestorationby2050.
Tuesday 20 June
Official publication was made of Regulation (EU) 2023/1182,whichestablishesspeci crulesformedicinalproductsintendedtobemarketedinNorthernIreland.
Wednesday 21 June
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e European Commission completed its proposal for a next generation of own resources, which completes and updates the package for the next generation of own resources to the budgetputforwardbackinDecember2021.
Wednesday 21 June
e European Commission proposed the establishment of a nancing instrument that will provide coherent, predictable, as well as exible support for the period 2024-2027 to Ukraine, adapted to the unprecedented challenges of supporting a countryatwar
Wednesday 21 June
e General Court delivered its judgment in Guangdong Haomei New Materials and Guangdong King Metal Light Alloy Technology v Commission (Case T-326/21), rejecting the action for annulment brought by Guangdong Haomei New Materials Co Ltd and Guangdong King Metal Light Alloy Technology Co. Ltd seeking the annulment of certain regulations related to anti-dumping duties on aluminum extrusions imported from thePeople’sRepublicofChina.
Wednesday 21 June
e General Court, si ing in its Extended Composition formation delivered its judgment in a case concerning an action for annulment of a Commission Decision concerning the termination of the applicant’s employment contract, the reemployment of the applicant, and the payment of all related costs:UGv.Commission(T-571/17RENV).
Wednesday 21 June
e EU member states ambassadors have reached an agreement on the Council’s position regarding the European Media Freedom Act (EMFA), which aims to protect media freedom, pluralism, and independence within the EU, establishing a common framework for media services in the internal market. e EMFA also includes measures to safeguard journalists and media providers from political interference and facilitatetheiroperationsacrossEUborders
Wednesday 21 June
e General Court rendered its judgment in Região Autónoma da Madeira v Commission (Case T-131/21) in which the Autonomous Region of Madeira challenged the European Commission’s decision to annul certain articles of the aid scheme implemented by Portugal in favor of the Madeira FreeTradeZone
ursday 22 June
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e ird Chamber of the Court of Justice delivered its judgment in regard to a case concerning an appeal regarding the impartiality of experts from the European Medicines Agency (EMA), within the context of the granting marketing authorization procedure of a medicinal product: Germany v Pharma Mar and Commission and Estonia v Pharma Mar and Commission(JoinedcasesC-6/21P;C-16/21P)
decision on the termination of an employment contract and the possible re-employment oftheformer
ursday 22 June
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e Court of Justice rendered its judgment, in a case concerning a preliminary ruling request seeking the interpretation of therighttoaccessofthedatasubject,wheretheconcerneddata subject has been an employee of the bank, which operates asthedatacontroller:PankkiS(C-579/21)
Advocate General Captea delivers rst OpiniononEPPORegulation
ursday 22 June
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Advocate General Capeta delivered her Opinion in G.K and Others (Europen Public Prosecutor’s Office) (Case C281/22), the rst case on the interpretation of the EPPO Regulation to reach the Court of Justice, concerning an investigation on the accused, suspected of having made false declarations in order to circumvent customs regulations when importingUS-originatedbiodieselintotheEuropeanUnion
ursday 22 June
e Court of Justice delivered its judgment in K.B. and F.S. (Raising ex officio of an infringement in criminal proceedings) (Case C-660/21), concerning two individuals who were located near a vehicle in a company car park and were arrested by thepoliceforsuspectedthe offuel
ursday 22 June
e Court of Justice handed down its ruling in Staatssecretaris van Justitie en Veiligheid (Case C-459/20), a preliminary reference submi ed by the Rechtsbank Den Haag, concerning the interpretation of Article 20 TFEU arising from a dispute between X, a national of ailand, and the Secretary of State for Justice and Security, regarding the la er’s refusal of X’s applicationforleavetoremain.
Advocate General Medina recommends Court of Justice set aside judgment in Public.Resource.Org and RighttoKnowv.Commission
ursday 22 June
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Advocate General Medina delivered her Opinion in PublicResourceOrgandRighttoKnowv EuropeanCommission (Case C-588/21 P), a case concerning access to the Commission’s documentsunderRegulation1049/2001.
ursday 22 June
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e First Chamber of the Court of Justice rendered its judgment in a case concerning an appeal, whereby the appellant sought, primarily, the annulment of ECB decisions, in accordance with which, he was dismissed from employment at the ECB, following the initiation of criminal proceedings: DI v BCE(C-513/21P).
EU law does not preclude a national law prohibiting a national court raising of its own motion an infringement in
Friday 23 June
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Official publication of Commission Implementing Regulation 2023/1201 on detailed arrangements for the conduct of certainproceedingsbytheCommission,pursuanttotheDigitalServicesAct,wasmadeintheOJ.
Friday 23 June
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e EFTA Surveillance Authority (ESA) issued a report, whereby it nds that Norway has made limited progress in addressing previous recommendations in the food and veterinary area.
Friday 23 June
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Following a thorough examination, ESA concluded that the concerned measures do not amount to State aid granted, withinthemeaningofArticle61(1)oftheEEAAgreement
Friday 23 June
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Today, the Council of the EU adopted the eleventh package of economic and individual measures to strengthen existing EUsanctionsagainstRussia.
Friday 23 June
eGeneralCourtruled,forthe rsttime,onthelegalstandingofanindividualMemberoftheEuropeanParliamenttochallenge aCommissionDelegatedRegulationandthestandingcriteriaapplicabletosuchacase.
Op-Ed on the Court of Justice’s judgment in BNP Paribas (C-567/21) concerning the principle of res judicata within thecontextoftheBrusselsIRegulation.
Op-Ed on the Court of Justice’s ruling in Meta Platforms Ireland v Commission (T-451/20) and Meta Platforms Ireland v Commission (T-452/20) concerning the European Commission’s antitrust investigations, which may affect fundamental rights, and the way the Courts interpret such rights, which canaffectthefateoftheCommission’sinvestigationsand,thereby, contribute but also undermine the effective application ofthelaw.
Op-Ed on the rati cation of the Istanbul Convention by the EUanditspositionvis-à-vistheadoptionofanadvancedEUdirective whose scope goes even beyond the one of the Conventionitself,especiallywithregardtoICT-facilitatedviolence.
Op-Ed on why the Members of the European Parliament are demanding further regulation in regard to AI, in addition to theproposedAILiabilityDirective.
by Elijah GranetAnalysis of the Court of Justice’s judgment in case IS & KS v YYY, S.A (C-570/21) regarding the clari cation of the de nition of ‘ consumer ’
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