Fernando Lopes: crypto, tokens and NFTs according to the EU

The proposed regulation created by the European Union, recognized by the abbreviation MiCA, Market in crypto-assetsThe ultimate model of which will likely be voted on shortly, is pioneering in the sense of offering interoperability between a few of the predominant kinds of crypto-assets.

The method utilized by the European legislator begins with a common definition, in a position to cowl all classes, subsequently to make clear three predominant subcategories, lastly including different species, reminiscent of cryptocurrencies and NFTs, To describe, as required by the context of the doc. ,

that is why, On Article 3 of the proposal introduces the common idea of crypto-assets, that’s: representations of worth or rights that may be transferred electronically by means of the use of DLT (distributed ledger applied sciences) or related applied sciences[1],

Having established this common idea, the existence of three species, or “three subcategories of cryptoassets that must be separate and topic to completely different regulatory necessities based mostly on the threat they supply” [2]

These three subcategories are as follows: asset-referenced tokenAnd-cash token And utility token,

are asset-referenced tokens good contract [3] Used for the goal of representing the worth of one other asset or proper, as happens, for instance, in circumstances the place the token issuer states that its worth is equal to one gram of gold or another commodity.

However, when the asset represented is the official foreign money of a rustic, it token [4] is named e-money token, Ultimately, a utility token is a way to an finish, that’s, the possession of this kind of token ensures the holder entry to sure items or companies.

NFTs have been outlined as cryptoassets “Unique and non-replaceable with different crypto property, together with digital artwork and collectibles, whose worth is attributed to the holder based mostly on the distinctive traits of the utility” [5],

These cryptoassets, though outlined, weren’t regulated as a result of, given their traits, they’ve restricted monetary use, and don’t current a considerable threat to the system or customers. [6],

However, demonstrating technical information about the market, the European legislator didn’t exclude the so-called regulatory framework. partial nft [7]That is, elements of an NFT are traded in the market, though every half has a singular identifier, technically known as a TokenID.

In this sense, elements of the single, irreplaceable crypto property shouldn’t be thought of distinctive and irreplaceable [8]just isn’t being excluded from the proposed regulation.

so known as actual property token (actual state)whether or not represented by an NFT or by a token [9]Unless they’re used to signify an irreplaceable asset, reminiscent of a home, they’re additionally appropriately excluded from regulation. [10],

Finally, cryptocurrencies like bitcoin are additionally outlined and logically excluded from regulation[11]And it must be thought of “mechanically created as a reward for sustaining the DLT system or for validating transactions in the context of utilizing a consensus mechanism”.[12],

It is vital that the distinction between the technical and authorized elements is at all times clear, as a single token, which is technically thought of a sensible contract created according to the ERC20 customary or some other, can be utilized for any of the three authorized sorts. can be utilized to signify a token, that’s: asset-referenced token, e-money token And utility token.

In this context, even in the case of NFTs, it isn’t the denomination or the expertise that will likely be decisive for the imposition of authorized results, the authorized rule of substance being legitimate:

“This regulation must also apply to crypto property that seem to be distinctive and non-replaceable, however whose bodily traits or traits associated to precise use could not make them both redeemable or distinctive. In this sense, when valuing or classifying them Competent authorities ought to undertake the form-over-substance method, in order that the traits of the asset in query decide its eligibility, not the designation assigned by the issuer. [13], (free translation).

Furthermore, the exclusion of some crypto-assets is at the will of the legislator who just isn’t sure to legislate for the whole lot, and should at all times adjust to the goals of the regulation, particularly: client safety, authorized certainty, selling innovation. and monetary stability.


[2] “Three sub-categories of crypto-assets that must be segregated and topic to completely different necessities based mostly on their dangers”. Ibid., p.13

[12] “mechanically created as a reward for the upkeep of DLT or the affirmation of transactions in the context of a consensus mechanism”. Ibid., p.17

Fernando Lopes is a lawyer, founding member of the Brazilian Institute of Economic Criminal Law, authorized advisor for the CyberSkys undertaking and professor of funding and postgraduate programs. blockchain offers EA Banking School,

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