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ESMA seeks clarity on crypto-asset regulation: reverse solicitation and classification of crypto-asset as financial instruments

21 February 2024

The Markets in Crypto-Assets (“MiCA”) Regulation is nearing its implementation, and the European Securities and Markets Authority (“ESMA”) released two crucial consultation papers on January 29th. The first one focuses on reverse solicitation and the other on the classification of crypto assets as financial instruments in light of the Markets in Financial Instruments Directive II (“MiFID II”). This article provides an overview of the insights they offer.

Consultation paper on guidelines on conditions and criteria for the classification of crypto-assets as financial instruments

ESMA is proposing a guidance on the conditions and criteria to classify crypto-assets as financial instruments, bridging the gap between the upcoming MiCA and the existing MiFID II regulations. This summary navigates the key points.

Where MiCA and MiFID II intersect:

  • MiCA steps in for crypto-assets not covered by existing EU financial instrument frameworks (though automatic application is not guaranteed).
  • Unlike MiFID II's fixed list in Annex I, MiCA leverages flexible criteria for individual crypto-asset assessments.
  • Whether a crypto-asset should be considered a financial instrument should remain a case-by-case exercise.
  • Technology neutrality: Financial instruments that have been tokenised should continue to be recognised as financial instruments in all regulatory contexts (adhering to the technology neutrality principle).

MiCA and MiFID II classification

The table below provides a visual representation of the five main scenarios when a crypto-asset is actually deemed as a financial instrument under MiFID II (therefore subject to MiFID and not MiCA rules):

Key characteristics

Scenario/ criteria

MiFID II equivalent

  • Negotiable on capital markets
  • Should be part of a « class of securities »
  • Should not be an instrument of payment

Grants rights similar to shares, bonds, or other securities

(e.g., securities embedding a derivative)

Transferable security

  • Legal and residual maturity
  • Stable value minimal volatility

Similar to short-term debt instruments

(e.g., a crypto-asset representing a short-term negotiable debt obligation issued by either a bank or a corporation)

Money-market instrument

  • No general commercial or industrial purpose
  • The absence of day-to-day control of the unitholders or shareholders over the entity

Represents pooled investment capital

Unit in collective investment undertakings

  • Has an underlying reference asset
  • Value fluctuates based on changes in the underlying asset

Digital representation of a contract with an underlying reference asset


  • Explicit emission right
  • Tradable

Represents a right to emit greenhouse gases within a regulated scheme

Emission allowance

A few other points


Unique, non-fungible tokens (“NFTs”) are not captured by MiCA’s scope. This means one-of-a-kind digital art, NFTs, or crypto-assets representing unique and non-fungible services or physical assets (such as product guarantees or real estate) are not subject to MiCA. However, the uniqueness is assessed based on individual characteristics and not just technical details. Collections with similar features, even with unique identifiers, may therefore fall under MiCA.

Subject to MiCA:

  • NFTs lacking true uniqueness: This applies to collections with similar attributes despite having unique identifiers.
  • Fractional NFTs: Each fraction loses its uniqueness as it represents partial ownership and can be combined with others.
  • NFTs valued based on comparison: If the value of one NFT depends on others in a series, they are no longer unique.

Importantly, the European Commission will review the need for regulating unique assets by December 2024.

Hybrid crypto-assets

ESMA acknowledges the challenge of classifying crypto-assets when they combine multiple characteristics and purposes, like acting as currency, offering utility, and holding investment value known as hybrid crypto-assets (“hybrids”). These hybrids are difficult to classify under one legal category, potentially creating regulatory uncertainty within both MiCA and MiFID II.

To address this, the focus would be on the specific rights, functions, and values associated with each asset, rather than just its label. A rigid and exhaustive classification system may not work due to the evolving nature of crypto-assets.

For hybrids, the key consideration under the consultation would be whether they exhibit characteristics of a financial instrument as defined by MiFID II. If so, classifying them as such would take priority to ensure regulatory clarity and consistency.

Consultation paper on guidelines on reverse solicitation under MICA

In this consultation, ESMA is seeking input on proposed guidance relating to the conditions of application of the reverse solicitation exemption and the supervision practices that National Competent Authorities (“NCAs”) may take to prevent its circumvention.

Reverse solicitation: refers to a situation where a client actively seeks out a service or product from a firm, rather than the firm actively soliciting the client.

In the context of MiCA’s Article 61, the reverse solicitation exemption allows certain third-country firms to offer crypto-asset services to EU clients even if they are not physically located in the EU and have not obtained a MiCA approval. However, this exemption comes with strict conditions and cannot be used by EU-based firms to avoid MiCA requirements.

Guidelines on the solicitation of clients by third-country firms


Key takeaway

What it means for Crypto-Asset Service Providers

Means of solicitation

Solicitation is broadly defined - it goes beyond traditional advertising to include online presence, social media, events, and even influencers

Need for transparency in all communications and avoid any activity that could be construed as actively attracting clients

Person soliciting

The concept of "soliciting" extends beyond direct firm actions and includes any individual, influencer, or even EU-regulated entity acting on the firm's behalf

Thorough monitoring of brand outreach

Exclusive client initiative

The reverse solicitation exemption relies solely on the client's genuine, unprompted initiative.


Proactive offer of additional services is prohibited

Firms must maintain detailed records of client interactions to demonstrate genuine client initiative

Type of crypto- assets

Marketing the same type of crypto-asset is permitted, but a case-by-case assessment based on the specific asset and its associated risks is mandatory to avoid having crypto-assets not similar in type and risk

Disguising high-risk offerings under seemingly familiar categories is prohibited

ESMA will consider feedback from both consultations, aiming to publish a final report by the end of 2024.

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