The Markets in Crypto Assets Regulation (MiCAR) will gradually take legal effect in the European Union from June 30, 2024. According to the regulation, a crypto whitepaper must be prepared when crypto assets are offered to the public and when they apply for admission to trading on a trading platform. In the first parts of the series, we addressed the content requirements of a MiCAR whitepaper, the marketing of tokens, and the publication requirements of a MiCAR whitepaper. In this sixth part of the series, we will analyse under which circumstances an investor is entitled to a right of revocation when purchasing crypto assets other than asset-referenced tokens or e-money tokens. According to the recitals of the regulation, a 14-day right of revocation should exist to protect retail investors in crypto assets.
Under Which Conditions Does the MiCAR Right of Revocation Apply?
Retail investors who purchase crypto assets other than asset-referenced tokens and e-money tokens either directly from the issuer of the crypto asset or from a crypto service provider enjoy a right of revocation. To this extent, MiCAR defines a retail investor as any natural person acting for purposes that are outside his or her trade, business, craft or profession. Similar to the right of revocation for consumers, only non-commercial investors can invoke a potential MiCAR right of revocation. Furthermore, it is a prerequisite that the retail investor purchases crypto securities directly from an issuer or from a crypto asset service provider that places crypto assets on behalf of that issuer. Retail investors entitled to a MiCAR right of revocation have a period of 14 calendar days to revoke their consent to purchase the relevant crypto assets free of charge and without giving any reason. The revocation period starts from the date of the retail investor’s agreement to purchase. In cases where the crypto assets were already admitted to trading prior to their purchase by the retail investor, the MiCAR right of revocation does not apply. If the provider of the crypto assets has set a time limit for its offer, the right of revocation cannot be exercised after that period.
Offeror Must Provide Information About the Right of Revocation and the Legal Consequences in the MiCAR Whitepaper
Offerors of crypto assets other than asset-referenced tokens or e-money tokens must provide information about the MiCAR revocation right in their MiCAR whitepaper. If the offeror fails to comply with this information requirement, the right of revocation is unlikely to be extended. However, in these cases, the MiCAR whitepaper is likely to be incomplete with the consequence that there is a risk of liability for the offeror. All payments received from a retail investor, including any fees, must be refunded within 14 days in the event of revocation. The period begins after the offeror has been notified of the Retail Investor’s decision to revoke the purchase of the crypto assets. For the refund, the provider must use the same means of payment that the retail investor used for the original purchase. This may be deviated from if this is expressly agreed with the retail investor and no fees or costs are incurred by the retail investor as a result of such alternative repayment.
Attorney Dr. Konrad Uhink
The lawyer responsible for providing advice on MiCAR whitepaper creation in our law firm is attorney Dr. Konrad Uhink.