Berlin 2.0

"Berlin is the city of startups and innovation. New ideas are developed and tried out here. The areas of Web3, crypto and fintech also play a crucial role on Berlin's path to becoming the innovation capital of Europe. With the House of Finance and Tech, Berlin now provides a central contact point for the fintech industry. Find more info on berlin.de/startups. We warmly welcome the experts and innovators to Berlin!" Franziska Giffey, Senator for Economic Affairs, Energy, and Public Enterprises

Following the roundtables in London, Berlin, Vienna, and Brussels, the fifth MiCAR Roundtable was held on the 20th of August in Berlin in partnership with Siedler Legal, thinkBLOCKtank, and Validvent, in collaboration with Berlin Partner, the Web3 Foundation, and Blockchain Bundesverband. This roundtable was also supported by the Berlin Senate Department for Economic Affairs, Energy, and Public Enterprises.

The event featured an introductory note from Franziska Giffey, Senator for Economic Affairs, Energy, and Public Enterprises, along with a keynote by Joachim Schwerin, Principal Economist at the European Commission. This roundtable included expert contributions from Anja von Rosenstiel (FINLAW) on Automated Market Makers (AMMs) as public offers, Axel von Goldbeck (Möhrle Happ Luther) on past communication as a public offer, and Dr. Nina-Luisa Siedler (siedler legal) on reverse solicitation for crypto-asset offerors.

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AMM as public offer

The discussion explored whether AMMs, which enable the exchange of digital assets through liquidity pools, could be considered a public offer under MiCAR or whether they would fall under the regulatory remit of CASPs. This topic raised concerns about whether providing liquidity or advertising the availability of liquidity pools constitutes a public offer, requiring regulatory oversight. The consensus was that liquidity providers do not directly conclude transactions with users, so AMMs generally do not fall under public offer provisions. However, situations where liquidity pools are publicly advertised may need clarification.

Call to Actions

Clarify the Definition of Public Offers in DeFi: Regulators should establish clear criteria for when AMM activities qualify as public offers under MiCAR.
Set Parameters for Market Manipulation: CASPs should develop standards to detect and prevent price manipulation schemes using AMMs.
Develop Risk Disclosure Mechanisms for Liquidity Providers: Ensure pre-trade transparency regarding risks like impermanent loss and price slippage.
Differentiate Between Fully and Partially Decentralised AMMs: Define criteria for distinguishing between fully decentralised and partially decentralised AMMs to establish proper oversight.

Past communication as current offer

This session addressed the regulatory complexities surrounding past public offers made before MiCAR’s enactment. Many issuers have publicly offered tokens in the past, and the question arises whether these past communications, if still accessible, could trigger MiCAR obligations. Issuers might need to review or retract old content on websites and social media to avoid unintentionally offering tokens under the new regulatory framework.

No reverse solicitation for offerors?

The lack of an explicit reverse solicitation exemption for crypto-asset offerors under MiCAR was discussed. Unlike CASPs, offerors do not enjoy the same reverse solicitation protections. The roundtable examined whether the absence of this provision implies stricter regulations for offerors and how to ensure consistent treatment across the crypto ecosystem.

Call to Actions

Clarify the Retroactive Application of MiCAR: Regulators must provide clear guidance on whether and how MiCAR applies to public offers made before its enactment.
Request ESMA to Issue Specific Guidance: Ensure that ESMA addresses this in its forthcoming MiCAR FAQs.
Encourage Proactive Declarations by Offerors: Recommend that offerors publish statements clarifying that past communications no longer hold binding effect post-2024.

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Call to Action

Extend Reverse Solicitation to Crypto-Asset Offerors: Ensure that reverse solicitation principles from the Prospectus Regulation apply to crypto-asset offerors under MiCAR.
Define Clear Parameters for Reverse Solicitation: Establish guidelines for distinguishing between investor-initiated transactions and marketing activities by offerors.
Prevent Misuse of Reverse Solicitation Claims: Ensure offerors cannot use reverse solicitation to bypass MiCAR’s public offering requirements.