SWEDEN Law and Practice Contributed by: Niclas Rockborn, Rikard Sundstedt and Robin Entenza, Gernandt & Danielsson
Under MiCA, issuers are required to publish a white paper before making a public offering of crypto-asset tokens or seeking their admission to trading on a trad- ing platform (see 2.4 Token Issuance ). Separately from the regime applicable to issuers, MiCA governs crypto-asset services including cus- tody, operating trading platforms, exchange services (crypto-to-fiat and crypto-to-crypto), order execution, placement, reception and transmission of orders, advising, portfolio management and transfer servic- es. These broadly correspond to investment services under MiFID II, but relate to crypto-assets rather than financial instruments. Providing these services requires MiCA authorisation and entails various regulatory obligations, including organisational and disclosure rules, safekeeping of cli- ent funds, outsourcing requirements, conduct rules (including an obligation to act honestly, fairly and pro- fessionally in clients’ best interests), and prudential requirements such as maintaining own funds. Client Categorisation MiCA does not establish a formal client categorisa- tion framework of “retail” versus “professional” clients comparable to the tiered system under MiFID II. How- ever, there are elements of investor protection embed- ded in MiCA whereby the sophistication of each indi- vidual client is taken into account. Specifically, in the context of providing advice or portfolio management relating to crypto-assets, MiCA stipulates a require- ment for service providers to assess whether the crypto-asset services or crypto-assets are suitable for their clients. In fulfilling this requirement, firms are required to obtain from their clients or prospective cli- ents the necessary information regarding: • their knowledge of, and experience in, investing, including in crypto-assets; • their investment objectives, including risk toler- ance; • their financial situation, including their ability to bear losses; and • their basic understanding of the risks involved in purchasing crypto-assets, so as to enable crypto- asset service providers to recommend to clients
or prospective clients whether or not the crypto- assets are suitable for them. In relation to crypto-asset issuing activities, MiCA draws a more formal distinction based on investor type. In order to benefit from the exemption from authorisation requirements for issuing asset-refer- enced tokens, one of the criteria is that the offer is addressed solely to qualified investors and the asset- referenced tokens can only be held by such qualified investors. In this context, qualified investors are pri- marily institutional investors, large undertakings, and national or regional governments, central banks and international or supranational institutions. 2.3 Regulated Firms and Legal Wrappers Regulation of Legal “Wrappers” – Alternative Investment Funds By using a legal wrapper, for example an alternative investment fund, as an indirect vehicle to give inves- tors exposure to underlying crypto-assets without directly investing in crypto-assets themselves, the sectoral rules governing crypto-assets will, in princi- ple, be replaced by sectoral rules governing alterna- tive investment funds instead – in so far as it concerns the relationships with ultimate investors. A key practical consequence is that alternative invest- ment fund managers (AIFMs), already regulated under sectoral legislation, are not subject to authorisation by or notification to the SFSA under MiCA. However, using a fund wrapper introduces different regulatory and practical consequences affecting both the service providers and investors. For example, in an alternative investment fund structure, depositary requirements impose liability on the depositary for losses of the fund’s assets, which can be complex when the underlying assets are crypto-assets subject to risks of DLT malfunctions or cyberattack-related misappropriation. Regulated Firms/Funds with Exposure to Digital Assets Regulatory capital requirements for credit institutions and large investment firms stem primarily from Regu- lation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential
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