ESTONIA Law and Practice Contributed by: Yuliya Barabash, Ivan Nevzorov, Daria Lysenko and Nikita Prokopenko, SBSB FinTech Lawyers
10.5 Regulation of Blockchain Asset Trading Platforms The regulation of blockchain asset trading platforms in Estonia, as in the EU in general, is mainly determined by MiCA regulation. Platforms that organise trading fall under Class 3 crypto regulation and require a CASP licence from Finantsinspektsioon . Licensed platforms must strictly comply with requirements, in particular regarding trading transparency, protection of client assets, AML/CFT control, and risk management. The same rules apply to secondary market trading through intermediaries; and in the case of peer-to-peer trans - actions without the involvement of a licensed provider, regulatory control is limited, but transactions may still be indirectly subject to sanctions and AML require - ments. 10.6 Staking Estonia here relies on the European Securities and Markets Authority (ESMA) clarification of the staking activity. In its narrow meaning, staking is the process of immobilising crypto-assets to support the opera - tions of proof-of-stake and proof-of-stake-like block - chain consensus mechanisms in exchange for the granting of validator privileges that can generate block rewards. MiCA does not contain provisions specific to staking. It does not therefore prohibit staking, and staking as such is not subject to specific requirements or licensing. As opposed to staking, where crypto-asset holders engage themselves directly on a proprietary basis with the distributed ledger protocol to stake their assets to obtain validator privileges and eventually collect associated block rewards, or where they commit their assets to a liquidity pool in return for a yield, staking services (also referred to as staking-as-a-service) are provided to clients for a consideration by intermediar - ies that undertake to stake the clients’ crypto-assets on their behalf. The staking service provider will col - lect the yield or obtain the validator privileges allowing them to earn block rewards. This yield or these block rewards are then distributed between the service pro - vider, as consideration for their service (staking the assets on the client’s behalf, exercising validator obli - gations and collecting the block rewards, etc), and the staking service provider’s clients, who are the ultimate owners of the crypto-assets that are staked.
are regulated in a manner similar to electronic money issued by e-money institutions. Issuers are required to obtain authorisation as a credit insti - tution or electronic money institution and must comply with applicable capital, safeguarding and operational requirements. • Other crypto-assets include a broad category of digital assets that do not qualify as asset-refer - enced tokens or e-money tokens. This category commonly includes utility tokens, which provide access to a specific product or service. Under MiCA, these assets are subject to a more flexible regulatory approach that reflects their diverse char - acteristics and use cases. For example, issuers of certain utility tokens may be required to prepare and publish a crypto-asset white paper and com - ply with transparency obligations. NFTs are generally excluded from the scope of MiCA when they are genuinely unique and non-fungible, although collections or fractionalised NFTs may fall within the regulation. 10.4 Regulation of “Issuers” of Blockchain Assets Estonian, as well as European regulation of blockchain asset issuance, relies on MiCA regulation. Issuers of certain assets must prepare and publish a crypto- asset white paper disclosing information, in particu - lar, about the project, risks, investor rights, mandatory warnings about the asset, and notify the regulatory authority. For asset-referenced tokens and e-money tokens, the rules are stricter, and companies must apply to Finantsinspektsioon for permission before making a public offering. For blockchain assets with the characteristics of financial instruments, financial regulation rules apply, including the preparation of the issuance process. The tokenisation of real assets in Estonia faces com - mon challenges, mainly related to the determination of property rights and the application of legislation, as well as the need to make changes to registers and other matters in the event of a change in tokens with - out an automatic format.
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