AUSTRIA Trends and Developments Contributed by: Oliver Völkel, CERHA HEMPEL
Liquid staking service A token received as part of a liquid staking service could be considered as representing a share in the staking rewards generated by the pooled staked assets. Typically, users delegate their tokens to a stak - ing service provider, who manages the staking pro - cess on their behalf. These tokens often represent a claim to both the staked assets and the rewards gen - erated from them. However, such crypto-asset should only be regarded as a unit of a collective investment undertaking if there is collective management by a third party following a predefined investment policy. This would be the case if users could trade their stak - ing tokens without restrictions and maintain day-to- Despite the ESMA guidelines, grey areas remain. The supervisory authority itself emphasises that its guide - lines provide general principles for classification, but the assessment as to whether a crypto-asset is con - sidered a financial instrument should remain a case- by-case exercise. The responsible market participants remain dependent on legal opinions. How Third-Country CASPs Prepare for MiCA – day control over them. Case-by-case exercise Generally, third-country firms may not solicit clients in the EU as they are not authorised to provide CASP services in the Union. There is only one exemption – if the client on its own, exclusive initiative contacted the firm and requested the service, the third-country firm may provide it (Article 61 MiCA). The rationale for this exemption is that clients will not be excluded from using third-country firms if they choose to do so without having been solicited by such firms. In any case, it should be understood as applying in very limited and narrow circumstances. Although often referred to as the reverse-solicitation exemption, it is actually a prohibition: a prohibition for third-country firms to solicit clients established or situated in the EU, unless the crypto-asset service was requested at the own exclusive initiative of the client. It also states that in order to make sure that clients of CASPs bene - fit from the full rights and protections afforded to them under MiCA and that EU CASPs are not put at a com - Reverse Solicitation Adieu What is reverse solicitation?
to a comprehensive set of EU regulations, such as the Prospectus Directive and Market Abusive Directive. A misclassification can therefore lead to violations of regulatory requirements and may result in administra - tive sanctions, civil or even criminal liability, as well as reputational damage. The responsibility for correct classification lies primar - ily with those offering crypto-assets to the public or MiCA strongly commits to technology neutrality: the classification of crypto-assets is based on their inher - ent characteristics regardless of their technological format. The authorities focus on the rights and obli - gations that define the legal and economic profiles of crypto-assets. A prime example for this approach is the treatment of unique and non-fungible tokens, which are assessed solely on their economic char - acteristics, regardless of the underlying technology. Governance rights in blockchain protocols Governance rights in blockchain protocols have become noticeably more common in recent years, as they enhance decentralisation and foster community engagement. These tokens allow their holders to par - ticipate in protocol governance. Depending on how the token rights are structured, they might resemble securities. Crypto-assets that grant governance rights solely on technical matters or operational changes, such as protocol upgrades and fee adjustments, should be distinguished from securities. They do not provide traditional shareholder powers and do not grant influ - ence over corporate governance decisions. In con - trast, tokens that grant voting rights in the company’s decision-making process, allowing holders to partici - pate in corporate governance decisions such as elect - ing board members or approving mergers and acqui - sitions, should be considered financial instruments. In general, governance rights in blockchain protocols therefore do not equate to the voting rights typically associated with traditional securities. However, if they provide such traditional shareholder powers, they will fall under MiFID II. seeking their admission to trading. Substance-over-form approach
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