CZECH REPUBLIC Law and Practice Contributed by: Ondřej Mikula, Jan Šovar and Markéta Klabouchová, FINREG PARTNERS
10.10Regulation of Funds The activity of investment funds, including those investing in crypto-assets, is regulated under the AMCIF in the Czech Republic. The CNB has issued an opinion on the possibility for investment funds to invest in crypto-assets. The opinion only discusses crypto-assets that do not qualify as “financial instruments” . The standard rules governing investments in “finan - cial instruments” therefore apply otherwise. According to the CNB position, only investment funds for qualified investors may invest in cryp - to-assets as their investment policy is not regu - lated by the legislation. On the other hand, funds that are offered to retail investors; ie, standard (UCITS) or special investment funds (AIF), can - not invest in crypto-assets due to the limited scope of permissible assets they can acquire. 10.11Virtual Currencies See 10.3 Classification of Blockchain Assets . 10.12Non-Fungible Tokens (NFTs) There is no specific regulation regarding non- fungible tokens (NFTs) and NFT platforms in the Czech Republic. This is mainly because NFTs have a great variety of characteristics and pur - poses that may require different levels of regula - tion. However, depending on the characteristics of the NFT, including its purpose and the rights and assets it represents, it may fall within the scope of existing financial services regulation. This can be demonstrated using the practical example of the AML/CFT legislation in the Czech Republic, which excludes crypto-assets that are unique, not fungible with other crypto-assets and cannot be used for payment or investment purposes from its scope. On the other hand, unique and not fungible crypto-assets used for
making payments or investment will be covered therein. It is quite similar in the case of MiCA, which excludes crypto-assets that are unique and not fungible with other crypto-assets from its scope, but at the same time lays down quite detailed criteria for determining when they are indeed NFTs (see Recitals 10 and 11 and Guide - line 8 of the ESMA Guidelines on the conditions and criteria for the qualification of crypto-assets as “financial instruments” ). Therefore, a case-by-case analysis is necessary to determine whether NFTs and NFT platforms fall under the scope of any regulation. As a result of the transposition of PSD2 into Czech Republic law, credit institutions are required to allow authorised third parties to access their customers’ payment data via a secure application programming interface (API). This has opened the EU payment market to innovative payment services providers relying on access to payment accounts (payment initia - tion services and account information services), allowing for more competition. However, as open banking remains limited in the Czech Republic and in the EU in general, legisla - tive changes will be introduced under the forth - coming PSD3/PSR/FIDA framework to, inter alia, strengthen open banking and open finance more generally. 11. Open Banking 11.1 Regulation of Open Banking 11.2 Concerns Raised by Open Banking Since open banking relies on sharing custom - ers’ personal data, it poses various data protec - tion and security risks, including data hacking or cyber-attacks on APIs.
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