IRELAND Law and Practice Contributed by: Niall Esler, Shane Martin, James O’Doherty and Laura Whitson, Walkers
Significance of MiFID II Definition of Transferable Securities to Regulatory Approach
In a recent letter to the EBA and ESMA, the Euro - pean Commission called for “no-action letter” with regard to the enforcement of the require - ments on authorisation in PSD2 in terms of ser - vices with EMTs provided by CASPs that may be
The MiFID Regulations apply to financial instru - ments, including those issued by means of DLT. One area of focus has been whether a particular blockchain asset qualifies to be considered as a MiFID II financial instrument, typically focused on the definition of a transferable security. Certain types of crypto-assets could instead qualify as other MiFID II financial instruments, such as units in collective investment undertak - ings, money-market instruments or derivatives; a case-by-case analysis is required. Depending on classification, a range of other regimes could be triggered – eg, a transferable security falls within the regulatory scope of, inter alia, MiFID II, the Prospectus Regulation and MAR. In December 2024, ESMA published its Final Report on the Guidelines on the conditions and criteria for the qualification of crypto-assets as financial instruments, which provides further clarity on the approach to be taken. Crypto-Assets and Payment Services Under the Electronic Money Directive Only electronic money institutions authorised under the Electronic Money Directive and credit institutions can issue EMTs – ie, crypto-assets that purport to maintain a stable value by refer - encing the value of one official currency. If a person performs “payment service” as listed in PSD2 with a blockchain asset that qualifies as “electronic money” under the Electronic Mon - ey Directive, such activity would fall within the scope of PSD2 by virtue of constituting “funds” .
inadvertently covered by the PSD2. 10.4 Regulation of “Issuers” of Blockchain Assets
Assuming the blockchain assets are not gov - erned by any existing EU legislation, the issu - ance of crypto-assets is governed by MiCAR. See 1.1 Evolution of the Fintech Market regard - ing the regulatory framework in MiCAR for issu - ers of crypto-assets, including issuers of ARTs and EMTs. 10.5 Regulation of Blockchain Asset Trading Platforms Where blockchain assets constitute MiFID II financial instruments such as transferable secu - rities, the operation of a trading platform will be in the scope of existing regulatory regimes. The operation of a trading platform may involve the issuance of electronic money or the provi - sion of payment services, in order to facilitate wallet and payment features. MiCAR imposes requirements on CASPs oper - ating a trading platform for crypto-assets or engaging in exchange services between crypto- assets and/or crypto-assets and funds. 10.6 Staking MiCAR does not contain provisions specific to staking and therefore does not create specific requirements or licensing obligations for staking. However, the European Commission confirmed that where the staking service provider holds the private keys to the staked crypto-assets, the ser -
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