Reverse solicitation as per MiCA Regulation

As per art. 61 of the Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets, and amending Regulations (EU) No 1093/2010 and (EU) No 1095/2010 and Directives 2013/36/EU and (EU) 2019/1937 (the “MiCA Regulation”) where a client established or situated in the Union initiates at its own exclusive initiative the provision of a crypto-asset service or activity by a third‐country firm, the requirement for authorization under Article 59 shall not apply to the provision of that crypto-asset service or activity by the third‐country firm to that client, including a relationship specifically relating to the provision of that crypto-asset service or activity.

Without prejudice to intragroup relationships, where a third‐country firm, including through an entity acting on its behalf or having close links with such third‐country firm or any other person acting on behalf of such entity, solicits clients or prospective clients in the Union, regardless of the means of communication used for the solicitation, promotion or advertising in the Union, it shall not be deemed to be a service provided on the client’s own exclusive initiative.

The previous subparagraph shall apply notwithstanding any contractual clause or disclaimer purporting to state otherwise, including any clause or disclaimer that the provision of services by a third-country firm is deemed to be a service provided on the client’s own exclusive initiative.”

Generally speaking, the “reverse solicitation exemption” refers to the provision of crypto-asset services or activities by a third-country firm initiated at the own exclusive initiative of a client.

ESMA has currently initiated a consultation paper on the draft guidelines on reverse solicitation (the “Consultation paper”) under the MiCA Regulation. Among the highlights of the Consultation paper, we mention:

  • The exemption of “reverse solicitation” should be interpreted narrowly and only for a short time in general, and it should not be used to avoid the application of the MiCA Regulation. This means that a third-country firm that uses the exemption cannot offer the client more crypto-assets or services at a later stage, even if they are similar to what the client asked for, unless they are part of the same transaction. The Consultation paper does not give a specific time limit for the coverage of this exemption, but if a third-country firm makes another offer after a month or even a few weeks from the first crypto-asset service that the client requested on their own, then the article 61 regulating the exemption would not apply.
  • ESMA also views that the concept “solicitation” should be understood in the widest sense. This covers any kind of marketing, advertising or proposing of crypto-asset services or activities to clients or potential clients in the European Union, no matter if it is done through online ads, pamphlets, phone calls, in-person meetings, press releases, social media sites or mobile apps.
  • To determine if third-country firms are marketing to clients who are based or live in the European Union, all the details and situations of the case should be taken into account. For instance, a website that uses an official language of the European Union could be a strong sign that a third country firm is targeting clients who are in that region. On the other hand, geo-blocking the website for such clients would be a strong indication that a third-country firm is not trying to solicit clients in the European Union through that website.
  • Note should be made that the concept of person soliciting should be understood as meaning a third-country firm or anyone acting on its behalf. Also, in ESMA’s opinion, the connection between the third-country firm and the person soliciting clients on its behalf does not have to be a contractual one.

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