Post Andrea Pantaleo and Francesco Lalli, DLA Piper –
After approving the final market text of the Crypto Asset Regulation (MiCA) last October, the European regulator preparing to face final formal steps before it is published, “disturbing” news has begun to spread about allegedly strict regulation of the spread of crypto influencers. Social media Information on relevant tokens and market prospects.
Crypto influencers, what’s up
However, if it is true that MiCA presents a specific system of market manipulation hypotheses derived from the dissemination of information through Social media , It is also necessary to specify that it is by no means a matter of suppressing an activity the influence Nor is there a general ban on this activity, and even more so when compared to the current system of financial instruments.
The “offending” provision (Section 80c) of the International Legal Procedure Code (MiCA) states that “Benefit from occasional or regular access to traditional or electronic media by posting an opinion about a crypto-asset, taking an investment position on a crypto-asset, and thus benefiting from the influence of spread opinions on the price of that crypto-asset, without first disclosing the conflict of interest in an appropriate manner and transparent (Free translation, English text).
MiCA legislation therefore does not provide for a general prohibition of publishing opinions about crypto assets, nor does it always and in any case involve market manipulation if it is likely to be appropriate to influence the market price of symbols. Indeed, it is necessary that the opinions on the one hand be published by someone who has previously held a position on this particular symbol, and that the same already benefits from his activity in the influence. Where only one of these conditions is not met, publicly shared opinions cannot constitute a case of market manipulation.
What has already been approved
It is understood that MiCA is penalized in any case, such as market manipulation, dissemination of false or misleading information about crypto-assets or for changing their price in an unnatural or artificial way, including “Rumors ” market, if one knew or should have known that it is bogus.
Furthermore, it should be noted that the MiCA forecast follows what has already been projected by the market abuse (MAR) discipline of market manipulation with financial instruments. The MAR (Article 12, Paragraph 1c) and Paragraph 2,d) actually contain nearly identical provisions with respect to the MiCA. Therefore, the invocation of the “severe” system towards cryptocurrency influencers does not seem appropriate at the moment when compared to the provisions of the applicable financial legislation. In fact, one could say that the MiCA system is less detailed and less rigorous than the MAR system.
Differences from Market Abuse Regulations
The MAR contains various additional provisions on the subject of “information to the public” that were not thought through in MiCA. In particular, the rules for investment recommendations, that is, those that MAR defines as “Information intended for distribution channels or the public, intended to recommend or suggest, expressly or implicitly, an investment strategy relating to one or more financial instruments or issuers, including opinions about the current or future value or price of such instrumentsTo which the European legislator has devoted a full delegated regulation (2016/958).
Therefore, the dissemination of information to the public about investment strategies within the MAR, regardless of whetherinfluencers Take an investment position to take advantage of it still needs to be executed properly and with disclosure Conflict of interest, as well as be accompanied by a detailed set of information, for example about the prices of the instruments, the form used for the recommendation, the previous recommendations and the frequency of their update. Furthermore, additional disclosure obligations are envisaged for so-called “experts,” that is, people who frequently suggest investment decisions and who present themselves as having financial expertise and experience. These provisions have also been the subject of clarifications and interventions by ESMA, the European supervisory authority, most recently in October 2021 specifically relating to investment recommendations shared on Social media.
Photo by Kelly Sikima for Unslash
Ftx can change cards
From this brief analysis, it becomes clear that the system of investment recommendations to the public is certainly more stringent for the world of “traditional finance” than for the world of crypto assets, for which the European legislator has prepared a set of regulations that – although largely following the “classic” financial instruments – are Less clear and detailed.
Also considering the market turmoil of the past few days and the events related to the bankruptcy of Ftx, one of the major exchanges around the world, it is reasonable to expect a review of the current legislation as well in terms of encryption effectHowever, at the moment there are significant differences attesting to the fact that, from the point of view of the legislator, the risks arising from the publication of recommendations to the public are more important in the traditional finance ecosystem than in the crypto-asset system.