European MiCA Laws & Sonar’s Readiness

Sonar | $PING
5 min readMay 4, 2023

by Iwan Spillebeen, Sonar Chairman

On April 20th 2023, MiCA provisions were voted on by the European Parliament and approved. The provisions will soon mature into law and EU member countries have a maximum of 12 months to implement the new regulatory framework. Sonar has already done the groundwork and company structuring to be in compliance with the new laws. MiCA brings consumer and investor protection, and most importantly opens up the doors for mass adoption of crypto.

Glossary of Terms:

  • MiCA: Market in Crypto Assets, European wide regulations coming into law for the crypto markets.
  • CASP: Crypto Asset Service Provider.
  • VASP: Virtual Asset Service Provider.
  • MFSA: Malta Financial Services Authority, the government body dealing with all financial services, including crypto.
  • EMT: E-money tokens: assets that maintain a stable value by referencing the value of an official currency, i.e. stablecoins.
  • ART: Asset-referenced tokens: assets that maintain a stable value by referencing any other value or combination of values or official currencies such as fiat, commodities, or crypto assets, i.e. a stablecoin variant.
  • Utility Tokens: All other crypto assets that are not EMTs or ARTs, which may be used for payment but are not stablecoins will be classified as ‘Utility Tokens’. This includes non-pegged payment tokens (BTC, ETH, etc), and utility tokens (assets which are only intended to provide access or utility to a good or service provider by the issuer of that token).

So where are we now?

The EU voted in favor of the MiCA or the “Market in Crypto Assets” regulations on the 20th April 2023, so what happens now?

First off, MiCA regulations were voted on 20/04/23 but they don’t actually come into force until 20 days later.

Then, several timelines begin:

  • Financial service authorities across Europe have a maximum of 12 months to align themselves with MiCA regulations.
  • Stablecoins have 12 months to submit and get authorised.
  • Any crypto asset service provider such as an exchange, custodian, broker or market maker, commonly referred to as either CASP or VASP and ICOs (utility tokens) have a maximum of 18 months to submit their notification to the regulators in their respective country.

Notification can be for one of two reasons: to issue tokens, or to list tokens.

So this means that projects will have to wait for their respective regulators to get aligned first and then they can apply for notification (presuming they are ready to do so, hint: Sonar is ready), so in most countries this will mean a minimum of 12 months waiting period.

The current MFSA regulations are more stringent than the MiCA regulations when it comes to Issuers. The MFSA is already aligned with MiCA when it comes to CASP / VASP from its previous regulations but there are others which need to be tuned, especially when it comes to Stablecoins and ICOs. We expect this process to take a few months and we will continue to monitor this and will provide updates when available.

Once aligned, we can get our Whitepaper (the one we created for MFSA registration) notified with the MFSA (a process that should be relatively quick) and from that point onwards we will officially be operating under MiCA regulations in line with the EU. Anyone will then be able to verify this fact independently with the MFSA, as Sonar will become an officially notified Whitepaper / Utility token project for the purposes of listing and trading all over Europe.

Why is that a good thing?

In short, MiCA offers consumer and investor protection, which is a very BIG thing for the crypto space as this brings crypto in line with existing and traditional EU financial services markets and regulations.

MiCA ensures legal coverage for all crypto assets (registered within the EU): EMTs, ARTs and Utility tokens.

The rules for EMTs and ARTs are more stringent than the rules for all other crypto assets, with one exception, NFTs. Since Sonar’s business doesn’t revolve around NFTs I’m not going to address them here.

Most projects will need prior registration as a CASP / VASP and hold a seat in the EU (legal office), i.e. they will need to run official operations in the EU. Hint: Sonar is already registered as such and operational in Malta.

Once registered, all projects must issue and notify to the authorities a Whitepaper before they offer the token to the public or list the token to centralised exchanges.

There are now standards introduced under MiCA for standardisation and reliability of Whitepapers, including but not limited to: the Issuer, the Crypto Asset Project, risks pertaining to the project, the rights and obligations attached to the asset, and any adverse environmental and climate related impact of the consensus mechanism of the asset. MiCA also requires disclosure, transparency, and governance rules for these assets.

One impact of this, as an example, is that retail token holders now hold a right to withdraw from the purchase of a token on the primary market within 14 days of purchase if the asset was not yet traded on a trading platform at the time of purchase. TL:DR; Bought ICO during presale? Hear stuff you don’t like about the project after purchase, withdraw from your purchase within 14 days.

For EMTs and ARTs, the rules are stricter and involve financial stability and monetary sovereignty stipulations, and particularly for EMTs. Safeguarding of received funds and rules around investment of received funds, all aimed at ensuring safer Stablecoins.

MiCA also introduces board accountability, and obligations for management bodies. And to further protect crypto asset holders, the management body of an entity can separately be held liable for the information provided to the public through the Whitepaper, (very similar to management being accountable for an IPO prospectus).

Lastly, MiCA also introduces a set of rules against market abuse similar to those that exist for traditional capital markets, prohibitions of insider trading, unlawful disclosure of inside information, market manipulation, as well as rules for the prevention and detection of market abuse.

And these rules potentially apply worldwide with regards to crypto assets that are admitted to trading on a trading platform operated by a CASP or for which a respective request to be traded has been made, irrespective of whether the action or omission actually takes place on the trading platform.

It makes the entire crypto space a whole lot safer for anyone to use, and should dramatically reduce shitcoins, rugpulls, honeypots and the likes for anyone trading crypto in EU registered projects.

Obviously, that doesn’t mean every project will be successful and every coin will moon, projects can still fail, so DYOR. But intentional pump and dumps would very much break the rules.

And forget about scenarios like this, where some guy is creating hundreds of meme coin scams in 1.5 months:

All in all, MiCA is a very good step towards making crypto a more reliable and safer trading space without removing its decentralised nature, which is a fantastic step to open the door for mass adoption and Sonar is ready to roll as soon as MFSA is aligned.

If there are additional questions about MiCA regulations and Sonar’s readiness, please feel free to ask them to @Iwan_Spillebeen in our main Telegram group.