The European Securities and Markets Authority (ESMA) has issued guidelines on situations where a third-country firm is deemed to solicit clients established or situated in the EU, aiming to prevent circumvention of the reverse solicitation exemption under MiCAR (the "Guidelines"). These Guidelines are based on Article 61(3) of MiCAR. Specifically, they aim to foster convergence and promote consistent supervision regarding the risk of abuse of Article 61, which includes provisions for crypto-asset services provided at the exclusive initiative of the client. According to the Guidelines, the solicitation of clients by third-country firms should be construed broadly and in a technology-neutral manner, while the client's own exclusive initiative should be construed narrowly. This approach by ESMA aims to prevent misuse of the "reverse solicitation" concept by many third-country firms, including European parties with a third-country presence, and clarify what constitutes a client's "own initiative." In this memo, we present a summary of the four guidelines along with the annex.
Guideline 1 – Methods of Solicitation
Guideline 1 states that solicitation encompasses the promotion, advertisement, or offering of crypto-asset services or activities to clients or potential clients within the Union by any means. This includes, but is not limited to, internet advertisements, phone calls, emails, banners, pop-ups, and similar tools on websites and social media, affiliation campaigns, targeted advertising, invitations to complete a response form, or to attend a training course.
Educational materials, training sessions, and industry events that are purely educational or focused on sharing knowledge about underlying technologies or industry innovations should not be considered solicitation. However, these materials and events would be deemed to promote the third-country firm or its crypto-asset services or activities if, for example, the audience is directed to the firm's website, given access to the services offered by the firm, handed brochures related to the crypto-asset services, invited to complete a client profile, or if the firm's services are promoted in any manner.
Guideline 2 – Person Soliciting
Solicitation can be conducted by the third-country firm itself or by any person acting on its behalf or having close links with the firm. A person acting on behalf of a third-country firm may do so either explicitly through a contract or implicitly via an informal agreement. The presence of any form of remuneration or benefit (monetary or non-monetary) provided by the third-country firm to the third party is a strong indication that the third party is acting on behalf of the firm. However, the absence of remuneration or benefit does not necessarily exclude the possibility that the person may be acting on behalf of the third-country firm.
The provision of crypto-asset services following solicitation on behalf of a third-country firm by a person or entity regulated in the EU should still be regarded as a breach of MiCAR. For example, an EU credit institution, investment firm, or payment service provider should not redirect clients (e.g., via its website) to crypto-asset services provided by a third-country firm, regardless of whether the third-country firm is part of the same group.
Guideline 3 – Client's Exclusive Initiative
The reverse solicitation exemption is based on the premise that the crypto-asset product, service, or activity is provided at the client's own exclusive initiative. Article 61(2) of MiCAR allows the third-country firm to market crypto-assets or crypto-asset services or activities of the same type to that client. However, the requirement that the crypto-asset services be provided based on the client's own exclusive initiative still applies.
For instance, if the client contacts the third-country firm to purchase crypto-asset X, the firm may market crypto-assets of the same type to the client at that time. However, the firm would not be entitled to market further transactions involving crypto-asset X or similar crypto-assets to the client a month later. Third-country firms should maintain records tracking the relationship with the client, particularly whether the client has initiated the request for crypto-asset services regarding a new product.
Guideline 4 – Same Type of Crypto-Asset or Service
The reverse solicitation regime allows a third-country firm to market crypto-assets or crypto-asset services or activities of the same type within the context of a relationship initiated by the client.
A third-country firm wishing to use this possibility should assess whether the crypto-assets or crypto-asset services or activities belong to the same type on a case-by-case basis, considering elements such as (i) the category of the crypto-asset or service offered and (ii) the risks associated with each crypto-asset or service.
The categorization of crypto-assets and services used by the third-country firm should be detailed enough to ensure that the reverse solicitation exemption cannot be used to circumvent the authorization requirements under Article 59 of MiCAR. Below is a non-exhaustive list of pairs of crypto-assets that should not be considered as belonging to the same type for the purpose of the reverse solicitation exemption:
- Utility tokens, asset-referenced tokens, or electronic money tokens;
- Crypto-assets not stored or transferred using the same technology;
- Electronic money tokens not referencing the same official currency;
- Asset-referenced tokens primarily based on fiat currencies and asset-referenced tokens with significant cryptocurrency weightings;
- Liquid and illiquid crypto-assets;
- Crypto-assets other than asset-referenced tokens and electronic money tokens with a non-identifiable offeror and crypto-assets other than asset-referenced tokens and electronic money tokens with an identifiable offeror.
The examples above should not be interpreted a contrario. For instance, electronic money tokens not referencing the same official currency do not belong to the same type. However, the fact that two electronic money tokens reference the same official currency does not necessarily imply that they are of the same type. Similarly, crypto-assets not stored or transferred using the same technology do not belong to the same type. However, crypto-assets stored or transferred using the same technology are not necessarily of the same type.
The Guideline's Annex provides a non-exhaustive list of examples of circumstances where a third-country firm is likely to be regarded as soliciting clients in the Union. The Guidelines along with the Annex may be accessed by clicking this link.
Conclusion
ESMA has released consultation packages for drafting technical standards and collaborated with national competent authorities (NCAs) to ensure a convergent approach to the authorizations of crypto-asset service providers (CASPs) during the transitional phase. The aim of this supervisory convergence work is to align supervisory expectations for entities offering crypto-asset services across EEA jurisdictions during MiCAR's transitional period and to promote consistent practices from the outset, starting with the authorization regime.
Although MiCAR entered into force in June 2023, the CASP licensing application became effective in January 2025. As CASPs are now licensed and regulated entities, it remains to be seen how competent authorities will apply MiCAR and implement effective supervisory practices to ensure the common, uniform, and consistent application of the provision of crypto-asset services at the exclusive initiative of the client, considering ESMA's approach.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
