A White Paper is a mandatory disclosure document required under the European Markets in Crypto-Assets Regulation (MiCAR). This document is essential for any entity intending to trade tokens within the European Union.
According to BaFin (the Federal Financial Supervisory Authority), a White Paper should provide a clear, accessible summary of essential information about both the provider and the crypto-asset.
White Paper requirements and obligations
Any entity offering crypto-asset services must prepare and publish a White Paper. This document must detail not only the services offered but also clearly outline the risks associated with crypto-asset operations.
Crypto-Asset Service Providers (CASPs) – legal entities or businesses offering crypto-asset-related services – must handle the preparation, notification, and publication of the White Paper when:
- Offering electronic money tokens
- Trading asset-referenced tokens (ARTs)
- Dealing with other crypto-assets
Regulatory process and requirements
The publication of a White Paper is mandatory before:
- Offering crypto-assets to the public
- Applying for trading admission
Prior to publication, the White Paper must undergo review and obtain approval from the relevant regulatory authority.
The authority verifies that:
- All regulatory requirements are met
- Information provided is complete and accurate
Following approval, the document must be published on the CASP's website, remaining freely accessible throughout the offering period.
A White Paper is required for:
- Any public offering of asset tokens
- Trading admission applications
- Cases where the issuer does not seek public offering authorization or trading admission (for offerings under €5,000,000 or those limited to qualified investors).
Essential White Paper Components
Under MiCAR regulations, a comprehensive White Paper must include:
- Issuer Information
- Complete corporate identification
- Legal documentation
- Organizational structure and governance
- Company history and background
- Crypto-Asset Specifications
- Asset classification and type
- Token functionality and characteristics
- Reference value and use cases
- Implementation framework
- Offering Strategy
- Clear objectives for the issuance
- Detailed allocation of raised funds
- Project implementation roadmap
- Financial planning
- Risk Assessment
- Comprehensive analysis of investment risks
- Technical and operational considerations
- Regulatory compliance factors
- Market-related risks
- Rights and Obligations
- Investor entitlements
- Token holder privileges
- Issuer responsibilities
- Governance participation rights
- Technical Framework
- Blockchain infrastructure details
- Protocol specifications
- Security measures
- Operational efficiency features
- Distribution Strategy
- Token allocation timeline
- Distribution methodology
- Investor categorization
- Access procedures
- Regulatory Compliance
- MiCAR regulation adherence
- Data protection measures
- Financial transparency protocols
- Ongoing compliance monitoring
- Information Disclosure
- Regular reporting commitments
- Update procedures
- Communication channels
- Transparency measures
Enforcement and penalties
Regulatory authorities may impose various measures for non-compliance:
Financial penalties
- Monetary fines ranging from €2,066 to €10,329
- Investor compensation requirements
- Financial restitution obligations
Criminal sanctions
- Imprisonment terms of six months to four years
- Applicable to unauthorized:
- Business-related token offerings
- Cryptocurrency services
- E-money token issuance
- Public token offerings
Administrative measures
- License revocation
- Operational restrictions
- Preventive market protection measures
- Mandatory corrective actions
Additional enforcement actions
- Asset freezing capabilities
- Mandatory investor compensation
- Operational suspensions
- Enhanced monitoring requirements
These enforcement measures aim to ensure regulatory compliance and protect market participants from unfair or fraudulent practices.
A comprehensive and well-structured White Paper serves both as a regulatory compliance document and a crucial trust-building instrument for potential investors. Professional guidance in preparing this document ensures all regulatory requirements are met while effectively communicating the investment proposition.
The Cryptocurrency Department of Boccadutri International Law Firm provides expert assistance in White Paper preparation, ensuring full regulatory compliance. Additionally, our legal team offers support to individuals who may have encountered potential cryptocurrency investment fraud.
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.