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ABBL response - ESMA MiCA Crypto-assets as financial instruments - Final.pdf

Here are the key points from the document:

Summary

The document discusses the classification process for hybrid tokens and proposes a hierarchical approach to determine whether a hybrid token should be categorized as a financial instrument or not.

Key Points

  1. Hybrid Tokens: The document highlights the complexity of hybrid tokens, which have diverse features and rights.
  2. Hierarchical Approach: The authors propose a hierarchical approach to categorize hybrid tokens, where all characteristics of a financial instrument must be satisfied for it to be considered as such.
  3. Categorization: Hybrid tokens that display features of a financial instrument should be categorized as such, while those without these features may not be considered as financial instruments.
  4. Convergence: The authors recommend that ESMA clarifies the application of the criteria further and promotes convergence of practices in the industry to facilitate the adoption of standards/taxonomy and minimize instances of divergent classification assessments among industry players.
  5. Complex Challenge: Hybrid tokens pose a complex challenge due to their diverse features and rights, and categorizing them as financial instruments may have unexpected consequences for traditional assets outside of the crypto-asset industry.

Recommendations

  1. ESMA should provide clarification on the number of features required to be captured by the definition of financial instrument.
  2. ESMA should support the position that this hierarchical approach is adopted where all characteristics of a financial instrument are satisfied or when the instrument under consideration has only certain characteristics.
  3. ESMA should clarify key notions related to hybrid tokens and their categorization as financial instruments.

Conclusion

The authors welcome ESMA's proposition and believe that the classification process for hybrid tokens should prioritize their identification as financial instruments when they display features of a financial instrument.

Published: · Source: ABBL

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