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Utility tokens, markets in crypto assets regulation (MiCAR), and the costs of being public

In: The Elgar Companion to Decentralized Finance, Digital Assets, and Blockchain Technologies

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  • David Florysiak

Abstract

Digital platforms publicly offering utility tokens to consumers and investors or listing tokens on a trading platform within the EU need to comply with the “Markets in Crypto Assets Regulation” (MiCAR) beginning in 2024, which results in significant direct and indirect costs for issuers. The offering requires extensive mandatory disclosure of information in a white paper, resulting in significant financial consulting and legal fees for compliance, but minimizes litigation risk, and maximizes offering success. The listing requires continuous mandatory disclosure of insider information as a prevention of insider dealing and market manipulation, similar to issuers of financial securities in the EU. Due to the relatively high costs of being public, I expect only larger digital platforms to list their tokens. The regulation is a step in the right direction since it protects consumers and investors, and allows innovation by preventing token market failure due to a large fraction of fraud token issuers.

Suggested Citation

  • David Florysiak, 2024. "Utility tokens, markets in crypto assets regulation (MiCAR), and the costs of being public," Chapters, in: Henrik Cronqvist & Desiree-Jessica Pely (ed.), The Elgar Companion to Decentralized Finance, Digital Assets, and Blockchain Technologies, chapter 6, pages 113-126, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:22115_6
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    File URL: https://www.elgaronline.com/doi/10.4337/9781035307760.00011
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    References listed on IDEAS

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