In this post, we will analyse the content and form of the crypto-asset white paper (hereinafter the “White Paper”).
The White Paper is a document used to provide information about the crypto-assets offered to the public or for which admission to trading is sought. It must contain detailed information about the issuer, the project, the offer to the public, the rights and obligations attached to the crypto-assets, the underlying technology and standards applied and the risks associated with the project. It must also contain a statement that the issuer is solely responsible for the content of the White Paper and a warning that crypto-assets may lose value, may not be transferable or liquid and that utility tokens may not be exchangeable against the good or service promised if the project fails or is discontinued.
The White Paper will not be subject to a pre-approval process by the national competent authorities. It will be notified to the national competent authorities with an assessment whether the crypto-asset at stake constitutes a financial instrument under the Markets in Financial Instruments Directive (Directive 2014/65/EU), in particular. After the notification of the White Paper, competent authorities will have the power to suspend or prohibit the offering, require the inclusion of additional information in the White Paper or make public the fact that the issuer is not complying with the Regulation.
In accordance with article 5 in Title II of MiCA the White Paper shall contain the following information:
- a detailed description of the issuer and a presentation of the main participants involved in the project’s design and development;
- a detailed description of the issuer’s project, the type of crypto-asset that will be offered to the public or for which admission to trading is sough, the reasons why the crypto-assets will be offered to the public or why admission to the trading is sought and the planned use of the fiat currency or other crypto-assets collected via the offer to the public;
- a detailed description of the characteristics of the offer to the public, in particular the number of crypto-assets that will be issued or for which admission to trading is sought, the issue price of the crypto-assets and the subscription terms and conditions;
- a detailed description of the rights and obligations attached to the crypto-assets and the procedures and conditions for exercising those rights;
- information on the underlying technology and standards applied by the issuer of crypto-assets allowing for the holding, storing and transfer those crypto-assets.
- a detailed description of the risks relating to the issuer of the crypto-assets, the crypto-assets, the offer to the public of the crypto-asset and the implementation of the project.
The White Paper shall contain the following statement: “The issuer of the crypto-assets is solely responsible for the content of this crypto-asset White Paper. This crypto-asset White Paper has not been reviewed or approved by any competent authority in any Member State of EU.”
The White Paper shall contain a clear and unambiguous statement that the crypto-assets:
- may lose their value in part or in full;
- may not always be transferable;
- may not be liquid.
It shall contain also that where the offer public concerns utility tokens, that such utility tokens may not be exchangeable against the good or service promised in the White Paper, especially in case of failure or discontinuation of the project.
The management body of the issuer of crypto-assets shall confirm with the statement that the White Paper complies with the requirements of Title II and that, to the best knowledge of the management body, the information presented in White Paper is correct and that there is no significant omission.
The White Paper shall contain summary which shall in brief and non-technical language provide key information about the offer of crypto-assets to the public or about the intended admission of crypto-assets to trading on a trading platform, and in particular, about the essential elements of the crypto-assets concerned. The aim of this summary is to help potential purchasers of crypto-assets to make an informed decision. The summary shall contain a warning that:
- it should be read as an introduction to the White Paper;
- the prospective purchaser should base any decision to purchase a crypto-asset on the content of the whole White Paper;
- the offer to the public of crypto-assets does not constitute an offer or solicitation to sell financial instruments and that any such offer or solicitation to sell financial instruments can be made only by means of a prospectus or other offering documents pursuant to national laws;
- the White Paper does not constitute a prospectus as referred to in Regulation EU 2017/1129 or another offering document pursuant to Union legislation or national laws.
Form of White Paper:
- Every White Paper shall be dated;
- It shall be drawn up in at least one of the official languages of the home Member State or in a language customary in the sphere of international finance.
- It shall be made available in machine readable formats.
European Securities and Markets Authority (ESMA), after consultation of European Banking Authority (EBA) shall develop draft implementing technical standards to establish standard forms, formats and templates.
In conclusion, the White Paper is important document because it helps potential investors and stakeholders to understand the features and potential of crypto-assets.