Mica Reverse Solicitation Flashcards
(16 cards)
What is MiCA?
MiCA (Markets in Crypto-Assets Regulation) is the EU regulatory framework for crypto-assets, aiming to standardize rules across member states.
What is the Reverse Solicitation Exemption under MiCA?
It allows third-country firms (firms outside the EU) to provide crypto-asset services in the EU if the client initiates the service request on their own exclusive initiative.
Why is the Reverse Solicitation Exemption important for third-country firms?
It provides a narrow legal pathway for firms outside the EU to engage with EU clients without a Crypto Asset Service Provider (CASP) license.
What are the three conditions under which third-country firms can provide crypto-asset services in the EU?
(1) They have a CASP license, (2) They benefit from the 18-month transitional period, or (3) They operate under the Reverse Solicitation Exemption.
What activities are prohibited under MiCA’s marketing ban for third-country firms?
Direct and indirect marketing to EU clients, including advertising, website backlinks, influencer promotions, and SEO strategies targeting the EU.
Can third-country firms use EU affiliates to indirectly market their services?
No, using EU-based affiliates, influencers, or advertising strategies to reach EU clients is still considered a violation.
What constitutes a valid client-initiated request under the exemption?
The client must explicitly request the service without any prior solicitation or indirect encouragement from the firm.
Can a firm use disclaimers or pre-filled documents to claim reverse solicitation?
No, ESMA states that such documents cannot override the factual circumstances of whether the client initiated the request.
Can a firm promote additional products or services under the reverse solicitation exemption?
No, except if they are (1) directly related to the original transaction and (2) of the same type.
How should third-country firms ensure compliance with the Reverse Solicitation Exemption?
They should maintain detailed records proving that the client exclusively initiated each transaction and should avoid new EU client acquisitions.
How does ESMA suggest firms avoid breaching MiCA rules?
By avoiding new EU client accounts, geo-blocking EU users, and maintaining evidence of client-initiated requests.
How does MiCA’s reverse solicitation rule compare with MiFID II?
MiFID II has a similar client-initiated service principle, but MiCA’s restrictions are broader and more stringent.
How does the UK’s approach to crypto-asset marketing differ from the EU?
The UK does not have a reverse solicitation exemption. Any financial promotion must be approved by an FCA-authorized entity or qualify for an exemption.
What is the main principle behind the Reverse Solicitation Exemption?
It is a prohibition-based exemption designed to protect EU clients’ freedom to choose service providers without being solicited.
Can third-country firms assume that any client-initiated request allows them to provide multiple services?
No, each request is strictly limited to the specific service type initially requested.
What should firms consider before relying on the Reverse Solicitation Exemption?
Legal and financial risks, compliance costs, and the need to maintain records to prove genuine client initiation.
