Hanfa confirms compliance with ESMA’s Guidelines on the qualification of crypto-assets as financial instruments

The Board of Hanfa has confirmed Hanfa’s compliance with the Guidelines on the conditions and criteria for the qualification of crypto-assets as financial instruments, published by the European Securities and Markets Authority (ESMA).

The Guidelines define the methodology and criteria for assessing whether a crypto-asset is a financial instrument within the meaning of Article 4(1)(15) of Directive 2014/65/EU (MiFID II). This ensures a uniform application of the regulatory framework across the European Union and a clear distinction between the application of MiFID II and Regulation (EU) 2023/1114 on Markets in Crypto-Assets (MiCA).

The qualification of crypto-assets as financial instruments is essential for:

• determining the regulatory regime applicable to specific crypto-assets;
• ensuring legal certainty and uniform oversight of innovative digital markets;
• distinction between the scope of MiCA and MiFID II.

The key technical determinants of the Guidelines include:

• Transferable securities: Crypto-assets that meet the criteria set out in Article 4(1)(44) of MiFID II – for example, if they grant rights (e.g. ownership, voting or similar rights) to their holders, they are negotiable and traded on capital markets – should be classified as transferable securities. ESMA clarifies that negotiability refers not only to the technical possibility of being transferred, but also to the legal and market requirement of such a transfer to be efficient in practice The rights attached to the instrument, its economic purpose, but also the level of standardisation and market use play a key role in this assessment.
• Other financial instruments: The Guidelines also cover the conditions under which crypto-assets qualify as money market instruments, units in collective investment undertakings, derivatives and emission allowances.
• Hybrid crypto-assets: Particular attention has been paid to hybrid forms of crypto-assets, which may contain features of several different types of financial instruments. In these cases, a multi-layered analysis is needed to determine the dominant legal character and the corresponding regulatory regime.
• Analysis criteria: The proper classification of crypto-assets requires an assessment of their legal, economic and functional characteristics. In this context, particular importance is attached to the content of the technical documentation (white paper), the technical characteristics of the distributed ledger technology (DLT), as well as the rights and obligations arising from the structure of the instrument.

Background to the concept of crypto-assets:

In accordance with Guideline 7, when assessing the qualification of a crypto-asset, national competent authorities and financial market participants should take into account whether the crypto-asset is a digital representation of the value or rights, capable of being transferred and stored using DLT, including whether these values or rights represent a right vis-à-vis the issuer and/or someone designated by the issuer. It is particularly important to take into account the nature of the crypto-asset’s electronic transfer and storage considering the use of DLT or similar technologies. 

The Guideline highlights that, although a utility token may be accompanied by governance rights, it should not replicate the rights attached to financial instruments, starting with those attached to transferable securities within the meaning of MiFID II. In addition, the expectation of a future profit linked to a token should not in itself be sufficient to qualify it as a financial instrument in accordance with MiFID II.

Crypto-assets that are non-transferable to other holders and that are only accepted either by the issuer or by the offeror, as well as crypto-assets that are unique and not fungible with other crypto-assets, do not fall within the scope of MiCA. Nevertheless, an assessment of whether a crypto-asset qualifies as one or more of the instruments listed in Article 2(4) of MiCA and its similarity to financial instruments should be carried out by national competent authorities and financial market participants as part of their assessment.

Relevance of the Guidelines for market participants and supervisory authorities:

Compliance with these Guidelines provides legal clarity for issuers and crypto-asset service providers and ensures more efficient licensing and supervision, proportionate investor protection and uniform application of EU law across Member States. The Guidelines also confirm the technological neutrality of the regulatory framework – the same principles apply regardless of the technology used for the issuance, transfer or trading of instruments.

Given that, according to Article 2(4) of MiCA, crypto-assets that qualify as financial instruments are excluded from its scope, the proper qualification of crypto-assets under MiFID II is a first and necessary step in determining the applicable regulatory regime.

The official Croatian translation of the Guidelines is available here: