Article 2 Scope

Some crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology;, in particular those that qualify as financial instrumentsmeans financial instruments as defined in Article 4(1), point (15), of Directive 2014/65/EU; as defined in Directive 2014/65/EU of the European Parliament and of the Council(⁴)Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (OJ L 173, 12.6.2014, p. 349)., fall within the scope of existing Union legislative acts on financial services. Therefore, a full set of Union rules already applies to issuersmeans a natural or legal person, or other undertaking, who issues crypto-assets; of such crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; and to firms conducting activities related to such crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology;.

Union legislative acts on financial services should be guided by the principles of ‘same activities, same risks, same rules’ and of technology neutrality. Therefore, crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; that fall under existing Union legislative acts on financial services should remain regulated under the existing regulatory framework, regardless of the technology used for their issuance or their transfer, rather than this Regulation. Accordingly, this Regulation expressly excludes from its scope crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; that qualify as financial instrumentsmeans financial instruments as defined in Article 4(1), point (15), of Directive 2014/65/EU; as defined in Directive 2014/65/EU, those that qualify as depositsmeans a deposit as defined in Article 2(1), point (3), of Directive 2014/49/EU; as defined in Directive 2014/49/EU of the European Parliament and of the Council(⁷)Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes (OJ L 173, 12.6.2014, p. 149)., including structured depositsmeans a structured deposit as defined in Article 4(1), point (43), of Directive 2014/65/EU.The Commission shall adopt delegated acts in accordance with Article 139 to supplement this Regulation by further specifying technical elements of the definitions laid down in paragraph 1 of this Article, and to adjust those definitions to market developments and technological developments. as defined in Directive 2014/65/EU, those that qualify as fundsmeans funds as defined in Article 4, point (25), of Directive (EU) 2015/2366; as defined in Directive (EU) 2015/2366 of the European Parliament and of the Council(⁸)Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC (OJ L 337, 23.12.2015, p. 35)., except if they qualify as electronic money tokensor ‘e-money token’ means a type of crypto-asset that purports to maintain a stable value by referencing the value of one official currency; (‘e-money tokens’), those that qualify as securitisation positions as defined in Regulation (EU) 2017/2402 of the European Parliament and of the Council(⁹)Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation, and amending Directives 2009/65/EC, 2009/138/EC and 2011/61/EU and Regulations (EC) No 1060/2009 and (EU) No 648/2012 (OJ L 347, 28.12.2017, p. 35)., and those that qualify as non-life or life insurance contracts, pension products or schemes and social security schemes. Having regard to the fact that electronic moneymeans electronic money as defined in Article 2, point (2), of Directive 2009/110/EC; and fundsmeans funds as defined in Article 4, point (25), of Directive (EU) 2015/2366; received in exchange for electronic moneymeans electronic money as defined in Article 2, point (2), of Directive 2009/110/EC; should not be treated as depositsmeans a deposit as defined in Article 2(1), point (3), of Directive 2014/49/EU; in accordance with Directive 2009/110/EC of the European Parliament and of the Council(¹⁰)Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009 on the taking up, pursuit and prudential supervision of the business of electronic money institutions amending Directives 2005/60/EC and 2006/48/EC and repealing Directive 2000/46/EC (OJ L 267, 10.10.2009, p. 7)., e-money tokens cannot be treated as depositsmeans a deposit as defined in Article 2(1), point (3), of Directive 2014/49/EU; that are excluded from the scope of this Regulation.

This Regulation should not apply to crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; that are unique and not fungible with other crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology;, including digital art and collectibles. The value of such unique and non-fungible crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; is attributable to each crypto-assetmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology;’s unique characteristics and the utility it gives to the holder of the token. Nor should this Regulation apply to crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; representing services or physical assets that are unique and non-fungible, such as product guarantees or real estate. While unique and non-fungible crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; might be traded on the marketplace and be accumulated speculatively, they are not readily interchangeable and the relative value of one such crypto-assetmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; in relation to another, each being unique, cannot be ascertained by means of comparison to an existing market or equivalent asset. Such features limit the extent to which those crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; can have a financial use, thus limiting risks to holders and the financial system and justifying their exclusion from the scope of this Regulation.

The fractional parts of a unique and non-fungible crypto-assetmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; should not be considered unique and non-fungible. The issuance of crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; as non-fungible tokens in a large series or collection should be considered an indicator of their fungibility. The mere attribution of a unique identifier to a crypto-assetmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; is not, in and of itself, sufficient to classify it as unique and non-fungible. The assets or rights represented should also be unique and non-fungible in order for the crypto-assetmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; to be considered unique and non-fungible. The exclusion of crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; that are unique and non-fungible from the scope of this Regulation is without prejudice to the qualification of such crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; as financial instrumentsmeans financial instruments as defined in Article 4(1), point (15), of Directive 2014/65/EU;. This Regulation should also apply to crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; that appear to be unique and non-fungible, but whose de facto features or whose features that are linked to their de facto uses, would make them either fungible or not unique. In that regard, when assessing and classifying crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology;, competent authoritiesmeans one or more authorities:designated by each Member State in accordance with Article 93 concerning offerors, persons seeking admission to trading of crypto-assets other than asset-referenced tokens and e-money tokens, issuers of asset-referenced tokens, or crypto-asset service providers;designated by each Member State for the application of Directive 2009/110/EC concerning issuers of e-money tokens; should adopt a substance over form approach whereby the features of the crypto-assetmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; in question determine the classification and not its designation by the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets;.

It is appropriate to exclude certain intragroup transactions and some public entities from the scope of this Regulation as they do not pose risks to investor protection, market integrity, financial stability, the smooth operation of payment systems, monetary policy transmission or monetary sovereignty. Public international organisations that are exempt include the International Monetary Fund and the Bank for International Settlements.

Digital assets issued by central banks acting in their monetary authority capacity, including central bank money in digital form, or crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; issued by other public authorities, including central, regional and local administrations, should not be subject to the Union framework for markets in crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology;. Nor should related services provided by such central banks when acting in their monetary authority capacity or other public authorities be subject to that Union framework.

For the purposes of ensuring a clear delineation between, on the one hand, crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; covered by this Regulation and, on the other hand, financial instrumentsmeans financial instruments as defined in Article 4(1), point (15), of Directive 2014/65/EU;, ESMA should be mandated to issue guidelines on the criteria and conditions for the qualification of crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; as financial instrumentsmeans financial instruments as defined in Article 4(1), point (15), of Directive 2014/65/EU;. Those guidelines should also allow for a better understanding of the cases where crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; that are otherwise considered unique and not fungible with other crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; might qualify as financial instrumentsmeans financial instruments as defined in Article 4(1), point (15), of Directive 2014/65/EU;. In order to promote a common approach towards the classification of crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology;, EBA, ESMA and the European Supervisory Authority (European Insurance and Occupational Pensions Authority) (EIOPA), established by Regulation (EU) No 1094/2010 of the European Parliament and of the Council(¹¹)Regulation (EU) No 1094/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/79/EC (OJ L 331, 15.12.2010, p. 48). (the ‘European Supervisory Authorities’ or ‘ESAs’) should promote discussions on such classification. Competent authoritiesmeans one or more authorities:designated by each Member State in accordance with Article 93 concerning offerors, persons seeking admission to trading of crypto-assets other than asset-referenced tokens and e-money tokens, issuers of asset-referenced tokens, or crypto-asset service providers;designated by each Member State for the application of Directive 2009/110/EC concerning issuers of e-money tokens; should be able to request opinions from the ESAs on the classification of crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology;, including classifications proposed by offerorsmeans a natural or legal person, or other undertaking, or the issuer, who offers crypto-assets to the public; or persons seeking admission to trading. Offerorsmeans a natural or legal person, or other undertaking, or the issuer, who offers crypto-assets to the public; or persons seeking admission to trading are primarily responsible for the correct classification of crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology;, which might be challenged by the competent authoritiesmeans one or more authorities:designated by each Member State in accordance with Article 93 concerning offerors, persons seeking admission to trading of crypto-assets other than asset-referenced tokens and e-money tokens, issuers of asset-referenced tokens, or crypto-asset service providers;designated by each Member State for the application of Directive 2009/110/EC concerning issuers of e-money tokens;, both before the date of publication of the offer and at any time thereafter. Where the classification of a crypto-assetmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; appears to be inconsistent with this Regulation or other relevant Union legislative acts on financial services, the ESAs should make use of their powers under Regulations (EU) No 1093/2010, (EU) No 1094/2010 and (EU) No 1095/2010 in order to ensure a consistent and coherent approach to such classification.

Pursuant to Article 127(2), fourth indent, of the Treaty on the Functioning of the European Union (TFEU), one of the basic tasks to be carried out through the European System of Central Banks (ESCB) is to promote the smooth operation of payment systems. The European Central Bank (ECB) may, pursuant to Article 22 of Protocol No 4 on the Statute of the European System of Central Banks and of the European Central Bank attached to the Treaties, make regulations to ensure efficient and sound clearing and payment systems within the Union and with other countries. To that end, the ECB has adopted regulations concerning requirements for systemically important payment systems. This Regulation is without prejudice to the responsibilities of the ECB and the national central banks in the ESCB to ensure efficient and sound clearing and payment systems within the Union and with third countries. Consequently, and in order to prevent the possible creation of parallel sets of rules, EBA, ESMA and the ECB should cooperate closely when preparing the relevant draft technical standards under this Regulation. Furthermore, it is crucial for the ECB and the national central banks to have access to information when fulfilling their tasks relating to the oversight of payment systems, including clearing of payments. In addition, this Regulation should be without prejudice to Council Regulation (EU) No 1024/2013(¹²)Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63). and should be interpreted in such a way that it is not in conflict with that Regulation.

Digital assets that cannot be transferred to other holders do not fall within the definition of crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology;. Therefore, digital assets that are accepted only by the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets; or the offerormeans a natural or legal person, or other undertaking, or the issuer, who offers crypto-assets to the public; and that are technically impossible to transfer directly to other holders should be excluded from the scope of this Regulation. An example of such digital assets includes loyalty schemes where the loyalty points can be exchanged for benefits only with the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets; or offerormeans a natural or legal person, or other undertaking, or the issuer, who offers crypto-assets to the public; of those points.

This Regulation should apply to natural and legal persons and certain other undertakings and to the crypto-asset servicesmeans any of the following services and activities relating to any crypto-asset:providing custody and administration of crypto-assets on behalf of clients;operation of a trading platform for crypto-assets;exchange of crypto-assets for funds;exchange of crypto-assets for other crypto-assets;execution of orders for crypto-assets on behalf of clients;placing of crypto-assets;reception and transmission of orders for crypto-assets on behalf of clients;providing advice on crypto-assets;providing portfolio management on crypto-assets;providing transfer services for crypto-assets on behalf of clients; and activities performed, provided or controlled, directly or indirectly, by them, including when part of such activities or services is performed in a decentralised manner. Where crypto-asset servicesmeans any of the following services and activities relating to any crypto-asset:providing custody and administration of crypto-assets on behalf of clients;operation of a trading platform for crypto-assets;exchange of crypto-assets for funds;exchange of crypto-assets for other crypto-assets;execution of orders for crypto-assets on behalf of clients;placing of crypto-assets;reception and transmission of orders for crypto-assets on behalf of clients;providing advice on crypto-assets;providing portfolio management on crypto-assets;providing transfer services for crypto-assets on behalf of clients; are provided in a fully decentralised manner without any intermediary, they should not fall within the scope of this Regulation. This Regulation covers the rights and obligations of issuersmeans a natural or legal person, or other undertaking, who issues crypto-assets; of crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology;, offerorsmeans a natural or legal person, or other undertaking, or the issuer, who offers crypto-assets to the public;, persons seeking admission to trading of crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; and crypto-asset service providersmeans a legal person or other undertaking whose occupation or business is the provision of one or more crypto-asset services to clients on a professional basis, and that is allowed to provide crypto-asset services in accordance with Article 59;. Where crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; have no identifiable issuermeans a natural or legal person, or other undertaking, who issues crypto-assets;, they should not fall within the scope of Title II, III or IV of this Regulation. Crypto-asset service providersmeans a legal person or other undertaking whose occupation or business is the provision of one or more crypto-asset services to clients on a professional basis, and that is allowed to provide crypto-asset services in accordance with Article 59; providing services in respect of such crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; should, however, be covered by this Regulation.