Pim Rank: ESMA guidelines on reverse solicitation - towards a more level playing field?
This column was originally written in Dutch. This is an English translation.
On 27 April 2025, ESMA's guidelines on the application of reverse solicitation under MiCAR entered into force. In practice, these guidelines will also determine the possibility of invoking reverse solicitation in the cross-border provision of other financial services in the EU by parties from third countries.
By Prof. W.A.K. Rank, Lawyer at NautaDutilh in Amsterdam and Professor of Financial Law at Leiden University.
Under MiCAR, parties providing cryptoasset services in the EU must have a licence. This applies to both parties established in the EU and parties with their registered office outside the EU. A licence is not required for a party established outside the EU if the cryptoasset services are provided by that party exclusively on the initiative of the client and there is no solicitation of the client by the service provider (Article 61 MiCAR). In this context, we refer to the initiative test or reverse solicitation.
In order to promote the uniform application of this exemption within the EU, ESMA has published guidelines on the cross-border solicitation of clients by crypto-asset service providers from a third country and methods that supervisors can use to prevent abuse of the exemption. These are the “ESMA Guidelines on situations in which a third-country firm is deemed to solicit clients established or situated in the EU and the supervision practices to detect and prevent circumvention of the reverse solicitation exemption under MiCAR”.
These guidelines show that the term “soliciting clients” must be interpreted broadly and that any form of communication, whether individual or generic, physical or electronic, through which cryptoasset services are promoted in the EU qualifies as solicitation and is therefore an activity subject to authorisation. Providing business information about the service is also quickly regarded as promoting it. Only the distribution of documentation of a purely educational nature is not considered to be solicitation. The guidelines indicate that solicitation also occurs when the service is marketed through a third party. The term “at the initiative of the client” must be interpreted narrowly. A statement by the client that the service is provided on his initiative will not benefit the crypto asset service provider if the initiative actually lies with the latter.
The document also sets out a number of guidelines to help supervisors determine whether solicitation has taken place. It also contains a list of indicators that point to this, such as the use of the client's language as the language of communication and the provision of information about the legislation of that country on the service provider's website. The AFM's 2013 Policy Rule on Active Operations in the Netherlands contains a similar list of indicators to determine when participation rights are being offered in the Netherlands. The same criteria are used by the AFM to determine whether investment services are being provided in the Netherlands.
The guidelines were written for the cross-border provision of cryptoasset services in the EU by a party from a third country. In practice, however, there will also be a certain reflex effect on the provision of other financial services. Because ESMA's guidelines are based on a restrictive application of the exception for reverse solicitation, they also provide for a more level playing field between providers established in the EU and parties from third countries providing financial services in the EU.