At the end of this year, innovative solutions adopted under the EU Regulation 2023/1114 in crypto-asset markets, known as the MiCA Regulation, will enter into force. This instrument regulates - subject to certain exemptions, including financial instruments - the trading of crypto-assets, i.e. digital representations of value or rights that can be transferred using so-called distributed ledger technology (DLT). These include tokens that are linked to the value of an asset (commodity, currency), that have the character of e-money, or that can be used for various mobile applications or games. Until now, there has been no specific regulation of this market, which has guaranteed freedom in its creation, but has also entailed significant risks that have discouraged some buyers. The MiCA regulation will change this.

Since the end of February 2024, MiCA has been in the news again, thanks to a draft law on crypto-assets published by the Ministry of Finance, which aims to adapt EU solutions to Polish realities. However, MiCA, as a regulation, will be directly applied in the Polish legal system anyway, and the proposed law cannot replace it.

The current discussion on the draft law focuses on administrative and criminal issues. In addition to the issues related to the licensing of crypto-asset businesses, the powers of the Polish Financial Supervision Authority (KNF) as the regulator of this market, and the high penalties for violations, there is another important aspect - the civil liability of entities involved in the issuance and trading of crypto-assets. In this case, the bill goes further than the EU regulation.

The EU legislator requires issuers of crypto-assets to prepare a so-called whitepaper, i.e. an information memorandum. It must contain a range of information describing, among other things, the issuer, the technologies used, the crypto-asset itself and the rights and obligations attached to it. Crucially, this document - as well as any related marketing material - must not be misleading and must be reliable, clear and understandable to the potential buyer. Given the complexity of the matter, this will certainly not be easy - especially since, based on classic disputes between individuals and financial institutions or companies, case law has developed a very high threshold of due diligence for the latter (with a not necessarily high threshold for individuals, which is sometimes even below reasonable care for their own interests). Moreover, the Polish legislator also emphasises this in the proposed regulations, requiring all potentially liable entities to exercise due diligence arising from the professional nature of their activities.

Meanwhile, a holder of a crypto-asset will be entitled to claim damages for breach of information obligations - particularly in relation to the content of the information memorandum. Interestingly, such a claim can be brought against a very wide range of entities. In individual cases, this will include not only entities trading in a particular crypto-asset (issuers, offerors, persons seeking admission to trading and operators of platforms for such trading), but also members of their administrative, management or supervisory bodies. The proposed law further extends this catalogue to include "entities that prepared or participated in the preparation of the information, to the extent that they prepared or participated in the preparation of the information" and further facilitates their identification by requiring that the information memorandum include the names, functions of these members and, in the case of legal entities involved in trading, their business names and registered offices.

In addition, the bill clarifies the not-so-clear relationship between the liabilities of certain entities. Now all of them (legal and natural persons involved in the trade of a given crypto-asset) will be jointly and severally liable. This will be different from the so-called subsidiary liability of a member of the management board of a limited liability company for the debts of that company, where the member is only held liable if it is impossible to enforce the debts against the company, subject to the fulfilment of a few additional conditions. Conversely, an aggrieved holder of a crypto-asset will be able to choose whether to pursue claims against, for example, the issuer, a member of its management board, the persons who prepared the information memorandum, or perhaps - all of them at once. However, it is still unclear whether a person who was a management board member at the time of the event causing the loss will be held liable, or whether a different period will be relevant - this issue will undoubtedly be widely debated in case law.

The bill also provides that the above liability cannot be limited or excluded in relation to third parties. The only thing that is allowed, and even necessary from the point of view of institutions that want to be involved in the issuance and trading of crypto-assets, is the contractual regulation of internal relations and joint and several liability obligations (so that in the event of an award of damages against individual entities, the settlements between them are clear). Such arrangements are well worth making before entering the crypto market.

Finally, the MiCA regulation stipulates that the above-mentioned entities are not liable for the entire damage, but only for the actual losses. Thus, the EU legislator does not provide that the owner of a crypto-asset can claim lost benefits under the MiCA regulation. The Polish legislator seems to have overlooked this, as in the proposed regulations - when defining liability, including for the translation of an information memorandum - it specifies the need to compensate for "damage" and not just "loss". Perhaps this inconsistency will be removed during the legislative process.

In summary, civil litigation under the MiCA regulation and the Polish crypto-assets law (currently being drafted) lies in the future. Nevertheless, sooner or later the Polish courts will have to deal with them, and institutions involved in the issuance and trading of crypto-assets will have to deal with the claims of purchasers (especially considering that the Financial Ombudsman has already submitted comments on the draft law, providing for the extension of his powers to protect their interests). Considering the above, it is already a good time to think about the proper execution of information memoranda and agreements defining mutual obligations between potentially liable indemnitors.