We would like to inform our Clients that the new European Union regulation governing the crypto-service providers – the Markets in Crypto-Assets Regulation (MiCA) – will gradually enter into force from June 2024. The MiCA imposes strict prudential and operational requirements for all crypto asset providers, which the Service Provider (IP Technologies Ltd.) will strive to comply with to the fullest extent.
Although the application of the legislation is being implemented gradually in the EU Member States, leaving a one and a half year preparation period for the licensing process; however, the domestic legislator (Nemzetgazdasági Minisztérium, Hungary) in Act VII of 2024 on the Crypto Instruments Market has significantly shortened the preparation and licensing period and obliged crypto-service providers in Article 16 to obtain licenses by 1 July 2025 at the latest. These changes impose significant operational and financial burdens on providers that must be met in order to operate legally.
The Vigiler platform provider is ready to start the authorisation process as soon as possible and has prepared the organisation and its processes for regulatory compliance. Most of the processes that have been modified in preparation do not represent a material change for customers using the platform services. However, the “Public offer for the conditional assumption of customer claims“, announced on 1 January 2023, must be closed before the authorisation process can start.
Among the key provisions of the Regulation, the following points do not allow the Service Provider to continue to maintain the record of customer claims in a pending migration state without time limitation or to provide the related services:
Compliance with minimum capital requirements under MICA Article 60: The Service Provider cannot comply with the prudential requirements if it provides or maintains on the platform services for assets that are not fully covered due to an Inlock damage event.
Segregation and adequate protection of client assets in accordance with Article 63 of the MICA: The Service Provider shall keep and register client assets separately. A provider cannot comply with this requirement if it provides services on assets (such as swaps or loan collateral) that are not fully covered due to an Inlock damage event.
Pursuant to Article 94(1)(b) and (c) of the MICA, the Supervisory Authority may order the suspension or prohibition of the service if the Service Provider does not comply with the obligations provided for in the Regulation.
In order to comply with these requirements, the Service Provider will no longer maintain the “Public Offer for the Conditional Assumption of Customer Claims” offer as of 31 December 2024, as the evolving legal environment and the very short deadline for the adaptation of the domestic legislation do not allow it to continue.
The Service Provider will suspend all customer accounts that have been established under the public offer and do not complete the migration by 30 December 2024 at the latest.
As a result of the suspension, the assets on the affected accounts will be restored to the status prior to the acceptance of the migration contract, whereby the assets on the affected Vigiler accounts will be fully restored to the original Inlock account from which they were migrated. If the Inlock account concerned has been closed in the meantime, it will be reopened/unlocked in parallel with the restoration of the original status.
Following the restoration of the pre-migration status as set out in the Inlock Recovery and Restructuring Plan, the affected Inlock accounts will be automatically transferred to the “Scheduled Release” program, subject to the terms and conditions of which the affected customer must agree to. Upon acceptance of the terms and conditions, Inlock will retroactively pay out the outstanding scheduled payments, whereby more than 54% of the affected assets will be paid out in one lump sum as set forth in the Scheduled Release program!
Subsequently, further payments of affected assets and the application of the Inlock claims process will be made under the same terms and conditions as for customers who have chosen the Inlock Scheduled Release program as one of their recovery options.
If you would like to avoid having your Vigiler account suspended or the assets on it returned to the Inlock platform, please complete the migration you have started by midnight on 30 December 2024 at the latest!
Over the past two years, the Service Provider has sought to provide its customers with the widest possible range of services to enable them to exercise self-determination over their assets affected by the damage. The Service Provider has been able to ensure the smooth operation of the platform during this period and has also tried to provide services for assets that were not fully covered. However, the new legal environment no longer allows the Service Provider to continue this operational practice. More than 95% of the customer accounts migrated to the Vigiler platform have already completed the migration, with more than 25% of the Fee Credit stock generated in the process already utilized!
The Service Provider will start the authorisation process with the shortest possible lead time after 1 January 2025, paying particular attention to compliance with regulatory requirements. We are committed to creating new innovative services that can lead to significant competitive advantage and industry development once the licensing process is successfully completed.