MiCA in detail: Pre- and post-execution transparency obligations in cryptoasset transfers that every investor should be aware of

Introduction

Transparency in cryptoasset transactions is one of the fundamental pillars of the Cryptoasset Markets Regulation (MiCA). In particular, Guideline 2 establishes a rigorous framework for the information that service providers must provide to their clients at three key moments: before executing a transfer, after its execution and in case of rejection or suspension. This rigorous information regime seeks to empower investors and reduce the opacity that has traditionally characterized this sector.

Let’s take a detailed look at what information users of cryptoasset platforms are entitled to receive at the critical moment prior to the execution of a transfer, as well as after it.

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Information prior to execution: The prelude to the transfer

When a client issues an instruction to transfer cryptoassets, but before the transfer is actually executed, the MiCA regulations (Guideline 2) establish that service providers must provide at least the following information:

1. Warning about irreversibility

Providers must include a brief, standardized warning informing the client whether the transfer of cryptoassets:

• Will be irreversible once executed
• Will be considered “sufficiently irreversible” in the event of probabilistic liquidation
• The exact moment when it will reach this state of irreversibility

This piece of information is crucial for the user to understand the implications of a transaction which, unlike traditional bank transfers, cannot be canceled or reversed once confirmed on the blockchain.

2. Full breakdown of costs

The platform should provide detailed information on:

• The total amount of transfer charges
• A specific breakdown of these charges, clearly distinguishing between:
  • Gas fees charged for the operation in the corresponding DLT network
  • Other commissions that providers charge for their intermediation services

This transparency of costs allows the user to make informed decisions and evaluate the efficiency of a transfer, especially at times of network congestion when gas tariffs can fluctuate significantly.

3. Regulatory compliance

A fundamental aspect, although sometimes invisible to the user, is the obligation of providers not to initiate or execute the transfer before having adopted the appropriate measures to guarantee compliance with the Regulation on transfers of funds, including Article 14 (which refers to the obligations of identification of the beneficiary).

This requirement, although technically part of the obligations of the provider rather than of the information to the customer, constitutes an additional guarantee that the transfers are carried out in compliance with anti-money laundering regulations.

Post-execution information: Full traceability

Transparency does not end with the execution of the transfer. Once it has been carried out, providers must provide the customer with detailed information that guarantees the complete traceability of the operation:

• Identification of the parties: Names of both the payer and the payee
• Blockchain addresses: Decentralized ledger address or cryptoasset account number of both parties
• Unique reference: An identifier that allows the customer to recognize each specific transfer
• Details of the transaction: Amount and type of cryptoassets transferred or received
• Relevant dates: Value date of the transfer debit or credit
• Final costs: Amount of all charges, fees or commissions related to the transfer and, where applicable, a detailed breakdown

This information must be provided in electronic format and, when it is not provided more frequently than once a month, it must be free of charge.

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Incident management: Transparency in rejection or suspension

The regulations also cover cases in which a transfer is rejected, returned or suspended. In such cases, the provider must inform the client about:

• Reason for rejection/return/suspension: Clear explanation of the causes
• Solution: Where possible, instructions on how to remedy the problem
• Economic impact: Details of any charges or fees incurred by the client and whether a refund is possible

Practical implications for investors and platforms

For investors

Investors in cryptoassets should be aware of these informational rights and demand compliance. Pre-execution information is particularly relevant for several reasons:

• Managing expectations: Knowing the irreversibility of the transaction helps to avoid costly mistakes
• Financial planning: The breakdown of costs allows for comparison of alternatives and optimization of transaction expenses
• Legal certainty: Confirmation that regulatory requirements are met provides peace of mind about the legality of transactions

For platforms

Cryptoasset platforms must implement robust systems that guarantee:

• Automated notifications: Mechanisms that provide the required information at each stage of the process
• Cost transparency: Systems that calculate and clearly display all the cost components of a transfer
• Full traceability: The ability to provide all the details of executed transfers
• Incident management: Protocols for adequately reporting rejections or suspensions

Conclusion: A new standard of transparency

The reporting obligations established by MiCA in relation to cryptoasset transfers represent a qualitative leap in investor protection. Far from being mere bureaucratic requirements, they are essential tools for users to make informed decisions and properly manage their cryptoasset transactions.

For platforms, diligent compliance with these requirements not only avoids sanctions, but can also become a differentiating factor that generates trust among their users. For investors, the knowledge and demand for this information constitute fundamental protection mechanisms in a traditionally volatile and complex market.

In short, the transparency of information on transfers of cryptoassets under the MiCA regime represents a decisive step towards a more mature, secure and accessible crypto ecosystem for all participants.

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