Glossary

An airdrop is a free distribution of tokens to users, a practice frequently used to encourage adoption of a blockchain project. An airdrop that confers a financial benefit or a right to remuneration may fall within the scope of the MiCA Regulation.

Anti-money laundering and counter-terrorist financing (AML/CFT) consists in implementing policies and procedures to prevent and detect money laundering and terrorist financing.

These obligations are set out in the AML Directive, to which CASPs are subject. Under that directive, CASPs must, among other things, carry out a risk assessment, adopt a policy, and provide training for executives and shareholders.

ARTs are stablecoins backed by a basket of assets, such as official currencies, commodities, or other crypto-assets. They are subject to specific requirements under the MiCA Regulation, in particular as regards transparency and financial safeguards.

A distributed ledger technology (DLT) that allows transactions to be recorded in an immutable and transparent manner, without the need for a central authority. A blockchain can be public, accessible to anyone without permission (e.g., Bitcoin, Ethereum), or private, restricted to a group of authorised participants (e.g., Hyperledger, Quorum).

It serves as the underlying technological infrastructure for crypto-assets, decentralised applications (dApps), smart contracts, and decentralised autonomous organisations (DAOs).

A blockchain analytics tool (in French, outil d'analyse transactionnelle, or OAT) allows crypto-asset flows on a blockchain to be tracked and analysed. These tools are used by regulators, crypto-asset service providers (CASPs), and law enforcement authorities to detect suspicious activity such as money laundering or terrorist financing. They must be configured and used in accordance with the MiCA Regulation and with the General Data Protection Regulation (GDPR).

CASPs are entities that provide services related to crypto-assets, such as custody, trading, portfolio management, and the issuance of digital assets. Under the MiCA Regulation, they must obtain a PSCA license and comply with a set of strict requirements.

The CASP licence is the authorisation provided for by the MiCA Regulation that allows a service provider to offer crypto-asset services from a European Union Member State and throughout the European market. Obtaining it requires a procedure before the competent authority of the provider's home Member State.

Collective management arrangements for crypto-assets include funds that invest in digital assets for the benefit of several investors. Depending on their structure and how they operate, they may be subject to regulatory requirements similar to those applicable to traditional investment funds.

Under Article 3(1)(5) of the MiCA Regulation, a crypto-asset is 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 practice, the term covers crypto-currencies, tokens, and stablecoins issued and exchangeable on a blockchain.

Crypto-asset services are the services provided by crypto-asset service providers (CASPs) regulated under MiCA. They include, in particular, the custody and administration of crypto-assets, the operation of a trading platform, the exchange of crypto-assets for funds, the reception and transmission of orders for crypto-assets, and other services relating to the management and liquidity of digital assets. Providing these services on a professional basis requires a prior CASP authorisation.

A subcategory of crypto-assets designed mainly as a digital medium of exchange.

Generally decentralised, it relies on a blockchain and on cryptographic protocols that secure transactions. Unlike official currencies, it operates without a central authority and can also serve as a store of value or as a platform for decentralised applications (e.g., Bitcoin, Ethereum).

A DAO is an organisational structure that operates on a blockchain through smart contracts and is governed by its members through governance tokens. Decisions are taken transparently and in a decentralised manner.

The legal status of DAOs is uncertain: they may fall under various regulations depending on their activities and their degree of decentralisation.

See CASP.

The DASP licence was an optional authorisation available to digital asset service providers in France under the PACTE Law. It has been replaced by the CASP authorisation under the MiCA Regulation and ceased to allow crypto-asset services to be provided on 1 July 2026, at the end of the transitional period.

Registration as a digital asset service provider (DASP) in France, introduced by the French PACTE Law, was mandatory for companies providing certain crypto-asset services.

Since 1 July 2026, the end of the transitional period, this status no longer allows those services to be provided: it has been replaced by the crypto-asset service provider (CASP) authorisation, which is harmonised at European level.

DeFi refers to an ecosystem of financial services operating on public blockchains, without traditional intermediaries such as banks. It relies on smart contracts that automate transactions and enable activities such as lending, asset trading, and yield farming. Unlike traditional finance, DeFi aims to offer open, permissionless, and censorship-resistant services.

DeFi appears to fall outside the scope of the MiCA Regulation.

A DEX is a platform that allows crypto-currencies to be exchanged without a centralised intermediary. It relies on smart contracts to execute orders and provide liquidity. Unlike centralised platforms, DEXs do not hold users' funds. They do, however, raise difficulties in terms of regulation, market abuse prevention, and anti-money laundering.

Description: Electronic money tokens are a category of stablecoin defined by the MiCA Regulation and designed to maintain a stable value by referencing a single official currency (e.g., the euro). Their issuance is subject to strict requirements intended to ensure financial stability and consumer protection.

The European Securities and Markets Authority (ESMA) maintains two separate lists to regulate market participants in the crypto-asset market in Europe:
- A whitelist: which lists the crypto-asset service providers (CASPs) that have obtained authorisation under MiCA, certifying their compliance with European regulatory requirements.
- A blacklist: which identifies entities suspected of fraudulent activities or operating without authorisation. This list is intended to protect investors by alerting them to risky platforms.

These lists are updated regularly and are available to investors and financial institutions to check the legitimacy of crypto-asset service providers.

A fork is a change to a blockchain's protocol that results in a split into two distinct versions of the chain. There are two types:
- Soft fork: a backward-compatible update, where new blocks remain valid for older nodes.
- Hard fork: a non-backward-compatible update, creating a split between the old and the new blockchain. Two separate chains may then coexist (e.g., Bitcoin and Bitcoin Cash).

Hard forks raise risks in terms of contracts (crypto-asset lending) as well as for custodians, which must ensure continuity of service and, where necessary, support the new chain.

A governance token grants its holder voting rights within a decentralised protocol, a DAO, or a blockchain service. These tokens are used to decide on protocol updates, the management of treasury funds, or a project's economic parameters. They may be reclassified as financial instruments where holding them confers a right to income or an influence comparable to that attaching to a financial security.

An initial coin offering (ICO) is a fundraising mechanism that allows blockchain companies and projects to issue and sell digital tokens in exchange for crypto-assets or official currencies. These tokens may confer various rights, such as access to a service or a share in a project's profits. Under MiCA, public offerings of crypto-assets are subject to strict disclosure and transparency requirements to protect investors and limit the risk of fraud.

Specific legal framework applicable in France to games involving monetisable digital objects (JONUM). It is intended to govern Web3 games and play-to-earn games in line with the rules applicable to games of chance. See the ORWL article on JONUM.

Know your customer (KYC) is a customer identity verification process required of payment service providers and other financial entities. It ensures compliance with anti-money laundering and counter-terrorist financing (AML/CFT) requirements.

Under the MiCA Regulation, CASPs must collect information about their customers before providing them with certain crypto-asset services.

Decentralised lending protocols allow users to lend and borrow crypto-assets without intermediaries, using smart contracts. Loans are often secured by crypto-asset collateral. These services are central to DeFi and raise regulatory issues, in particular as regards investor protection and anti-money laundering.

Maximal extractable value (MEV) is the maximum value that a validator or a miner can extract by reordering, inserting, or censoring transactions in a blockchain block. This practice is common on Ethereum and on other blockchains that support smart contracts. It can be exploited by specialised bots, known as searchers, that scan the mempool to identify profitable transactions. In certain circumstances, it may amount to market abuse.

The MiCA Regulation is the first piece of legislation harmonising the crypto-asset market within the European Union.

It has several components:
- the primary market, which regulates public offerings of crypto-assets, including the issuance of stablecoins, with disclosure and authorisation requirements for issuers;
- the secondary market, which regulates crypto-asset service providers (CASPs) such as trading platforms, custodians, and brokers;
- market abuse, which prohibits market manipulation, insider dealing, and the dissemination of misleading information on crypto-asset markets.

A mixer is a service that anonymises transactions by combining several transactions between different users. These tools are often used to increase privacy, but they are also monitored by regulators because they can be used for money laundering and the financing of illicit activities. MiCA and other legislation seek to regulate their use in order to limit the risk of abuse.

Multi-party computation (MPC) is a shared private key access mechanism that allows a private key to be split into several parts distributed among different parties (the technical service provider, the CASP, or the customer).

In the context of crypto-asset security, this technology is used to strengthen the protection of private keys by distributing control over them among several parties. A growing number of financial institutions and CASPs use MPC to improve wallet security.

Depending on how it is used, it may fall within the scope of the custody and administration of crypto-assets on behalf of clients.
In the context of crypto-asset security, this technology is used to strengthen the protection of private keys by distributing control over them among multiple parties. An increasing number of financial institutions and PSCA are adopting MPC to enhance portfolio security.
Depending on its use, it may fall within the scope of crypto-asset custody activities on behalf of third parties.

Multisig (multi-signature) is a shared private key access mechanism that requires several separate signatures to authorise a transaction. It imposes a rigid structure, since any change to the signatories requires a transaction on the blockchain. It strengthens security by preventing a single entity from authorising transfers without consensus. Multisig is commonly used by companies, DeFi protocols, and DAOs to secure shared funds. Depending on how it is used, it may fall within the scope of the custody and administration of crypto-assets on behalf of clients.

NFTs are unique tokens that represent a digital or physical asset, such as works of art, collectibles, or virtual land.

The MiCA Regulation excludes from its scope crypto-assets that are unique and not fungible with other crypto-assets.

Play-to-earn (P2E) is a business model applied to Web3 video games that allows players to earn tokens or NFTs as a reward for their participation and their in-game performance. These crypto-assets can be traded on secondary market platforms, thereby creating a virtual economy.

Some play-to-earn models may qualify as gambling and fall under specific rules, in particular the JONUM framework.

Privacy coins (e.g., Monero, Zcash) are designed to offer greater confidentiality by making transactions untraceable. This feature raises a regulatory difficulty, in particular for anti-money laundering and counter-terrorist financing. The MiCA Regulation requires trading platforms that wish to offer access to this type of crypto-asset to implement additional transparency measures.

Reverse solicitation refers to a situation in which the client takes the initiative in engaging the services of a CASP, without the CASP having previously solicited or approached the client.

Identifying the party that initiated contact makes it possible to determine where the service is deemed to be provided. The issue is whether a CASP authorisation is required in order to provide crypto-asset services validly under the MiCA Regulation.

Article 2 of the MiCA Regulation provides that it applies to natural and legal persons and certain other undertakings that engage in activities or provide services relating to crypto-assets within the Union.

A security token is a crypto-asset that represents a right in a traditional financial asset, such as a share, a bond, or a unit in an investment fund. Unlike utility tokens, security tokens fall outside the scope of the MiCA Regulation. They qualify as financial instruments and are subject to financial markets legislation, including the MiFID II Directive and the Prospectus Regulation. Their issuance and trading require strict compliance with the obligations applicable to financial instruments.

The seizure of digital assets refers to the process by which a judicial or administrative authority freezes and, potentially, confiscates assets in digital form, such as cryptocurrencies, non-fungible tokens (NFTs), or other digital representations of value. This measure generally occurs within the context of legal proceedings. The seizure of crypto-assets is expressly covered by Article 706-154 of the Code of Criminal Procedure.

A smart contract is a computer program deployed on a blockchain that automates crypto-asset transactions. Depending on the conditions written into its code, it may be immutable once deployed.

The MiCA Regulation does not regulate smart contracts directly, but their use may be caught by sector-specific rules where their execution affects regulated financial services.

A stablecoin is a type of crypto-asset designed to maintain a stable value relative to a reference asset, such as:
- an official currency (such as the dollar or the euro);
- a commodity (such as gold); or
- a basket of assets.

The MiCA Regulation does not define the concept of a stablecoin, but provides for two subcategories:
- the e-money token (EMT), which refers to a crypto-asset backed exclusively by a single official currency;
- the asset-referenced token (ART), which is a crypto-asset whose value is based on a basket of assets that may include several currencies, commodities, or other reference assets (crypto-assets, financial instruments, etc.).

Stablecoins play a key role in the crypto-asset market by facilitating payments, cross-border transfers, and trading on secondary markets while reducing exposure to the volatility of other crypto-currencies.

Staking is the process by which a user locks up crypto-assets in a proof-of-stake blockchain protocol in order to take part in validating transactions and securing the network. In return, the user receives rewards in the form of new tokens.

Staking is generally not regulated. Some forms of staking and some staking services may, however, qualify as crypto-asset services or as financial services.

A token is digital unit stored and transferred within on a blockchain. It can represent an asset, a right, an access to a service, or a digital currency. According to MiCA Regulation, tokens are ranked in several categories, in particular Electronic Money Token (EMT).

The travel rule is an obligation to transmit information on the originator and the beneficiary of crypto-asset transfers. Based on the recommendations of the Financial Action Task Force (FATF), it requires crypto-asset service providers to collect and share that data in order to prevent money laundering and terrorist financing.

In the European Union, it is implemented by Regulation (EU) 2023/1113 on information accompanying transfers of funds and certain crypto-assets, which applies alongside the MiCA Regulation.

A utility token is a crypto-asset that grants the right to access a good or a service supplied by its issuer. Unlike electronic money tokens (EMTs) and ARTs, utility tokens are not intended to be used as a means of exchange.

Under Title II of the MiCA Regulation, a person may offer a crypto-asset to the public or seek its admission to trading in the European Union only if it has first drawn up a white paper on that crypto-asset, notified it to the competent national authority, and published it on its website.