Legal Opinion on MiCA Compliance of CO2.CAPITAL NFT Carbon Certificates

Background:

CO2.CAPITAL issues carbon certificates as unique NFTs on blockchain, each certificate tied directly to a specific carbon credit or offset project. These certificates are explicitly non-transferable and cannot be traded on secondary markets. CO2.CAPITAL asserts that this structure aligns with the Markets in Crypto-Assets Regulation (MiCA) definition of NFTs excluded from regulation due to their uniqueness and non-fungibility.

Applicable Legal Framework: Markets in Crypto-Assets Regulation (EU) 2023/1114 (“MiCA”)

MiCA governs crypto-assets within the European Union but explicitly excludes certain categories of crypto-assets from its scope, including NFTs meeting specific criteria.

Relevant MiCA provisions:

• Article 2(4) of MiCA: Excludes from MiCA’s scope crypto-assets that are unique and non-fungible (“non-fungible crypto-assets”), provided the asset or rights represented are unique and non-fungible.
• Recitals 8b, 10, 11, and 12: Emphasize the exclusion of NFTs that are unique and not fungible. The recitals acknowledge NFTs’ unique nature means their value does not depend on comparable tokens, limiting their financial use and associated risks.
• ESMA Guidelines and Interpretations: Further clarify that NFTs issued as a unique, non-fungible token, especially if non-transferable and not part of large series or fractionalized, fall outside MiCA’s regulatory perimeter. NFTs that do not have fungible characteristics or financial instrument features are excluded.

Legal Analysis of CO2.CAPITAL’s NFT Carbon Certificates Under MiCA

1. Uniqueness and Non-Fungibility: Each CO2.CAPITAL NFT certificate is unique and tied to one specific carbon credit or offset project. It is not interchangeable with other tokens, satisfying MiCA’s uniqueness and non-fungibility criteria under Article 2(4) and Recitals 8b and 11.
2. Non-Transferability: The certificates are explicitly non-transferable and cannot be traded on secondary markets. Since MiCA explicitly applies to transferable crypto-assets, CO2.CAPITAL NFTs fall outside its scope due to lack of transferability, consistent with ESMA’s position that non-transferable crypto-assets are excluded.
3. Not Issued in Large Series or Fractionalized: The NFTs are individually minted, not part of a large collection or fractionalized tokens. This avoids classification as fungible or asset-referenced tokens subject to MiCA.
4. No Characteristics of Financial Instruments: The NFTs do not represent financial instruments under MiFID II or other EU laws. Their purpose is to represent verified carbon credits transparently, not to confer investment or financial rights.

Conclusion

CO2.CAPITAL’s non-transferable, unique NFT carbon certificates are excluded from MiCA regulation under Article 2(4) and Recitals 8b, 10, 11, and 12, as they meet the essential criteria of being unique, non-fungible, and non-transferable tokens. This exclusion is further supported by ESMA’s guidelines interpreting MiCA’s scope.

Therefore, CO2.CAPITAL’s model is MiCA compliant by design, ensuring transparency and traceability of carbon credits without introducing the regulatory burdens applicable to fungible or transferable crypto-assets.