Crypto disclosure firm Bluprynt releases standards to help token issuers comply with EU rules

Crypto disclosure company Bluprynt has plans to help bring token issuers into compliance in the European Union as regulators grapple with how to regulate the digital asset industry.Bluprynt CEO Dr. Christopher Brummer said part of the inspiration for starting Bluprynt was to make it easier to comply with new rules coming out, such as the EU's Markets in Crypto Assets regulation, or MiCA. Brummer is also the Williams Sesquicentennial Professor of Financial Technology at Georgetown Law and founder of the annual DC Fintech Week.MiCA, which is overseen by the European Securities and Markets Authority, was approved by the European Parliament in April 2023 and is being rolled out in different phases. Under MiCA, token issuers have to make certain disclosures through whitepapers, which must be machine-readable.Bluprynt has since created a taxonomy for MiCA to "streamline the compliance process" for token issuers —Brummer compared the taxonomy to filing taxes to software used to file taxes.Token issuers send their information to Bluprynt, which then ingests and organizes data for issuers and their lawyers to review with their software. At the end of the process, a machine-readable white paper is generated. Brummer told The Block he plans to share the Bluprynt standards with European Securities and Markets Authority Chair Verena Ross on Monday. Brummer previously was a member of ESMA's Financial Innovation Standing Committee.ESMA published a draft taxonomy earlier this year, but Bluprynt said in a statement that it was "ultimately only partial" and covered a small portion of the needed disclosure fields."Bluprynt took up the challenge to build upon ESMA’s initial work and complete the challenge, and has shared its taxonomy with ESMA to help accelerate and enable MiCA implementation," the firm said in a statement on Monday. "The taxonomy is used in its core product, which helps automate the production of MiCA white papers for crypto issuers, and can be used as a standard for regulators and industry alike."One of the engineers for the taxonomy compared it to having a dictionary and an instruction manual in one. For example, one of the EU's new requirements is disclosing the environmental impact, so an investor could more easily search for that disclosure using Bluprynt's taxonomy.Crypto currently does not have regulated channels of communication with investors. Traditional capital markets rely on quarterly and annual reports and proxy statements, while crypto turns to X (formerly Twitter), Discord and Telegram, Brummer said."That's actually not very good for building trust, liquidity or an actual functioning capital market," Brummer said.As for legacy white papers, those can be poorly written and can have lots of technical jargon."The EU comes along and says because that [white paper] is the way in which the industry has communicated in the past, we are going to use a white paper as the document for communicating stuff about your company," Brummer said.As the EU forges on in implementing rules for the crypto industry, the U.S. is working through its own regulatory framework. Lawmakers have introduced bills to rein in the crypto industry, including one that gives new jurisdiction to the U.S. Commodity Futures Trading Commission over "digital commodities" and asserts the U.S. Securities and Exchange Commission would oversee digital assets offered as part of an investment contract.Meanwhile, U.S. SEC Chair Gary Gensler has said that current rules apply to crypto and has called on crypto platforms to register with the agency. Gensler has also noted that most cryptocurrencies are securities. Some firms have obtained licenses to custody digital assets, but the crypto industry largely has arguedit's not possible to register with the agency, in part because rules were made for more traditional entities that are different from digital assets."MiCA is a glass half full," Brummer said. "It has rules, but there's plenty that has not been worked out entirely, including very important aspects like how do you even comply with how the documentation is to be formatted and delivered under MiCA.""In the United States, we're just using our hands, we don't even have a glass," Brummer added.Bluprynt was founded in late 2023 and has since brought on several investors including businessman Mark Cuban, former PayPal CEO Dan Schulman, Kroll Founder Jules Kroll and institutional investors including Robinhood.