These guidelines are aimed at providing regulatory clarity for asset-referenced tokens (ARTs) and e-money tokens (EMTs) across the European Union. The guidelines focus on various aspects, including stress testing programmes, asset reserves, and recovery plans. ARTs are tokens backed by assets such as commodities, real estate, or a portfolio of different assets, whereas EMTs maintain a stable value by being pegged to fiat currencies and are used for payments, similar to stablecoins.
Key provisions include requirements for token issuers to maintain sufficient financial resources (own funds) to mitigate potential risks. The EBA has established criteria to assess higher-risk scenarios, requiring increased reserves of own funds.
The EBA’s reports outline the process and timeline for issuers to adjust their own funds to at least 3% of the average reserve of significant assets, with an implementation plan due within 25 working days and full compliance mandated within six months.
Additionally, the regulator mandates minimum percentages for asset reserves based on daily and weekly maturities and imposes restrictions on issuers’ concentration of highly liquid financial instruments. For tokens linked to non-official currencies like commodities or real estate, similar limits apply to highly liquid assets.
Regarding recovery plans, the EBA incorporates consultation feedback to specify communication and disclosure requirements. It clarifies that certain exemptions under the legislation already exclude EMT issuers from specific asset reserve obligations. These guidelines are integral to the implementation of the MiCA regulation, with digital asset service providers required to adhere to the new standards by 1 July 2026.
Some background on MiCA
The MiCA regulation, proposed by the European Parliament, aims to create a comprehensive framework for crypto assets within the European Union (EU). This initiative addresses the lack of specific legislative coverage for these assets within the EU, providing clear and consistent legal regulations.
MiCA’s primary objectives are to enhance consumer and investor protection, promote financial stability and innovation, and support the adoption of crypto assets across the EU. The regulation categorises crypto assets into three main types: asset-referenced tokens (ART), electronic money tokens (EMT), and other assets not previously covered by EU legislation.
Introduced in June 2023, MiCA was designed to be implemented in phases. Rules related to stablecoin are scheduled to take effect in June 2024, while the remaining regulatory provisions are set to be enforced starting December 2024, incorporating specific transitional measures.
In January 2024, the European Securities and Markets Authority (ESMA) has published two Consultations Papers on guidelines under Markets in Crypto Assets Regulation.
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