The European Banking Authority (EBA) recently introduced comprehensive guidelines focused on recovery plans for issuers of asset-referenced tokens (ARTs) and e-money tokens (EMTs) under the Markets in Crypto-Assets (MiCA) regulation. These guidelines are crucial in maintaining compliance with regulatory requirements and ensuring the stability and reliability of the crypto industry in the EU.
The guidelines require issuers to develop recovery plans that outline key elements, governance details, recovery options, and communication strategies. Moreover, these plans must include a framework of indicators to monitor the issuer’s financial health and operational stability, with a specific focus on the critical de-pegging risk indicator. The principle of proportionality is incorporated to tailor recovery plan requirements based on the issuer’s size, complexity, and business model, providing flexibility and practicality.
Transparency is a key focus of the guidelines, emphasizing the importance of informing token holders and stakeholders about the implementation of recovery options. Issuers are expected to manage potential adverse market reactions, ensure stakeholders are aware of the steps taken to restore compliance, and maintain transparent internal decision-making processes. Timely communication with competent authorities is also highlighted to ensure compliance with regulatory standards.
The EBA developed these guidelines following a public consultation that ended in February 2024, incorporating feedback from industry stakeholders. The final guidelines strike a balance between regulatory oversight and operational flexibility, aiming to strengthen the resilience of the crypto-asset market in the EU. Issuers are required to comply with these guidelines and notify the EBA of their status within two months of publication on the EBA website, providing a clear framework for maintaining robust recovery plans in line with regulatory requirements.
The introduction of comprehensive guidelines by the EBA marks a significant step toward ensuring the stability and reliability of the rapidly expanding crypto industry in the EU. By mandating recovery plans for issuers of asset-referenced tokens and e-money tokens, these guidelines aim to enhance regulatory compliance, promote transparency, and strengthen the resilience of the crypto-asset market. It is imperative for issuers to adhere to these guidelines and proactively develop effective recovery plans to safeguard the integrity of the crypto industry in the EU.
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