The implementation of the MiCA crypto regulation is progressing at great speed, and with it the introduction of new technical standards and guidelines by the European Banking Authority (EBA).
The EBA recently published a comprehensive package of technical standards and guidelines that aim to provide regulatory clarity for token issuers, with a particular focus on asset-linked tokens (ARTs) and electronic money tokens (EMTs) across Europe.
The MiCA regulation, adopted by the European Union, is designed to create a coherent and secure legal framework for the issuance and use of crypto-assets.
This legislation aims to strengthen investor protection, ensure financial stability and promote technological innovation in the crypto-asset sector.
New guidelines for MiCA crypto regulation based on EBA guidelines
The EBA’s new guidelines and technical standards represent a key step towards the effective implementation of MiCA.
These standards are designed to ensure that ART and EMT issuers operate in compliance with European regulations, ensuring transparency, security and integrity in the crypto-asset market.
Asset-linked tokens, or ARTs, are crypto-assets whose value is linked to one or more underlying assets, such as commodities or fiat currencies. The new EBA guidelines require ART issuers to maintain an adequate reserve of the underlying assets to ensure the stability and value of the token.
Furthermore, issuers must provide detailed and transparent information to investors regarding the underlying assets, buffer policies and investor protection mechanisms.
The EBA also highlights the importance of robust governance for ART issuers. Companies must implement governance structures that ensure prudent management of resources, segregation of activities and protection of investor rights.
Furthermore, measures must be taken to prevent conflicts of interest and ensure compliance with anti-money laundering (AML) and counter-terrorism financing (CFT) regulations.
Electronic money tokens, or EMTs, are crypto-assets designed to function as digital currency, with a value linked to a specific fiat currency.
The EBA Guidelines for EMTs require issuers to obtain a license to operate as electronic money institutions, in accordance with European directives on electronic money and payment services.
EMT issuers must ensure that funds raised from investors are safeguarded and segregated from other business activities. They must also implement risk management systems to monitor and mitigate risks associated with issuing EMTs, including operational, liquidity and credit risks.
Transparency and investor protection
A central theme of the EBA’s new guidelines is transparency. ART and EMT issuers must provide investors with complete and accurate information regarding the characteristics of the tokens, associated risks and investor rights.
This includes disclosing periodic information on underlying asset reserves, reserve policies and investor protection mechanisms.
Furthermore, the EBA requires issuers to take measures to protect investor funds in the event of the issuer’s insolvency or bankruptcy. This may include setting up separate accounts for investor funds and adopting insurance or guarantee mechanisms.
The implementation of the EBA’s new guidelines and technical standards represents a significant step towards creating a safer and more regulated crypto-asset market in Europe.
With these measures, the EBA aims to ensure that ART and EMT issuers operate in compliance with European regulations, protecting investors and promoting financial stability.
As the crypto-asset industry continues to evolve, the MiCA regulation and EBA guidelines provide a clear and consistent framework for issuers, helping to create a safer and more transparent market environment.
This will not only protect investors but also encourage innovation and technological development in the crypto-asset sector.
