Regulation
The EBA publishes new MiCA guidelines for the regulation of cryptocurrencies
THE European Banking Authority has published a comprehensive set of technical standards and guidelines under the Markets in Crypto-Assets (MiCA) Regulation.
These guidelines are intended to provide regulatory clarity for asset-referenced tokens (ART) and electronic money tokens (EMT) across the European Union. The guidelines focus on various aspects, including stress test programs, capital buffers and recovery plans. ARTs are tokens backed by assets such as commodities, real estate or a portfolio of different assets, while EMTs maintain a stable value by being pegged to fiat currencies and are used for payments, similar to stablecoins.
Key provisions include the obligation for token issuers to maintain sufficient financial resources (equity) to mitigate potential risks. The EBA has established criteria to evaluate higher risk scenarios, requiring greater reserves of own funds.
The EBA reports outline the process and timeline for issuers to adjust their funds to at least 3% of the average significant assets reserve, with an implementation plan within 25 working days and full compliance within six months.
Furthermore, the regulator imposes minimum percentages for capital reserves based on daily and weekly maturities and imposes restrictions on concentration by issuers of highly liquid financial instruments. For tokens linked to unofficial currencies such as commodities or real estate, similar limits apply to highly liquid assets.
Regarding recovery plans, EBA incorporates feedback from the consultation to specify communication and disclosure requirements. Clarifies that certain exemptions in 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 cryptocurrencies within the European Union (EU). This initiative addresses the lack of specific legislative coverage for these goods within the EU by providing clear and consistent legal rules.
MiCA’s primary objectives are to improve consumer and investor protection, promote financial stability and innovation, and support the adoption of cryptocurrencies across the EU. The regulation classifies cryptocurrencies 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. The rules relating to stablecoins will come into force in June 2024, while the remaining regulatory provisions will come into force from December 2024, incorporating specific transitional measures.
In January 2024, the European Securities and Markets Authority (ESMA) published two consultation documents on guidance under the Crypto Asset Markets Regulation.