On September 29, 2023, the European Banking Authority (EBA) unveiled its response to the European Commission’s Call for Advice. This pertains to two delegate acts under the Markets in Crypto-Assets Regulation (MiCAR), focusing on how the significance of asset-referenced tokens (ARTs) and electronic money tokens (EMTs) should be determined, as well as outlining supervisory fees for these assets.
"The feedback we provided aims to establish clear indicators for determining the significance of both ARTs and EMTs, detailing their interconnectedness and activities on a global scale," said José Manuel Campa, Chair of the EBA. The guiding indicators proposed by the EBA will address complex dimensions of interconnectedness, such as the direct and indirect ties between issuers and the financial system, alongside the international reach of transactions involving these tokens.
Under the framework set forth by MiCAR, the EBA emphasizes the importance of evaluating several core and ancillary indicators for assessing significance. These indicators are intended to offer a comprehensive view of the potential risks and impacts associated with ARTs and EMTs. According to the EBA's document, these evaluations will especially consider data availability while looking into various transaction types where tokens serve as payment methods.
Regarding the aspect of supervisory fees, the EBA has suggested a method for distributing these costs among issuers, ensuring adherence to the principle of full cost recovery as mandated by MiCAR. This approach includes the costs incurred in supervisory activities, including forming supervisory colleges and delegating certain tasks to national competent authorities. "By confirming this framework, we aim to ensure transparency and accountability in the costs related to oversight for significant ARTs and EMTs," noted Campa.
This regulatory process is part of a larger initiative under MiCAR, which creates a robust environment for the regulation and oversight of crypto-asset services and issuance in the European Union. The regulation became effective on June 29, 2023, with specific provisions regarding ARTs and EMTs set to take effect on June 30, 2024.
MiCAR encompasses various activities related to publicly offering ARTs and EMTs or seeking admission for these tokens to trading venues. The EBA's responsibilities include identifying which ARTs and EMTs are significant and developing 17 technical standards under MiCAR, along with additional guidelines in collaboration with the European Securities and Markets Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA).
In December 2022, the European Commission reached out to the EBA, initiating this Call for Advice specifically about two matters: the criteria for classifying ARTs and EMTs as significant, and the fees the EBA may impose on issuers. The request was aligned with a broader inquiry regarding specific delegated acts under the Digital Operational Resilience Act (DORA). The EBA was granted until September 30, 2023, to respond to both matters.
To develop its response, the EBA facilitated two public workshops on May 17 and July 24, allowing participants to provide insights and further inputs. Additionally, the EBA engaged directly with several key institutions including the Financial Stability Board, the European Central Bank, and national regulators to ensure a well-rounded approach to its advice. The discussion also drew from the EBA's network on crypto-assets, particularly concerning the element of supervisory fees.
Looking ahead, the interplay between MiCAR and the evolving cryptocurrency landscape remains critical. The EBA's response is anticipated to guide regulatory actions and align with broader initiatives in Europe aimed at enhancing financial stability and consumer protection in the crypto-asset domain.