Final Draft Standards for MiCA Regulation

The European Banking Authority (EBA) sent a press statement on May 7, 2024, announcing that the European Supervisory Authority has published important regulatory technical standards (RTS) and implementing technological standards (ITS). These guidelines address a number of important topics related to the Markets in Crypto-assets Regulation (MiCAR).

They address, in particular, the authorization process for organizations that issue asset-referenced tokens (ARTs), the standards for determining whether to approve white papers about ARTs issued by credit institutions, and the criteria for evaluating the purchase of qualified interests in ART issuers. This development highlights the continued efforts to create thorough regulatory frameworks that ensure investor protection, transparency, and regulatory compliance in the rapidly developing European crypto-assets industry.

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EBA publishes final draft technical standards under MiCAR

On 7 May 2024, the European Banking Authority (EBA) issued a press release stating that the European Supervisory Authority had published three sets of

Global Regulation TomorrowSimon Lovegrove (UK)

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MiCA Regulation: EBA cryptoasset policies RTS

The European Banking Authority (EBA) advances cryptoasset integration with its latest Regulatory Technical Standards (RTS) under the Market in CryptoAssets Regulation (MiCAR).

GrandAlessandro Micagni

Regulatory Technical Standards (RTS) on Authorisation under MiCA Regulation

In line with Article 18(6) of the Markets in Crypto-assets Regulation (MiCAR), the Regulatory Technical Standards (RTS) on authorisation set forth the information requirements that must be met by entities in order to obtain authorization to offer asset-referenced tokens (ARTs) to the general public or to apply for admission to trading. These guidelines are intended to make it easier for qualified regulatory bodies to conduct a thorough evaluation of these applications.

The scope of authorisation has been modified in response to previous discussions and input. First off, it is made clear that the only entities that can request for authority to issue letters (ARTs) are legal persons or businesses that were founded within the European Union (EU). Furthermore, it is stressed that the authorization does not relate to the issuance itself, but rather to the public offer or admission to trading. This implies that any company requesting authorization must be the issuer of the relevant ARTs, even though the issuing procedure itself is not subject to authorization.

The MiCA framework's need for regulatory specificity and clarity is emphasised by these modifications. These standards seek to guarantee that only allows organisations participate inside the ART market, improving investor protection and market integrity while promoting innovation in the European crypto-assets ecosystem. They do this by outlining eligibility requirements and making the scope of permission clear.

Implementing Technical Standards (ITS) on Approval under MiCA Regulation

In accordance with Article 18(7) of the Markets in Crypto-assets Regulation (MiCAR), the Implementing Technical Standards (ITS) on authorisation offer an organized application procedure for firms wishing to be authorised to offer asset-referenced tokens (ARTs). These guidelines include a template for the application itself as well as the format for the application letter. They also provide clarification on the steps taken by regulatory bodies to determine whether these applications are complete.

An essential elucidation provided by the ITS concerns the function of credit institutions in the procedure. In contrast to other organizations requesting clearance, credit institutions merely need to get permission in order to publish an ART-related white paper. Credit institutions therefore fall beyond the purview of the Regulatory Technical Standards (RTS) and Implementing Technical Standards (ITS) pertaining to authorisation.

This distinction draws attention to the customised strategy used in the MiCA framework to support various entity kinds involved in the crypto-assets market. In order to promote regulatory clarity and efficiency in monitoring the rapidly expanding crypto-assets market in the European Union, the MiCA legislation acknowledges particular requirements for credit institutions and offers standardized procedures and templates for the authorization process.

Regulatory Technical Standards (RTS) on Detailed Information Requirements for ARTs Acquisition Notifications

Within the framework of the Markets in Crypto-assets Regulation (MiCAR), the Regulatory Technical Standards (RTS) on the detailed content of information required for notifications of proposed acquisitions of direct or indirect qualifying holdings are essential in helping to streamline the prudential assessment process. These criteria, which were created in compliance with MiCAR's Article 42(4), specify the crucial data required by authorized bodies to assess prospective purchases in asset-referenced token (ART) issuers that aren't financial institutions:

• Reputation Assessment: To make sure that companies making acquisitions have a positive reputation in the financial market, the RTS lays down standards for evaluating the reputation of the potential acquirer.

• Evaluation of eligibility: Standards are offered to assess the eligibility of those who will oversee the target project after acquisition, guaranteeing the participation of knowledgeable and skilled staff.

• Financial Soundness: To protect against any possible financial risks connected to the purchase, the RTS contains procedures for evaluating the proposed acquirer's financial health and stability.

• Evaluation of Management: Following the acquisition, criteria are set to assess the target undertaking's cautious and sound management, guaranteeing efficient governance and risk management procedures.

• Anti-Money Laundering Measures: In order to reduce potential risks to the financial system, criteria are defined for recognizing and addressing suspicions of money laundering or terrorist financing activities related to the acquisition.

Furthermore, the RTS includes reminders about adhering to privacy requirements in the authorization application as well as the notice of proposed acquisition processes in response to consultations and privacy concerns. Notably, credit institutions are exempt from requiring authorization in order to issue ARTs, but they still need to notify the appropriate authority of their activities and get approval for related white papers. This is indicative of the MiCAR framework's tailored approach for various issuer types in the crypto-assets market.

Regulatory Technical Standards (RTS) for White Paper Approval Procedure under MiCA Regulation

Credit institutions, appropriate authorities, and pertinent central banks—including the European Central Bank—must follow certain deadlines and procedures when it comes to the approval of white papers for asset-referenced tokens (ARTs). These procedures are outlined in the Regulatory Technical Standards (RTS) on the process. These guidelines have been developed in accordance with Markets in Crypto-assets Regulation (MiCAR) Article 17(8).

The approval process is given a formal framework by the RTS, which guarantees efficiency, transparency, and regulatory compliance. These standards seek to expedite the approval process for credit institution-issued white papers related to advance release transactions (ARTs) by providing precise deadlines and delineating the roles and duties of relevant parties. In the changing context of crypto-assets in the European Union, legal clarity is crucial for boosting investor protection, encouraging innovation, and building confidence among market players.

Streamlining Approval Processes

Establishing Regulatory Technical Standards (RTS) for white paper clearance processes is a major step towards regulatory efficiency and clarity in the ever-changing world of crypto-assets within the EU. These standards speed the approval process for white papers related to asset-referenced tokens (ARTs) published by credit institutions by formalising the approval framework and ensuring transparency and regulatory compliance.

With clear tasks and deadlines, this methodical approach protects investors, stimulates creativity, and builds confidence among market players. Adherence to such norms is essential for preserving market integrity and enabling sustainable growth within the regulatory framework of the European Union as the crypto-assets market continues to mature.