The Markets in Crypto-Assets Regulation ("MiCAR") continues to evolve, reflecting the European Union's efforts to provide a comprehensive regulatory framework for crypto-assets. This article reviews the latest developments from the European Securities and Markets Authority ("ESMA") and the European Banking Authority ("EBA"), including newly issued Q&As, final reports on redemption plans, and updates to regulatory technical standards ("RTS"). We also highlight key opinions from ESMA regarding adjustments to the draft RTS proposed by the European Commission, ensuring that stakeholders remain informed on the dynamic regulatory landscape.
New Q&As
In our last newsletter, we reported on recent EU and Luxembourg developments in MiCA, in particular regarding the entry into force of Regulation (EU) 2023/1114 of 31 May 2023 on markets in crypto-assets (“MiCAR”). Shortly after that newsletter, ESMA published updates to various existing Q&A on topics including the treatment of staking services, grandfathering clauses with AML laws, Article 60 notifications during the CASP transitional phase, simplified authorisation procedures, crypto-asset transfers as standalone or integrated services, and the status of entities not authorised or refused authorisation as CASPs by the transition period's end. These Q&As can be consulted here.
More recently, on 2 October 2024, ESMA published a new Q&A on the status of entities providing crypto-asset services as part of the grandfathering regime, clarifying how crypto-asset service providers that provided their services in accordance with applicable law before 30 December 2024 can continue to do so until the end of the applicable transition period (and not later than 1 July 2026), or until they are granted an authorisation, in accordance with MiCAR. This Q&A can be found here.
Final Report
On 9 October 2024, the EBA published a final report (the “Final report”) on guidelines on redemption plans under Articles 47 and 55 of MiCAR.
MiCA requires issuers of asset referenced tokens (“ART”) and e-money tokens (“EMT”) to create a redemption plan to ensure tokens can be redeemed if the issuer cannot meet its obligations.
Pursuant to Article 47(5) of MiCAR EBA is mandated to issue guidelines to specify:
- the content of the redemption plan and the periodicity of its review, and
- the triggers for the implementation of such a plan.
Furthermore, Article 55 of MiCAR envisages that ‘Title III, Chapter 6 shall apply mutatis mutandis to issuers of e-money tokens’. In the light of this cross-reference which also covers Article 47 of MiCAR, the guidelines which are the subject of the Final Report shall also be applied by issuers of EMTs
The guidelines will be published on the EBA website in all EU languages and take effect two months later.
Delegated Regulation
On 10 October 2024, the EC adopted a Delegated Regulation (Ref: C(2024)6766) (the “Delegated Regulation”) containing regulatory technical standards (“RTS”) on the information to be exchanged between competent authorities under MiCAR.
Article 95 of MiCAR requires authorities to work together and share relevant information while supervising crypto markets. The Commission can set rules specifying what information should be exchanged.
The new Delegated Regulation outlines what authorities need to share, including details on:
- the type of asset (EMT, ART, or other crypto assets),
- crypto asset service providers (CASPs),
- suspected market abuse,
- precautionary measures.
The Council of the EU and the European Parliament will review the regulation. If there are no objections, it will take effect 20 days after being published in the Official Journal of the EU.
Opinion
On 16 October 2024, ESMA published an opinion (ESMA35-1872330276-195) (the “ESMA Opinion”) on the European Commission’s amendments to draft RTS on authorisations and notifications under MiCAR. In our April newsletter, we reported on the ESMA final report of 25 March 2024 (the “March 2024 Final Report”) on various RTS and implementing technical standards (“ITS”) including in respect of the following RTS (the “Relevant RTS”):
- notification requirements, the information referred to in Article 60(7) of MiCAR, to be included in a notification by certain financial entities of their intention to provide crypto-asset services (Article 60(13) of MiCAR);
- authorization requirements, the information referred to in Article 62(2) and (3) of MiCAR, to be included in an application for authorisation as crypto-asset service provider (Article 62(5) of MiCAR).
The link to this newsletter can be found here. In September 2024, the Commission responded on the aforementioned March 2024 Final Report, stating it would adopt the RTS but with amendments to the RTS relating to Article 60(13) and Article 62(5) of MiCAR.
In ESMA's Opinion, ESMA did not fully amend the RTS to comply with the European Commission's recommendations. While ESMA acknowledged some of the proposed amendments and accepted changes in certain areas, such as the scope of information related to the good repute of management body members, it maintained some reservations. ESMA supported keeping the original proposal for mandatory third-party cybersecurity audits, even though the Commission suggested making them optional. ESMA recommended that the Commission update the MiCAR text to include these requirements, stressing their importance for properly assessing crypto-asset service providers' ICT systems.
The next step will be for the Commission to decide whether to adopt the Relevant RTS in the form proposed by ESMA.
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