The European Banking Authority (EBA) recently released comprehensive guidelines aimed at addressing recovery plans for issuers of asset-referenced tokens (ARTs) and e-money tokens (EMTs) in the context of the broader Markets in Crypto-Assets (MiCA) regulation. These guidelines are crucial in ensuring the stability and resilience of the crypto-asset market in the EU.
Recovery Plan Requirements
The guidelines set forth by the EBA require issuers to develop robust recovery plans that include key elements such as governance details, recovery options, communication strategies, and a framework of indicators to monitor financial health and operational stability. Specifically, issuers must include a critical de-pegging risk indicator to track the alignment between the token’s market price and the value of referenced assets.
Principle of Proportionality
An essential aspect of the guidelines is the incorporation of the principle of proportionality, which ensures that recovery plan requirements are appropriate for the issuer’s size, complexity, and business model. This approach allows issuers to create practical and effective recovery plans tailored to their unique circumstances.
For tokens issued by multiple entities, the guidelines emphasize the significance of coordination to ensure aligned recovery plan indicators, consistent recovery options, and fair treatment of all token holders. This coordination is essential in maintaining transparency and ensuring the effective implementation of recovery plans.
Transparency and Communication
Transparency is a key focus of the guidelines. Issuers are required to develop communication strategies to inform token holders and other stakeholders about the implementation of recovery options. Additionally, they must manage potential adverse market reactions and ensure stakeholders are aware of the steps taken to restore compliance.
Issuers are mandated to comply with these guidelines and notify the EBA of their compliance status. The guidelines will come into effect two months after publication on the EBA website, providing issuers with a clear framework for maintaining robust recovery plans. The formalization of these guidelines is a significant step toward ensuring the stability and reliability of the rapidly growing crypto industry in the EU.
Overall, the EBA’s guidelines represent a crucial development in the regulation of the crypto-asset market in the EU. By mandating robust recovery plans and emphasizing transparency and communication, the guidelines aim to strengthen the resilience of the market and enhance investor protection. It is essential for issuers to carefully adhere to these guidelines to ensure the stability and reliability of the crypto-asset market in the EU.
