In an effort to regulate the rapidly expanding crypto industry, the European Banking Authority (EBA) has introduced comprehensive guidelines concerning recovery plans for asset-referenced tokens (ARTs) and e-money tokens (EMTs) under the Markets in Crypto-Assets (MiCA) regulation. The guidelines aim to ensure the stability and reliability of these digital tokens by setting out strict requirements for issuers.
The guidelines put forth by the EBA mandate that issuers must develop recovery plans that cover key elements, governance details, recovery options, and a communication strategy. These plans should include a framework of indicators to monitor the financial health and operational stability of the issuer, with a focus on tracking the alignment between the token’s market price and the value of referenced assets.
One key aspect of the guidelines is the principle of proportionality, which ensures that recovery plan requirements are tailored to the size, complexity, and business model of the issuer. This approach provides flexibility for issuers to design practical and effective recovery plans that suit their individual circumstances, while still meeting regulatory standards.
For tokens issued by multiple entities, the guidelines stress the importance of coordination to ensure consistent recovery plan indicators, aligned recovery options, and fair treatment of all token holders. This emphasizes the need for transparency and collaboration among issuers to maintain the integrity of the crypto-asset market.
The guidelines also place a strong emphasis on transparency. Issuers are required to develop communication strategies to keep token holders and other stakeholders informed about the implementation of recovery options and any steps taken to restore compliance. This includes transparent internal decision-making processes and timely communication with competent authorities.
Following a public consultation and feedback from industry stakeholders, the EBA developed these guidelines to strike a balance between regulatory oversight and operational flexibility. Issuers are required 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 roadmap for implementing robust recovery plans.
By formalizing these guidelines, the EBA aims to strengthen the resilience of the crypto-asset market in the EU and ensure the stability and reliability of digital tokens. It is crucial for issuers to adhere to these guidelines to maintain trust and confidence in the growing crypto industry.
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