Key Takeaways
- EBA policy officials provided insights into proposed guidelines for issuers of asset-referenced tokens
- Hearing addressed internal governance of stablecoin issuing companies, management requirements and compliance
The European Union’s push for comprehensive crypto regulation took center stage as the European Banking Authority (EBA) held a public hearing to deliberate on proposed operational guidelines for stablecoin issuers under the upcoming Markets in Crypto Assets (MiCA) framework. This development follows the EU’s historic adoption in May 2023 of the world’s first comprehensive set of rules for cryptoassets regulation.
MiCA, approved by EU member states and the European Parliament, mandates that crypto firms must be authorized by the EU to serve customers within the bloc and comply with measures against money laundering and terrorism financing.
Regulatory bodies, including the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA), have been actively engaging with stakeholders to formulate rules and guidelines for crypto issuers in line with MiCA mandates. The EBA, tasked with creating a single rulebook for stablecoin issuers, will subsequently elaborate on related policies that supervisors must implement.
Notably, the EBA, responsible for stress testing EU banks, is extending its purview to assess the potential impact of strains in non-bank financial institutions (NBFIs), including those related to cryptocurrency entities. This move comes amid rising concerns over contagion, prompting the need for a deeper understanding of the links between banks and other financial firms. According to the Financial Times, NBFIs currently hold around $219 trillion, nearly half of the world’s financial assets.
The EBA has already taken proactive steps to address the role of crypto in potential systemic stress. In November, it published draft rules on liquidity and capital requirements for stablecoin issuers in line with the EU’s new MiCA regulation. The EBA has also proposed rules requiring individuals with stakes exceeding 10% in a crypto company to undergo vetting for convictions or sanctions. Additionally, it has advised crypto companies to monitor customers using privacy coins or self-hosted wallets to detect potential money laundering activities.
During the recent public hearing, EBA policy officials provided insights into proposed guidelines for issuers of asset-referenced tokens (ART), defined by MiCA as crypto assets referencing the value of official currencies or assets to maintain stability. The hearing covered the first batch of guidelines, addressing internal governance of stablecoin issuing companies, management requirements, compliance, remuneration, and disclosures for conflicts of interest.
Isabel Vaillant, EBA Director of Prudential Regulation, emphasized the significance of this batch of guidelines, encouraging stakeholders to use the public hearing as an opportunity for dialogue to ensure a solid foundation.
