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). These guidelines form part of the broader Markets in Crypto-Assets (MiCA) regulation, which governs the issuance and operation of digital tokens in the European Union. ARTs are tokens backed by tangible assets such as commodities or real estate, while EMTs are pegged to fiat currencies to maintain a stable value, commonly referred to as stablecoins.
The EBA’s guidelines require issuers to develop recovery plans that encompass various essential elements, including a summary of key components, governance details, recovery options, and a communication strategy. These plans must also include a comprehensive framework of indicators to monitor the issuer’s financial health and operational stability. Of particular importance is the inclusion of a critical de-pegging risk indicator, which tracks the alignment between the token’s market price and the value of the underlying assets.
One significant aspect of the guidelines is the principle of proportionality, which ensures that recovery plan requirements are tailored to the issuer’s size, complexity, and business model. This approach allows issuers to design practical and effective recovery plans that are specifically suited to their unique circumstances. For tokens issued by multiple entities, the guidelines stress the importance of coordination to guarantee aligned recovery plan indicators, consistent recovery options, and fair treatment of all token holders.
Transparency is a core focus of the guidelines, with issuers mandated to develop communication strategies that inform token holders and other stakeholders about the implementation of recovery options. Additionally, issuers must manage potential adverse market reactions and ensure stakeholders are informed of the steps taken to restore compliance. Timely communication with competent authorities and transparent internal decision-making processes are also emphasized to facilitate effective implementation of recovery plans.
The EBA developed these guidelines following a public consultation involving feedback from various industry stakeholders. The final guidelines strike a balance between regulatory oversight and operational flexibility, aiming to enhance the resilience of the crypto-asset market in the EU. Issuers are required to comply with these guidelines and inform 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 establishing and maintaining robust recovery plans. The formalization of these guidelines marks a significant milestone in ensuring the stability and reliability of the rapidly expanding crypto industry in the EU.
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