Response to consultation on the adjustment of own funds requirements and design of stress testing programmes for issuers under MiCAR

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Question 1. Is the procedure clear and the timelines for the issuer to provide views on the assessment and submit the plan reasonable?

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Question 2. Are the timeframes for issuers to adjust to higher own funds requirements feasible?

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Question 3. During the period when own funds need to be increased by the issuer, should there be more restrictions on the issuer to ensure timely implementation of the additional own funds requirements, for example banning the issuance of further tokens?

N/A

Question 4. Do you agree with the criteria to identify if an issuer has a higher degree of risk?

In the case of gold, gold tokens carry a lower risk vis a vis other  types of tokens. Therefore, when determining the criteria for mandating a specific level of own funds, the features and the risk profile of the tokens issued should be considered. A token which represents direct ownership in physical gold, avoids many of the risks that other types of tokens pose. It is not the financial liability of the issuer, but represents the investor’s ownership in custodied gold. There are no risks from leverage as a physically backed gold token does not allow for leverage by the issuer. Such a token does not incur risks from asset-liability mismatch, nor maturity mismatch risks. The risk level of the token issued should be factored into the assessment of the issuer’s risk level.

Question 5. Do you agree with the procedure to assess whether an issuer has a higher degree of risk?

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Question 6. Do you consider the criteria and their evaluation benchmarks sufficiently clear?

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Question 7. Do you agree with the need for a solvency and liquidity stress-test and the requirements of the stress-test?

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Question 8. Do you agree with the frequency and time horizon of the solvency and liquidity stress-test? Should there be more differentiation between significant and not-significant issuers? Should the stress testing be more frequent for issuers of asset-referenced tokens referenced to official currencies?

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Question 9. Should a reverse stress testing requirements/methodology be introduced? Please provide your reasoning.

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Question 10. Do you have any other comments in relation to the stress-testing part in these RTS?

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Name of the organization

World Gold Council