Response to consultation on Guidelines on templates to assist competent authorities in performing their supervisory duties regarding issuers’ compliance under MiCAR
Question 1: Do you have any comments on template U 05.01 on how issuers should report on their own funds requirements? Do you have any comments on template U 05.02 on how issuers should report on the composition of their available own funds?
The EBA should clarify whether the reporting of additional own funds in field ‘0050’ of template U 05.01 should include: (i) the calculation in Article 35(1) which is also reported in field ‘0010’ of template U 05.01; or (ii) only the calculation in Article 35(2) and (3) and therefore represent the additional own funds (if applicable) beyond the minimum requirement.
Question 2: Do you have any comments on template U 06.00 on how issuers should report on their reserve of assets by maturity ladder?
We recommend reducing the number of time-buckets on the proposed maturity ladder report by half to strike a better balance between proportionality and data useability, for instance drawing on existing maturity and liquidity reporting for alternative investment funds with just over half the number of proposed time-buckets.
For instance, see the consolidated AIFMD reporting templates which in AIF file 24(2) tab fields 211-217 require financing terms (https://www.esma.europa.eu/sites/default/files/library/2015/11/2013-1359_consolidated_aifmd_reporting_template-v1.1_revised.xlsx)
Question 3: To note, templates U 03.01 and U 03.02 in these guidelines are the same templates as templates S 03.01 and S 03.02 in the draft ITS under Article 22(7) of MiCAR, only the tokens in scope of the reporting is different. Do you have any comments on the extension of the scope, compared to the draft ITS, to EMTs referencing to EU currencies for these templates on the composition of the reserve of assets with these guidelines?
We support the EBA’s proposal to introduce a threshold for reporting that is based on issue value, but propose raising this threshold to EUR 1bn to calibrate reporting and align with the EBA’s intent to ensure proportionate application of its guidelines. We note that MiCAR imposes a EUR1mn threshold for quarterly reporting (Article 22) with discretion for NCAs to require sub-threshold issuers to meet the reporting requirements.
We recommend that the EBA also sets forth other factors for NCAs to assess the proportionality of imposing additional reporting requirements, including the extent of cross-border transactions and the extent of other uses of the EMT which are not for means of exchange (e.g., investment functions and services). Setting forth additional factors to assess proportionality will reduce the burden on smaller issuers and not impose undue compliance obligations on issuers of EMTs with limited or no cross-border nexus and use.
Question 4: Do you have any comments on templates U 07.01, U 07.02 and U 07.03 on how issuers should report information needed to assess the significance criteria as specified in Articles 43 and 56 of MiCAR?
The EBA should clarify that only holders and holdings that meet the thresholds in Article 3(1)(36) and Article 41 need be reported on template U 07.02. Imposing sub-threshold reporting obligations appears disproportionate compared to what is required for NCAs to assess tokens against quantitative significance criteria in MiCAR (e.g., Article 43(1)(b) for ARTs).
As a general matter, we are concerned about the reporting of the personally identifiable information (PII) of token holders. As we have set out in detail previously, we support the reporting of unique identifier information for each holder by the CASP to the issuer to facilitate accurate reporting and avoid the double counting of holders and transactions, but this unique identifier should be pseudonymous. Requiring CASPs to provide issuers with the PII of their users such as the originators address, personal document number, date and place of birth serves no net benefit over a unique pseudonymous identifier and would create a honey pot of information which bad actors may seek to exploit. While CASPs and issuers may adopt measures to secure PII data, the nature of blockchain technology can result in holdings in cryptocurrency wallets being broadcast in aggregate on the blockchain. Where information such as PII that is not directly available on blockchains is collected and retained, this may pose serious privacy and security concerns. This is particularly the case where such information would link a person’s PII with their blockchain addresses, which, if accessed without authorisation, could reveal their entire blockchain transaction history. Privacy is a central tenet to a well-functioning internet and imperative to support user confidence of blockchain technology and to spur ongoing innovation. We respectfully request that the EBA only require the reporting of pseudonymous unique identifier information by CASPs to issuers and not PII. Building on industry proposals, approaches to the reporting and storage of information using anonymisation/pseudonymisation should be considered to mitigate the risks identified above.
As we have also set out previously, stablecoin transaction reporting should be limited to better reflect our understanding of the intention of the co-legislators and only cover in template U 07.03 the following transactions:
- those that are for means of exchange;
- involving custodial wallets and not non-custodial wallets; and
- where both the payer and payee are in the Eurozone rather than covering all transactions with an EU payer and/or EU payee.
See the Crypto Council for Innovation’s response to the European Banking Authority’s 3rd Consultation Package on Prudential and Related Aspects of MiCAR, https://media.cryptoforinnovation.org/2024/02/f1wTmm9d-Comment-Letter_-EBAs-3rd-MiCAR-Consultation.pdf
Question 5: To note, templates U 01.00, U 02.00, U 04.01, U 04.02, U 04.03 and U 04.04 in these guidelines are the same templates as templates S 01.00, S 02.00, S 04.01, S 04.02, S 04.03 and S 04.04 in the draft ITS under Article 22(7) of MiCAR, only the tokens in scope of the reporting is different. Do you have any comments on the extension of the scope, compared to the draft ITS, to EMTs referencing to EU currencies for these templates related to number of holders; value of the token issued and size of the related reserve of assets; and information on transactions per day with these guidelines?
As we set out in our response to question 3, we support the EBA’s proposal to introduce a threshold for reporting that is based on issue value but recommend the following:
- raising the threshold to EUR 1bn to better calibrate reporting;
- introducing other factors for NCAs to assess the proportionality of imposing additional reporting requirements, including the extent of cross-border transactions and the extent of other uses of the EMT which are not for means of exchange (e.g., investment functions and services).
Question 6: Do you have any comments on template U 09.04 on how CASPs should report to issuers the cross-border transactions that are associated as a means of exchange?
We urge the EBA to narrow the scope of reporting to only transactions where both the payer and payee are in the Eurozone rather than covering all transactions with an EU payer and/or EU payee, as we believe this to be the intention of the co-legislators in the primary legislation. *
As a general matter, we recommend that the EBA clarifies that it only expects issuers to request and collect the information from CASPs that is necessary for the issuer to meet their own reporting obligations, as required by under the general principle of proportionality and the objective of reducing unnecessary reporting requirements and related risk when it comes to the transfer of data.
* Recital 19, 61, 110 and Article 22 and 23, MiCAR
Question 7: To note, CASPs templates U 08.00, U 09.01, U 09.02, U 09.03 and U 10.00 in these guidelines are the same templates as templates S 06.00, S 07.01, S 07.02, S 07.04 and S 08.00 in the draft ITS under Article 22(7) of MiCAR, only the tokens in scope of the reporting is different. Do you have any comments on the extension of the scope, compared to the draft ITS, to EMTs referencing to EU currencies for these templates related to information on holders; information on transactions; and information on token held by the CASPs with these guidelines?
See our responses to question 3 and 5.