The EBA publishes governance regulatory products under the Markets in Crypto-Assets Regulation

The European Banking Authority (EBA) has been actively working on shaping the regulatory landscape for crypto assets by publishing three regulatory products on governance, conflicts of interest and remuneration under MiCAR. These products are part of the EBA’s ongoing efforts to foster a transparent, secure, and well-regulated crypto-assets market.

The package of EBA regulatory products on governance and remuneration includes:

Guidelines on the minimum content of the governance arrangements for issuers of ARTs that specify further the various governance provisions in MiCAR, taking into account the principle of proportionality. In addition, these Guidelines clarify the tasks, responsibilities and organisation of the management body, and the organisational arrangements of issuers, including the sound management of risks across all the three lines of defence.

Final draft Regulatory Technical Standards (RTS) on the minimum content of the governance arrangements on the remuneration policy. The RTS are applicable to issuers of significant asset-referenced tokens (ARTs) and electronic money institutions issuing significant e-money tokens (EMTs), and, where Member States require to apply Article 45(1) MiCAR, to issuers of non-significant EMTs.

To ensure that remuneration policies promote the sound and effective risk management of issuers, do not create incentives to reduce risk standards and ensure the cross sectoral consistency, these final draft RTS set out a framework similar to the remuneration framework for investment firms that aims at achieving the same regulatory objectives.

Final draft RTS on conflicts of interest for issuers of ARTs that specify the requirements for policies and procedures on conflicts of interest (CoI). Issuers of ARTs shall implement and maintain effective policies and procedures to identify, prevent, manage and disclose conflicts of interest. For CoI to be effectively managed, the policies and procedures should ensure that there are sufficient resources available for their management.

The final draft RTS underline that Issuers of ARTs should pay particular attention to conflicts of interest that could arise in relation to the reserve of assets. Where the issuer of ARTs is a member of a group, the policies and procedures must also take into account any circumstances which may give rise to a CoI due to the structure and business activities of other entities within the group.

Legal basis and next steps

The EBA guidelines on the minimum content of the governance arrangements for issuers of ARTs have been developed in accordance with Article 34(13) of MiCAR which mandates the EBA in close cooperation with European Securities and Markets Authority (ESMA) and European Central Bank (ECB) to issue guidelines to specify the minimum content of the governance arrangements for issuers of ARTs in particular regarding the monitoring tools for the risks; the business continuity plans; the internal control mechanism; and the audits, including the minimum documentation to be used in the audits.

The RTS on the minimum content of the governance arrangements on the remuneration policy have been developed in accordance with Article 45(7) of MiCAR which mandates the EBA in close cooperation with ESMA to develop the RTS specifying the main governance processes regarding the adoption and maintenance of the remuneration policy and the main policy’s elements that should be adopted by the issuer as part of the remuneration policy.

The RTS on conflicts of interest for issuers of ARTs have been developed in accordance with Article 32(5) of MiCAR which mandates the EBA to specify the requirements for the conflicts of interest policies and procedures for issuers of asset-referenced tokens as well as the details and methodology for the content of the disclosure. It has been elaborated in close cooperation with the European Securities and Markets Authority (ESMA), who is mandated to develop a similar RTS for crypto-asset service providers (CASPs) under Article 72(5) of MiCAR.