Recital 54 provides guidance regarding reserve requirement applicable to ART issuers and their reserve of assets in cases where such issuers market their tokens both in the Union and in third countries. This recital provides that, in such cases, these ART issuers “[…] should ensure that their reserve of assets is available to cover the issuers’ liability towards Union holders” and that “The requirement to hold the reserve of assets with firms subject to Union law should therefore apply in proportion to the share of asset-referenced tokens that is expected to be marketed in the Union”.

This recital raises several interpretation issues. 

Question 1

First, on the cases it addresses, as it is not entirely clear whether this recital tackles i) an issuer which issues in the Union and in third countries a technically unique token -that could possibly not be attributable to a specific issuers in case of multi issuance- or ii) an issuer that issues different tokens, that could be marketed under the same name but that would not be technically identical  -and therefore that could be attributable to a specific issuer in case of multi issuance-.

Question 2

Second, on the possible extension of recital 54 to other type of issuers (namely, EMT issuers, whether or not they are subject to reserve of assets requirements). The rationale for such an extension is that EMT issuers could also market tokens both in the Union and in third countries, and could therefore be in the situation described in the recital. 

Question 3

Third, if ever this recital was to be extended to all EMT issuers, then the articulation of said recital with article 54 of MICAR would be in question. Article 54 of MICA foresees that EMT issuers should safeguard funds received by issuers of e-money tokens in exchange for e-money tokens in accordance with Article 7(1) of Directive 2009/110/EC, meaning that said funds should be safeguarded using the instruments described in points (a) and (b) of article 54 by no later than five business days (as per article 7(1) of Directive 2009/110/EC). However, if ever recital 54 was to be interpreted as allowing for cases where one or multiple issuers can issue and market one technically identical token both in the Union and in third countries, then it might prove very difficult –if not technically unfeasible- for issuers to have a comprehensive view of the overall amount of tokens that are in each jurisdiction in real time (and therefore to have an exact assessment of issuers’ liability towards Union holders at all time), as tokens would continually circulate between the different jurisdictions on the secondary market, whether through exchanges, hosted wallets or unhosted wallets. The only way for issuers to assess these volumes would be through estimates and reportings from EU exchanges, which would in any case not cover all potential transactions occurring through unhosted wallets. In such a situation, imbalances could be created between the level of funds safeguarded according to recital 54 and the level of funds to be protected as the requirements set per recital 54 (for example, underfunding cases if ever large amount of tokens initially marketed toward third countries would ultimately be held and redeemed by EU holders, said amount exceeding the funds safeguarded pursuant to article 54).