The European Banking Authority (EBA) has unveiled comprehensive guidance on recovery plans for issuers of asset-referenced tokens (ARTs) and e-money tokens (EMTs) as part of the broader Markets in Crypto-Assets (MiCA) regulation.
Under MiCA, ARTs are digital tokens backed by assets such as commodities, real estate or a diversified basket of assets, while EMTs are tokens pegged to fiat currencies to maintain a stable value for payments – known as stablecoins.
The guidelines are intended to ensure that robust recovery plans are in place to maintain compliance with regulatory requirements if issuers fail to meet asset reserve standards.
Remediation and Disclosures
The EBA guidelines require issuers to develop recovery plans that include a summary of key elements, governance details, recovery options and a communication strategy.
These plans should include a comprehensive framework of indicators to monitor the financial health and operational stability of the issuer, including a critical de-pegging risk indicator to ensure the alignment between the market price of the token and the value of the referenced assets to follow.
The guidelines incorporate the principle of proportionality and ensure that the recovery plan requirements are consistent with the size, complexity and business model of the issuer.
According to the EBA, this approach provides flexibility, allowing issuers to design practical and effective recovery plans tailored to their unique circumstances.
For tokens issued by multiple entities, the guidelines emphasize the importance of coordination to ensure aligned recovery plan indicators, consistent recovery options, and fair treatment of all token holders.
Transparency
The guidelines are mainly aimed at ensuring transparency. Issuers should develop communication strategies to inform token holders and other stakeholders about the implementation of recovery options.
They must also manage potential adverse market reactions and ensure stakeholders are aware of steps taken to restore compliance. The guidelines specify that recovery plans should include transparent internal decision-making processes and timely communication with competent authorities.
The EBA developed these guidelines following a public consultation that ended in February 2024, which incorporated feedback from various industry stakeholders. The final guidelines balance regulatory oversight with operational flexibility, with the aim of strengthening the resilience of the EU crypto asset market.
Issuers must comply with these guidelines and notify 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 maintaining robust recovery plans.
The EBA said the formalization of these guidelines represents an important step towards ensuring the stability and reliability of the EU’s fast-growing crypto industry.