New EBA regulations strengthen governance, conflict management and remuneration policies for crypto assets
On 6 June 2024, the European Banking Authority (EBA) enhanced the regulatory framework for crypto assets by publishing a package with three new regulatory products under the Markets in Crypto-Assets Regulation (MiCAR). These products focus on governance, conflicts of interest and remuneration aiming to create a transparent, secure, and well-regulated market in crypto assets.
The package covers:
Governance guidelines
These guidelines focus on the principle of proportionality, outlining minimum content of governance arrangements for issuers of asset-referenced tokens (ARTs), covering detailed tasks and responsibilities of the managing body, organisational requirements for issuers, risk management, and consumer protection.
The governance guidelines were developed in collaboration with the European Securities and Markets Authority (ESMA) and the European Central Bank and will come into effect three months after their publication on the EBA’s website.
Remuneration Regulatory Technical Standards (RTS)
These standards apply to significant ART and electronic money token (EMT) issuers, setting up a framework for remuneration policies that ensure sound risk management and cross-sectoral consistency, mirroring the remuneration framework for investment firms.
Under Regulation (EU) 2023/1114, issuers of significant ARTs and EMTs should implement remuneration policies which will ensure sound risk management and avoid incentives to lower risk standards. This requirement can extend to issuers of non-significant EMTs if mandated by the competent authority.
The EBA, in collaboration with ESMA, is tasked with developing RTS to define the minimum content of these remuneration policies. These standards will cover governance arrangements, liquidity management policies, and procedures for adjusting required own funds.
RTS on conflict of interest for Arts issuers
These specify requirements for managing, preventing, identifying, and disclosing conflicts of interest, requiring issuers to have effective policies and procedures in place. Particular attention is given to conflicts arising from asset reserves and the organisational structure of issuer groups.
The three new regulatory products will be submitted to the EU Commission for endorsement. As a next step, they will be subject to scrutiny by the European Parliament and the European Council before being published in the Official Journal of the European Union.
The EBA’s press release and the three regulatory products published, can be found here.
If you are unsure whether MiCA Regulation may apply to you, you can use our MiCA Assessment Tool to obtain a free preliminary assessment here.
