The European Banking Authority Reveals Guidelines for Recovery Plans for Asset-Referenced Tokens
The European Banking Authority (EBA) has introduced detailed guidelines concerning 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.
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, commonly known as stablecoins.
These guidelines are formulated to ensure that strong recovery plans are in place to uphold compliance with regulatory standards if issuers fail to meet asset reserve requirements.
Recovery and disclosure requirements under the guidelines encompass the development of recovery plans that outline key elements, governance structure, recovery options, and a communication strategy.
Issuers are expected to establish a comprehensive set of indicators to monitor their financial health and operational stability, including a critical de-pegging risk indicator to track the alignment between the market price of the token and the value of its referenced assets.
The principle of proportionality is integrated into the guidelines to ensure that recovery plan obligations are scaled according to the size, complexity, and business model of the issuer, allowing for the creation of practical and effective plans tailored to each issuer’s specific circumstances.
Transparency is a key focus of these guidelines, with issuers required to develop communication strategies to keep token holders and other stakeholders informed about the implementation of recovery options and any decisions made.
Issuers must comply with these guidelines and inform the EBA of their compliance status. The guidelines will come into effect two months after being published on the EBA website, providing issuers with a clear roadmap for maintaining robust recovery plans.
The EBA has highlighted that the formalization of these guidelines signifies a significant advancement in ensuring the stability and reliability of the rapidly expanding crypto industry in the EU.
