The European Banking Authority (EBA) published the technical standards MiCA, or Markets in Cryptographic Assets, on Thursday. Ahead of the upcoming July deadline, the EBA has published a detailed set of guidelines on the technical standards that Web3 companies operating in the region will soon have to meet. The aim is to ensure that the Web3 sector in the EU is secure, both financially and technically. The European Union (EU), last year, became one of the first regions in the world to regulate the crypto and Web3 sector with its MiCA regulations.
In January 2023, the EU said it could take up to eighteen months for the EBA to provide guidance on technical standards for the MiCA regulations, a task that has now been completed ahead of schedule.
MiCA regulations published by the EBA: News
The EBA has addressed a number of issues in its final draft technical standards for MiCA, including those related to liquidity requirements, the stress testing programme, asset reserves and recovery plans, wrote the EBA in its official announcement.
Regulatory oversight of Asset Reference Tokens (ART) and Electronic Money (EMT) are also part of the EBA guidelines. While ARTs maintain a stable value by being linked to other assets or fiat currencies, EMTs are digital representations of traditional fiat currencies. CBDCs (central bank digital currencies) are part of the EMT category of crypto assets.
“These standards specify the criteria for the assessment of the highest degree of risk and a minimum set of requirements for the design and implementation of their stress testing programs,” the EBA said on Thursday. It has also detailed the procedure for the authorities to determine the 25 business day deadline for token issuers to raise and manage their own funds, eliminating risks for their token holders.
EU token issuers have also been ordered to adjust their own funds to three percent of the average reserve of their significant assets. In addition, the EBA has identified that crypto assets backed by real estate or commodities can be seen as very valuable tools for liquidity.
The EBA joined forces with the European Securities and Markets Authority (ESMA) to work on these guidelines which make MiCA regulation more comprehensive.
Both organizations agreed that recovery plans for Web3 companies should be properly streamlined to safeguard the EU investor base in light of the collapse of major crypto projects such as FTX and Terra, which had left the sector reeling in 2022.
“These provide for procedures to identify, measure and manage liquidity risk, a contingency policy and mitigation tools, as well as minimum aspects of liquidity stress tests. Taking into account the comments received during the consultation period, the Guidelines further specify the content of the communication and disclosure plan,” the EBA said in its announcement.
About the MiCA regulations of the EU
The Markets in Crypto Assets (MiCA) framework was approved by the EU in October 2022 by the Economic and Monetary Affairs Committee (ECON) of the European Parliament. The law came into effect in June 2023.
The aim of this legislation is to ensure consumer protection, prevent market manipulation and curb financial crimes linked to digital assets in the EU.
“MiCA has been instrumental in establishing a harmonized regulatory standard for cryptoassets, issuers and service providers, focused on consumer protection, transparency and market integrity,” the European Blockchain Observatory and Forum (EUBOF) had said ), praising the MiCA regulation. in May this year.
