EC adopts Delegated Regulation under MiCAR on liquidity management for ARTs and EMTs

The European Commission has adopted a Delegated Regulation supplementing Regulation (EU) 2023/1114 (Markets in Crypto Assets Regulation) (MiCAR), regarding regulatory technical standards (RTS) specifying the minimum contents of the liquidity management policy and procedures for issuers of asset-referenced tokens (ARTs) and e-money tokens (EMTs). The RTS aim to ensure that issuers maintain robust liquidity frameworks capable of withstanding both normal and stressed market conditions.

Key provisions include:

• Maintaining separate liquidity management policies and procedures for each ART or EMT issuance, tailored to the specific characteristics and risk profile of the associated reserve of assets.
• Establishing liquidity contingency plans that include: (i) predefined triggers and mitigation tools; and (ii) early warning indicators, such as volatility in the value of referenced assets, discrepancies between token and asset market values and unusual transaction volumes or price movements
• Assessing the appropriateness of overcollateralisation, particularly where the referenced assets are highly volatile or not included in the reserve of assets.
• Implementing measures to mitigate custodian concentration risk. The Delegated Regulation will now be subject to scrutiny by the European Parliament and the Council of the EU. If no objections are raised, it will be published in the Official Journal of the European Union.

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