EBA responds to targeted consultation on MiCAR

The European Banking Authority (EBA) has published its response to the European Commission's targeted consultation on the review of the Regulation on Markets in Crypto-assets (Regulation (EU) 2023/1114) (MiCAR). The targeted consultation contained technical and legal questions on whether MiCAR remains fit for purpose in light of evolving market and international developments.

The response includes detailed answers and recommendations across the consultation's coverage of scope, asset-referenced tokens and e-money tokens, crypto-asset service providers, and areas beyond the current scope of MiCAR. Of particular interest are the following:

• Harmonisation definitions: the EBA recommends that further harmonisation on the definitions of financial instrument and tokenised deposits is needed to prevent divergent national approaches. In the EBA's view, tokenised financial instruments should remain out of scope of MiCAR.
• Classification: the EBA recommends that further analysis be carried out as to classification of commodities-linked tokens as there is still a lack of clarity on regulatory status of such tokens and notes the risk of arbitrage in the absence of regulatory clarity in edge cases such as hybrid tokens, synthetic exposure, and "wrapped" tokens.
• Prudential requirements: the EBA response requests clarification as to the application of requirements to entities which are both issuers and crypto-asset service providers and improvements to own funds requirements, among other recommendations in relation to alignment and calibration. The EBA also suggests reducing the deposit requirement for e-money token reserve assets.
• Crisis management: the EBA suggests extending the toolkit to non-bank issuers and further mechanisms to better coordinate recovery and redemption planning.
• Lending - the EBA recommends regulating crypto-asset lending, including activities linked to decentralised finance, in view of the risks posed to consumers.
• Third-country multi-issuer stablecoin schemes: the EBA recommends a dedicated regulatory and supervisory regime to mitigate the significant risks posed by these schemes.

The EBA also provides feedback in relation to group supervision, reporting, and the interplay between MiCAR and other payment services regulation.

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