On October 20, the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) collaborated to unveil crucial guidelines shaping the landscape of asset-referenced tokens (ARTs) and crypto-asset service providers (CASPs). This joint effort is encapsulated in a consultation paper, presenting two drafts that delve into the evaluation of key aspects.

Assessment of Shareholders and Members

The first draft focuses on the evaluation of shareholders or members holding qualifying stakes in issuers of ARTs and CASPs. The proposed guidelines aim to establish a unified approach for regulatory bodies when assessing suitability. This involves the pivotal steps of authorizing ART and CASP issuance and conducting prudential assessments for potential acquisitions.

Simultaneously, the second draft hones in on the assessment of the suitability of management body members in firms dealing with ARTs and CASPs. This segment introduces standardized criteria for evaluating crucial attributes such as knowledge, expertise, integrity, and the ability to dedicate adequate time to fulfill responsibilities.

To nurture and safeguard the integrity of the cryptocurrency market and its associated services, it is imperative to ascertain the suitability of both the management body members of ART and CASP issuers and individuals seeking to hold or acquire qualifying stakes in them. This dual-pronged approach reinforces trust within the industry.

Clarity and Standardization for Industry Players

A screenshot from the consultation paper

The outlined guidelines in these drafts serve a twofold purpose. Firstly, they offer clarity and standardization in evaluating the suitability of the management body, shareholders, and members holding qualifying stakes. Secondly, this standardized approach aims to minimize potential discrepancies and arbitrage in rule application.

Consultation Period and Regulatory Landscape

As industry players anticipate forthcoming regulations, the consultation period for these guidelines remains open until January 22, 2024. This extended timeline emphasizes the importance of comprehensive industry input. Meanwhile, the European Union’s banking regulator encourages stablecoin issuers to voluntarily adhere to specific “guiding principles” related to risk management and consumer protection.

The regulatory landscape is evolving, with the EBA unveiling its initial set of measures for public input on July 12. These measures aim to clarify the requirements of the Markets in Crypto-Assets regulation (MiCA), scheduled for enforcement on June 30, 2024.

Industry participants are urged to stay informed and actively contribute to the ongoing dialogue shaping the future of crypto entities in the European market.

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