Response to consultation on RTS to specify the minimum contents of the liquidity management policy and procedures under MiCA
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Question 1. Do respondents have any concerns of Article 1 for the identification, measurement and monitoring of liquidity risk of issuers? Do respondents think that the main aspects in the processes for issuers of tokens to properly manage liquidity risk are captured?
We would argue that holding up to 60% of reserve assets in cash across multiple banks is not only unnecessary but does not align with counterparty or operational risk management. A reserve portfolio that is composed of a mix of liquid instruments which include cash, short dated government debt obligations and collateralized repurchase agreements is a more prudent approach to liquidity management.
Question 2. Do respondents have any comment on the minimum content of the liquidity contingency policy proposed in Article 2? In particular, do respondents have any concern on the inclusion of the required indicator to measure deviations between the market value of the token and the market value of the assets referenced as an early warning signal to be calibrated by the issuer?
We would note that the EBA has highlighted that ART and EMT holders can request redemption at any time, and issuers must comply either by cash or asset transfer. We propose that the EBA explicitly provide that transferring assets directly to holders could be a valid approach to manage liquidity risks in urgent scenarios.