Response to consultation on RTS on procedure and timeframe to adjust its own funds requirements for issuers of significant asset-referenced tokens or of e-money tokens under MiCAR

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Question 1. Is the procedure clear and the timelines for the issuer to submit the plan reasonable?

We recommend the following two changes to the EBA’s proposals for the procedure and timelines for the notification from the NCA to the sART’s issuer, and for the sART’s issuer to adjust its own funds:

  • The period for an sART’s issuer to provide a plan for the adjustment of its own funds should be extended from the 20 working days proposed in the consultation paper to 25 working days, to mirror the time that is given for an NCA to provide notification of the timeframe for the issuer to adjust its own funds; and 
  • A consultation period of 10 working days should be introduced – from when the notification is provided by the NCA to the sART’s issuer and before the period the sART issuer is required to prepare a plan for the adjustment of its own funds – during which the sART’s issuer should be permitted to request that the NCA adjusts the timeframe for the issuer to adjust its own funds.

Question 2. Are the timeframes for issuers to adjust to higher own funds requirements feasible?

We recommend the following two changes to the EBA’s proposals for the timeframe in which sART issuers are required to adjust their own funds:

  • NCAs should be required to have regard to the potential impact on token holders when setting the timeframe for the adjustment of an sART issuers’ own funds. Where an sART issuer can show that an adjustment to its own funds within a 3-month period may have a material impact on token holders, the NCA should be permitted to provide up to 6 months for the sART issuer to adjust its own funds. 
  • The period for an sART issuer to adjust its own funds should commence from when the plan is provided by the sART issuer to the NCA and not from when the NCA notifies the sART issuer of the timeframe for it to adjust its own funds.

Question 3. During the period when own funds need to be increased by the issuer, should there be more restrictions on the issuer to ensure timely implementation of the additional own funds’ requirements, for example banning the issuance of further tokens?

The sART issuer should not be subject to mandatory restrictions during the implementation of the additional own funds requirements. It is challenging to foresee with accuracy the range of market circumstances during which an sART issuer may need to adjust its own funds requirements. Prescribing restrictions ahead of time may hinder timely implementation of additional own funds requirements. For instance, banning the issuance of further tokens may impair token holder confidence, result in price volatility with unintended consequences or have other market effects on the token or other tokens in issuance. The EBA should provide for the possibility that sART issuers may determine measures that will support the implementation of additional own funds requirements and make representations on such measures to the relevant NCA.

Name of the organization

Crypto Council for Innovation