EUCI December Recap

In this edition, we talk about our responses to ESMA's Consultations on MiCA Regulatory Technical Standards and explore significant regulatory changes put forward by the European Commission, the European Banking Authority, and other key institutions. Read on for a detailed rundown of regulatory updates.

Our Responses to ESMA's Consultations

In December, we submitted two responses to ESMA's Consultations on MiCA Regulatory Technical Standards.  

In the first response, we analysed critical aspects of digitalised assets and suggested reasonable actions. In particular, we focused our attention on the definition of 'Permissionless Distributed Ledger Technology', CASPs reporting, data accessibility, the importance of a standardised Digital Token Identifier, the use of 'transaction hash', and the application of MiFID II 'fill-or kill strategies' to crypto trading platforms, among other key topics.

👉 Read the overview our of response

In the second response, written in partnership with Adan , the European Blockchain Association e.V. , and INATBA - International Association for Trusted Blockchain Applications , we focused on how these RTS will greatly influence the future of crypto regulation, specifically regarding environmental impacts. We went through various indicators and asked the regulators to acknowledge the factors that contribute to the positive impact projects may have on the environment, not just the negative ones. We've also pointed out a lack of clarity when it comes to the responsibility of different stakeholders to conduct such an assessment and advocated for a comprehensive study to identify which indicators are relevant for the assessment of a variety of consensus mechanisms.

👉 Read our response

Regulatory Rundown

1️⃣ At the beginning of December, we submitted our feedback on the new rules in line with MiCA that the European Commission proposed back in November. The new rules include defining significant crypto-tokens, extending supervisory measures, procedural rules for fines, and introducing supervisory fees. Our response highlighted practical challenges in compliance, the need for greater clarity on the criteria by which ARTs and EMTs are deemed 'significant' and on market cap and volume evaluation.  

2️⃣ The European Banking Authority (EBA) published new draft Guidelines on the so-called 'Travel Rule', aiming to make it tougher for financial crimes to thrive and easier for authorities to trace illicit transactions. With these guidelines, EBA seeks to provide more clarity regarding TFR’s application. The Guidelines offer a targeted, risk-based model for Payment Service Providers (PSPs), Intermediary PSPs (IPSPs), Crypto-asset Service Providers (CASPs), and Intermediary CASPs (ICASPs). This flexible framework is grounded in the currently applicable ALMD5, TFR and MiCA. We spoke about it here. 

3️⃣ On December 7th, the European Banking Authority (EBA) shared its guidelines for conflicts of interest in the issuance of Asset-Referenced Tokens under MiCA. Critical points of EBA's RTS include the fact that ART issuers are required to have solid policies and procedures to identify, handle, and disclose any potential conflicts of interest; that these measures must address all situations that could sway the issuer's impartial decision-making capabilities; and that special attention should be given to conflicts possibly arising from the reserve of assets, personal transactions, and remuneration strategies. You can find our highlights and read the full paper here.

4️⃣ On December 13, the EU reached an agreement on the AMLAR, hence adopting the framework for developing an Anti-Money Laundering Authority (AMLA) against financial crimes. We listed here everything you need to know about it.

5️⃣ The Data Act was published in the Official Journal of the European Union on December 13, bringing the EU one step closer to new rules on access and usage of data.

6️⃣ On December 14, the updated Product Liability Directive (PLD) was officially adopted. Among the key points you need to know, we highlighted the updated definitions of 'Damage' (which now includes personal injury, death, psychological health impact, property damage, and even loss or corruption of data) and 'Product' (which now includes digital manufacturing files and software); the exclusion of free and open-source software developed outside of commercial activity; the definition of a product's defectiveness; and more clarity regarding the manufacturers’ liability for software updates or the lack thereof. Find our full overview of these key points here.

7️⃣  The Basel Committee on Banking Supervision (BCBS), invited a public consultation on major amendments to the standards on banks' exposures to crypto assets. Key takeaways from their consultation include the need for a revision regarding the criteria for stablecoins to receive 'Group 1b' regulatory treatment, and due diligence on banks’ understanding of stablecoins' stabilisation mechanism.

8️⃣ The European Parliament 's ECON Committee released their draft report on the Financial Data Access proposal (FiDA). The proposal still views CASPs and ARTs issuers as obliged entities, meaning they're both data holders and data users and as such required to share crypto-asset data at a customer's request. We spoke about it here. 

9️⃣ The European Central Bank launched a DLT investigation for wholesale central bank money settlement. The Eurosystem called on financial market stakeholders to participate in the exploration of new technologies. Along with the call for expression of interest, the ECB provided detailed descriptions of the three interoperability solutions and registration information. We listed all key points and important materials here.

1️⃣0️⃣ The Swiss Financial Market Supervisory Authority FINMA provided clarifications about the security of staked crypto assets in the event of a service provider's bankruptcy. According to their staking will not impose capital requirements on the supervised institution, as long as sufficient risk-mitigating measures are implemented and customers are appropriately informed about the risks. 

Events Highlights

🎟️ We were glad to participate in the Bengaluru Tech Summit on December 1st. Virtually on stage, our Marina Markezic explored the importance of international cooperation in defining the role of blockchain on a global level and shared ideas on how learnings from MiCA can be leveraged when developing regulatory structures.

🎙️ Our latest LinkedIn Live event “From Code to Courtroom: The Legal Realm of DeFi” was a staggering success, and we couldn’t be happier to close our 2023 with a lively discussion with Victor Charpiat on how international discussions on DeFi regulations are shaping digital finance. If you missed it, you can check the recording here.

🤝  EUCI is a proud partner of CONF3RENCE , the definitive event on the future of Web3 and AI that will take place in Dortmund (Germany), on 15 and 16 of May. Don’t forget to grab your ticket here. Are you joining us in Dortmund?

EUCI in the Media

📌 Cryptonews , “A quoi s’attendre pour 2024 ? Entretien avec l’EUCI, le plus gros lobby crypto européen" - In this interview, our Executive Director Marina Markezic highlighted how stablecoins will be heavily regulated in 2024 and how these steps in defining and supervising them will determine their future.

Thank you for reading and supporting us! If you're curious about a specific activity or have any questions, don't hesitate to reach out to info@crypto-initiative.eu.

Team EUCI