The MiCA — or Crypto Asset Market — technical standards were published by the European Banking Authority (EBA) on Thursday. Ahead of the upcoming July deadline, the EBA has published a detailed set of guidelines on the technical standards that Web3 companies operating in the region will soon have to adhere to. The aim is to ensure that the Web3 sector in the EU is secure, both financially and technically. Last year, the European Union (EU) became one of the first regions in the world to regulate the crypto and Web3 sector with its MiCA regulations.
In January 2023, the EU said it could take up to eighteen months for the EBA to provide guidance on technical standards for the MiCA regulations – a task that has now been completed ahead of the estimated deadline.
MiCA regulations published by the EBA: What’s new
The EBA addressed a number of issues in its final draft technical standards for MiCA, including those related to liquidity requirements, stress testing program, asset reserves and recovery plans, the EBA wrote in its official announcement.
Regulatory oversight of asset-linked tokens (ARTs) and e-money tokens (EMTs) is also part of the EBA’s guidelines. While ARTs maintain a stable value by linking to other assets or fixed currencies, EMTs are digital representations of traditional fixed currencies. CBDCs (central bank digital currencies) are part of the EMT category of crypto assets.
“These standards set out criteria for assessing a higher degree of risk and a minimum set of requirements for the design and implementation of their stress testing programmes,” the EBA said on Thursday. It also outlined a procedure for authorities to set a deadline of 25 business days for token issuers to raise and manage their own funds, eliminating risks for their token holders.
Token issuers within the EU are also directed to adjust their own funds to three percent of the average reserve of their significant assets. Furthermore, the EBA found that crypto assets backed by real estate or commodities can be considered very valuable liquidity tools.
The EBA has joined forces with the European Securities and Markets Authority (ESMA) to work on these guidelines which make the MiCA regulation more comprehensive.
Both organizations agreed that recovery plans for Web3 companies need to be properly targeted to protect the EU investor base in light of the collapse of major crypto projects such as FTX and Terra, which rocked the sector in 2022.
“They provide for procedures to identify, measure and manage liquidity risk, contingency policies and mitigation tools, as well as minimal aspects of liquidity stress testing. Taking into account the feedback received during the consultation period, the Guidelines further specify the content of the communication and disclosure plan,” the EBA said in a statement.
About EU MiCA regulations
The Framework for Markets in Crypto Assets (MiCA) was approved by the EU in October 2022 by the European Parliament’s Committee on Economic and Monetary Affairs (ECON). The law entered into force in June 2023.
The aim of this law is to ensure consumer protection, prevent market manipulation and curb financial crime related to digital assets in the EU.
“MiCA has been instrumental in setting a harmonized regulatory standard for crypto-assets, issuers and service providers, with a focus on consumer protection, transparency and market integrity,” said the European Blockchain Observatory and Forum (EUBOF), praising the MiCA regulation in May this year years.
