Final Report on draft RTS on the procedure for the approval of white papers of ARTs issued by credit institutions

General Information

This document is the final report of the European Banking Authority (EBA) published in 2024, entitled "Final Report on draft RTS on the procedure for the approval of white papers of ARTs issued by credit institutions." It concerns the regulatory technical standards (RTS) related to the approval procedure of white papers for Asset-Referenced Tokens (ART) issued by credit institutions, under Regulation (EU) 2023/1114 on crypto-asset markets (MiCAR). The scope covers the European regulation applicable to credit institutions in the European Union, with the entry into force of provisions related to ARTs as of June 30, 2024. The document comprises 25 pages and addresses procedural, logistical, and technical aspects of white paper approval.

Executive Summary

The final report presents the regulatory technical standards (RTS) developed by the EBA, in cooperation with ESMA and the ECB, to harmonize the approval procedure of white papers for Asset-Referenced Tokens (ART) issued by credit institutions pursuant to Article 17(8) of the MiCAR Regulation (EU) 2023/1114. This topic is crucial to ensure a consistent approach across the European Union, fostering innovation while protecting retail investors and the integrity of crypto-asset markets (p. 3). The main findings are that the approval procedure must be aligned with the notification of information related to ARTs, including a completeness assessment and a substantive evaluation of the white paper by the competent authority, with necessary interaction with the ECB and relevant national central banks (p. 5-7). The procedure provides precise deadlines: 20 business days for the completeness assessment, 10 days for amendment requests after a positive opinion or expiry of the ECB deadline, and 10 days for the final approval decision (p. 9-12). The report also emphasizes that if the ECB or a central bank does not issue an opinion within the allotted time, the competent authority may consider there is no objection and proceed with the procedure (p. 10-11). The public consultation conducted between October 2023 and January 2024 led to targeted adjustments, notably extending deadlines to allow competent authorities more time, requiring that amendment requests be duly justified, and clarifying substantive evaluation criteria (p. 17-24). The main recommendations are to submit the RTS to the European Commission before June 30, 2024 for approval, to ensure a harmonized and effective implementation of the MiCAR regulatory framework for ARTs issued by credit institutions.

Context and Objectives

The MiCAR regulation, adopted in June 2023, establishes a harmonized regulatory framework for crypto-asset markets within the European Union, including Asset-Referenced Tokens (ART) issued by credit institutions. The latter do not require specific authorization under MiCAR but must notify their intention and submit a white paper for approval by the competent authority (p. 4). The main objective of the document is to define precise regulatory technical standards for the approval procedure of ART white papers, to avoid national divergences, guarantee transparency, legal certainty, and fair treatment of credit institutions across the EU (p. 4). The RTS aim to clarify the steps, deadlines, and modalities of information exchange between institutions, competent authorities, the ECB, and national central banks, as well as to provide an efficient and proportionate procedure (p. 4-5). The document addresses the issue of regulatory fragmentation risk and regulatory arbitrage between Member States by ensuring a harmonized and transparent process (p. 13-14).

Summary of Key Points by Theme

Harmonization of the approval procedure:

- The approval procedure of white papers is closely linked to the notification of information by credit institutions (Article 17 MiCAR). The RTS establish a similar process for both, including completeness assessment of the white paper and communication to the ECB and central banks (p. 5-7).

- The procedure provides for secure electronic exchanges between institutions, competent authorities, and central banks, with precise deadlines for each step (p. 7-9).

Deadlines and key steps:

- Completeness assessment of the white paper by the competent authority within 20 business days.

- In case of missing information, request for supplements with a maximum 20-day response deadline, suspending the initial deadline (p. 9-10).

- After positive opinion or expiry of the 20-day deadline for ECB/central bank opinion, the competent authority may request substantial amendments with a 10-day response deadline (p. 11-12).

- Final approval decision notified within 10 days after receipt of the amended white paper or if no amendments were requested (p. 12).

Role of the ECB and central banks:

- The ECB and, where applicable, national central banks must issue an opinion on monetary risks within 20 business days.

- In the absence of an opinion within this deadline, the competent authority may consider there is no objection and proceed (p. 10-11).

- A negative opinion from the ECB or a central bank results in the prohibition to offer the token to the public or admit it to trading (p. 6-7).

Substantive evaluation by the competent authority:

- Beyond completeness verification, the competent authority performs a qualitative evaluation based on the requirements of Article 19 of MiCAR, notably clarity, accuracy, and absence of omissions in the white paper (p. 15-16).

- This evaluation can be iterative, with amendment requests justified by the competent authority (p. 11-12, 23-24).

Public consultation and adjustments:

- The public consultation received 4 responses, notably highlighting the need for justification of amendment requests, the possibility to align deadlines for more flexibility, and clarity on qualitative evaluation criteria (p. 17-24).

- The EBA adjusted the RTS accordingly, notably extending deadlines for competent authority decisions from 5 to 10 business days, specifying the obligation to justify amendment requests, and clarifying substantive evaluation criteria (p. 19-24).

Publication and transparency:

- The white paper may only be published after approval by the competent authority (p. 12).

- Interim versions and amendment requests are not subject to publication, being supervisory-use information (p. 23).

- Contact details for approval points must be published on competent authorities’ websites (p. 12).

Main Findings and Lessons Learned

Established facts:

- The MiCAR regulation imposes a harmonized approval procedure for ART white papers issued by credit institutions, without requiring prior authorization (p. 4).

- The approval procedure includes a completeness assessment and a substantive evaluation by the competent authority, with an advisory role for the ECB and national central banks (p. 5-7).

- Regulatory deadlines are clearly defined: 20 days for completeness, 10 days for amendment requests, 10 days for the final decision (p. 9-12).

- In the absence of an opinion from the ECB/central bank within the allotted time, the competent authority may consider there is no objection (p. 10-11).

Assumptions:

- The absence of an opinion within the deadline is interpreted as no objection, which avoids disproportionate delays (p. 10-11).

- The iterative substantive evaluation does not incur significant costs but is necessary to ensure the quality of white papers (p. 15-16).

Interpretations:

- The EBA considers that the harmonized procedure will prevent national divergences and the risk of regulatory arbitrage (p. 13-14).

- Increased flexibility in deadlines allows competent authorities to manage requests efficiently while ensuring investor protection (p. 19-20).

Uncertainties:

- Possibility of late negative opinions from the ECB or central banks, which may impact the procedure (p. 22).

- Potential divergences in qualitative interpretation of white paper requirements between competent authorities (p. 21-22).

Conclusions and Recommendations

The EBA concludes that the implementation of harmonized RTS is essential to guarantee a clear, transparent, and effective approval process of white papers for ARTs issued by credit institutions in the European Union (p. 3, 13). The main recommendations are:

- Submit the RTS to the European Commission before June 30, 2024 for approval and publication in the Official Journal of the European Union (p. 3).

- Strictly apply the defined deadlines for each step, while offering increased flexibility to competent authorities (extension of deadlines from 5 to 10 days for certain decisions) (p. 19-20).

- Require that any request for substantial amendment of the white paper be duly justified by the competent authority (p. 23-24).

- Maintain the prohibition on publishing the white paper before official approval (p. 12).

- Ensure secure electronic communication between stakeholders to guarantee speed and traceability of exchanges (p. 7-9).

- Allow the competent authority to consider the absence of an opinion from the ECB or central bank within the allotted time as no objection, to avoid disproportionate delays (p. 10-11).

These measures aim to support innovation in the crypto-asset sector while protecting investors and ensuring market integrity.