Council of theEuropean Union
Brussels, 24 September 2020
(OR. en)11053/20
Interinstitutional File:
2020/0265 (COD)EF 231ECOFIN 849
CODEC 873
IA 63
PROPOSAL
From:

Secretary-General of the European Commission,
signed by Mr Jordi AYET PUIGARNAU, Director

date of receipt:
To:

24 September 2020
Mr Jeppe TRANHOLM-MIKKELSEN, Secretary-General of the Councilof the European Union

No. Cion doc.:

COM(2020) 593 final

Subject:

Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND
OF THE COUNCIL on Markets in Crypto-assets, and amending
Directive (EU) 2019/1937

Delegations will find attached document COM(2020) 593 final.

Encl.: COM(2020) 593 final

11053/20

RGP/jkECOMP.1.B

EN

舶 糾

EUROPEAN
COMMISSION

Brussels, 24.9.2020
COM(2020) 593 final
2020/0265 (COD)

Proposal for a
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
on Markets in Crypto-assets, and amending Directive (EU) 2019/1937(Text with EEA relevance){SEC(2020) 306 final} - {SWD(2020) 380 final} - {SWD(2020) 381 final}

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EXPLANATORY MEMORANDUM
1.

CONTEXT OF THE PROPOSAL•

Reasons for and objectives of the proposal

This proposal is part of the Digital Finance package, a package of measures to further enable
and support the potential of digital finance in terms of innovation and competition while
mitigating the risks. It is in line with the Commission priorities to make Europe fit for thedigital age and to build a future-ready economy that works for the people. The digital financepackage includes a new Strategy on digital finance for the EU financial1 sector with the aim toensure that the EU embraces the digital revolution and drives it with innovative European
firms in the lead, making the benefits of digital finance available to European consumers andbusinesses. In addition to this proposal, the package also includes a proposal for a pilot regime
on distributed ledger technology (DLT) market infrastructures2, a proposal for digital
operational resilience3, and a proposal to clarify or amend certain related EU financial
services rules4.
One of the strategy’s identified priority areas is ensuring that the EU financial services
regulatory framework is innovation-friendly and does not pose obstacles to the application of
new technologies. This proposal, together with the proposal on a DLT pilot regime, represents
the first concrete action within this area.
Crypto-assets are one of the major applications of blockchain technology in finance. Since thepublication of the Commission’s Fintech Action plan5, in March 2018, the Commission has
been examining the opportunities and challenges raised by crypto-assets. Following a big
surge in the market capitalisation of crypto-assets during 2017, in December 2017, Executive
Vice-President Dombrovskis, in a letter addressed to the European Banking Authority (EBA)
and the European Securities and Markets Authority (ESMA), urged them to reiterate theirwarnings to investors. In the 2018 FinTech Action plan, the Commission mandated the EBA
and ESMA to assess the applicability and suitability of the existing EU financial services
regulatory framework to crypto-assets. The advice6, issued in January 2019, argued that whilesome crypto-assets could fall within the scope of EU legislation, effectively applying it tothese assets is not always straightforward. Moreover, the advice noted that provisions inexisting EU legislation may inhibit the use of DLT. At the same time, the EBA and ESMA
underlined that – beyond EU legislation aimed at combating money laundering and terrorism
financing – most crypto-assets fall outside the scope of EU financial services legislation and
1

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3

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Communication from the Commission to the European Parliament, the European Council, the Council,
the European Central Bank, the European Economic and Social Committee and the Committee of theRegions on a Digital Finance Strategy for the EU, 23 September 2020, COM(2020)591.
Proposal for a Regulation of the European Parliament and of the Council on a Pilot Regime for market
infrastructures based on distributed ledger technology - COM(2020)594.
Proposal for a Regulation of the European Parliament and of the Council on digital operational
resilience for the financial sector and amending Regulations (EC) No 1060/2009, (EU) No 648/2012,(EU) No 600/2014 and (EU) No 909/2014 - COM(2020)595.
Proposal for a Directive of the European Parliament and of The Council amending Directives
2006/43/EC, 2009/65/EC, 2009/138/EU, 2011/61/EU, EU/2013/36, 2014/65/EU, (EU) 2015/2366 andEU/2016/2341 - COM(2020)596.
European Commission, FinTech Action plan, COM/2018/109 final.
ESMA, Advice on ‘Initial Coin Offerings and Crypto-Assets’, 2019; EBA report with advice on cryptoassets, 2019.

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ENtherefore are not subject to provisions on consumer and investor protection and market
integrity, among others, although they give rise to these risks. In addition, a number ofMember States have recently legislated on issues related to crypto-assets leading to market
fragmentation.
A relatively new subset of crypto-assets – the so-called ‘stablecoins’ – has recently emerged
and attracted the attention of both the public and regulators around the world. While thecrypto-asset market remains modest in size and does not currently pose a threat to financial
stability7, this may change with the advent of ‘global stablecoins’, which seek wider adoption
by incorporating features aimed at stabilising their value and by exploiting the network effects
stemming from the firms promoting these assets8.
Given these developments and as part of the Commission’s broader digital agenda, President
Ursula von der Leyen has stressed the need for “a common approach with Member States on
cryptocurrencies to ensure we understand how to make the most of the opportunities theycreate and address the new risks they may pose”9. While acknowledging the risks they may
present, the Commission and the Council also jointly declared in December 2019 that they“are committed to put in place a framework that will harness the potential opportunities thatsome crypto-assets may offer”10. More recently, the European Parliament is working on areport on digital finance, which has a particular focus on crypto assets.11
To respond to all of these issues and create an EU framework that both enables markets incrypto-assets as well as the tokenisation of traditional financial assets and wider use of DLT
in financial services, this Regulation will be accompanied by other legislative proposals: theCommission is also proposing a clarification that the existing definition of ‘financial
instruments’ - which defines the scope of the Markets in Financial Instruments Directive(MiFID II)12 - includes financial instruments based on DLT,13 as well as a pilot regime on
DLT market infrastructures for these instruments14. The pilot regime will allow forexperimentation within a safe environment and provide evidence for possible further
amendments.
This proposal, which covers crypto-assets falling outside existing EU financial services
legislation, as well as e-money tokens, has four general and related objectives. The firstobjective is one of legal certainty. For crypto-asset markets to develop within the EU, there isa need for a sound legal framework, clearly defining the regulatory treatment of all cryptoassets that are not covered by existing financial services legislation. The second objective is tosupport innovation. To promote the development of crypto-assets and the wider use of DLT, it
is necessary to put in place a safe and proportionate framework to support innovation and fair
7
8
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10
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12
13

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FSB Chair’s letter to G20 Finance Ministers and Central Bank Governors, 2018.
G7 Working Group on Stablecoins, Report on ‘Investigating the impact of global stablecoins’, 2019.
Mission letter of President-elect Von der Leyen to Vice-President Dombrovskis, 10 September 2019.
Joint Statement of the European Commission and Council on ‘stablecoins’, 5 December 2019.
“Report with recommendations to the Commission on Digital Finance: emerging risks in crypto-assets regulatory and supervisory challenges in the area of financial services, institutions and markets”(2020/2034(INL)
https://oeil.secure.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2020/2034(INL)&l=en.
Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets infinancial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU
Proposal for a Directive of the European Parliament and of the Council amending Directives
2006/43/EC, 2009/65/EC, 2009/138/EU, 2011/61/EU, EU/2013/36, 2014/65/EU, (EU) 2015/2366 andEU/2016/2341 - COM(2020)596
Proposal for a Regulation of the European Parliament and of the Council on a Pilot Regime for market
infrastructures based on distributed ledger technology - COM(2020)594

2ENcompetition. The third objective is to instil appropriate levels of consumer and investor
protection and market integrity given that crypto-assets not covered by existing financial
services legislation present many of the same risks as more familiar financial instruments. The
fourth objective is to ensure financial stability. Crypto-assets are continuously evolving.
While some have a quite limited scope and use, others, such as the emerging category of‘stablecoins’, have the potential to become widely accepted and potentially systemic. This
proposal includes safeguards to address potential risks to financial stability and orderly
monetary policy that could arise from ‘stablecoins’.
•

Consistency with existing policy provisions in the policy area

This proposal is part of a broader framework on crypto-assets and distributed ledger
technology (DLT), as it is accompanied by proposals ensuring that existing legislation does
not present obstacles to the uptake of new technologies while still reaching the relevant
regulatory objectives.
The proposal builds on extensive and long-standing market monitoring and participation ininternational policy work, for example, in such fora as the Financial Stability Board, theFinancial Action Task Force and the G7.
As part of the FinTech Action plan adopted in March 201815, the Commission mandated theEuropean Supervisory Authorities (ESAs) to produce advice on the applicability andsuitability of the existing EU financial services regulatory framework on crypto-assets. This
proposal builds on the advice received from the EBA and ESMA.16•

Consistency with other Union policies

As stated by President von der Leyen in her Political Guidelines,17 and set out in theCommunication ‘Shaping Europe’s digital future’,18 it is crucial for Europe to reap all thebenefits of the digital age and to strengthen its industrial and innovation capacity within safeand ethical boundaries. In addition, the mission letter provided to Executive Vice-President
Dombrovskis calls for a common approach with Member States on cryptocurrencies to ensure
Europe can make the most of the opportunities they create and address the new risks they may
pose.19
This proposal is closely linked with wider Commission policies on blockchain technology,
since crypto-assets, as the main application of blockchain technologies, are inextricably linked
to the promotion of blockchain technology throughout Europe. This proposal supports aholistic approach to blockchain and DLT, which aims at positioning Europe at the forefront ofblockchain innovation and uptake. Policy work in this area has included the creation of theEuropean Blockchain Observatory and Forum, and the European Blockchain Partnership,

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Communication from the Commission to the European Parliament, the Council, the European
Economic and Social Committee and the Committee of the Region on a FinTech Action plan,COM(2018)109, 08.03.2018
ESMA, Advice on ‘Initial Coin Offerings and Crypto-Assets’, 2019; EBA report with advice on cryptoassets, 2019.
https://ec.europa.eu/commission/sites/beta-political/files/political-guidelines-next-commission_en.pdf
Communication from the Commission to the European Parliament, the Council, the European
Economic and Social Committee and the Committee of the Region, Shaping Europe’s Digital Future,COM(2020)67, 19.02.2020
Mission letter of President-elect Von der Leyen to Vice-President Dombrovskis, 10 September 2019.

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ENwhich unites all Member States at political level, as well as the public-private partnerships
envisaged with the International Association for Trusted Blockchain Applications.20
This proposal is also consistent with the Union policies aimed at creating a Capital Markets
Union (CMU). It notably responds to the High-level Forum’s final report, which stressed theunderused potential of crypto-assets and called on the Commission to bring legal certainty andestablish clear rules for the use of crypto-assets.21 This proposal is consistent with the SME
strategy adopted on 10 March 2020, which also highlights DLT and crypto-assets as
innovations that can enable SMEs to engage directly with investors.22
Finally, the proposal is fully in line with the recommendation in the Security Union Strategy
for the development of a legislative framework in crypto-assets given the growing effect ofthese new technologies on how financial assets are issued, exchanged, shared and accessed.23
2.

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY•

Legal basis

The proposal is based on Article 114 TFEU, which confers on the European institutions thecompetence to lay down appropriate provisions for the approximation of laws of the Member
States that have as their objective the establishment and functioning of the internal market.
The proposal aims to remove obstacles to establishment and improve the functioning of theinternal market for financial services by ensuring that the applicable rules are fully
harmonised.
Today, crypto-asset issuers and service providers cannot fully reap the benefits of the internalmarket, due to a lack of both legal certainty about the regulatory treatment of crypto-assets aswell as the absence of a dedicated and coherent regulatory and supervisory regime at EU
level. While a few Member States have already implemented a bespoke regime to cover somecrypto-asset service providers or parts of their activity, in most Member States they operate
outside any regulatory regime. In addition, an increasing number of Member States are
considering bespoke national frameworks to cater specifically for crypto-assets and cryptoasset service providers.
The divergent frameworks, rules and interpretations of both crypto-assets and crypto-asset
services throughout the Union hinder the service providers’ ability to scale up their activity at
EU level. This means that service providers of these inherently cross-border products andservices are forced to familiarise themselves with several Member States’ legislations, obtain
multiple national authorisations or registrations and comply with often divergent nationallaws, sometimes adjusting their business model throughout the Union. This results in highcosts, legal complexity and uncertainty for service providers operating in the crypto-assets
20
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https://ec.europa.eu/digital-single-market/en/blockchain-technologies
Recommendation 7 of the High-Level forum on the Capital Markets Union’s final report.
(https://ec.europa.eu/info/sites/info/files/business_economy_euro/growth_and_investment/documents/200610-cmu-high-level-forum-final-report_en.pdf).
Communication from the Commission to the European Parliament, the European Council, the Council,
the European Economic and Social Committee and the Committee of the Regions on An SME Strategy
for a sustainable and digital Europe, COM(2020)203, 10.03.2020
Communication from the Commission to the European Parliament, the European Council, the Council,
the European Economic and Social Committee and the Committee of the Regions on the EU Security
Union Strategy, COM(2020)605 final of 24.07.2020

4ENspace, limiting the development and scaling up of crypto-asset activities in the Union.
Additionally, the lack of applicable regimes to crypto-asset service providers in many
Member States limits the availability of funding and sometimes even wider access tonecessary financial services, such as banking services, due to the regulatory uncertainty
associated with crypto-assets and therefore crypto-asset service providers.
These divergences also create an uneven playing field for crypto-asset service providers
depending on their location, creating further barriers to the smooth functioning of the internalmarket. Finally, this adds to the lack of legal certainty, which, combined with the absence of acommon EU framework, leaves consumers and investors exposed to substantial risks.
Through the introduction of a common EU framework, uniform conditions of operation forfirms within the EU can be set, overcoming the differences in national frameworks, which isleading to market fragmentation and reducing the complexity and costs for firms operating inthis space. At the same time, it will offer firms full access to the internal market and provide
the legal certainty necessary to promote innovation within the crypto-asset market. Lastly, it
will cater for market integrity and provide consumers and investors with appropriate levels ofprotection and a clear understanding of their rights as well as ensuring financial stability.
•

Subsidiarity

The different approaches taken by Member States makes cross-border provision of services inrelation to crypto-assets difficult. Proliferation of national approaches also poses risks to levelplaying field in the single market in terms of consumer and investor protection, market
integrity and competition. Furthermore, while some risks are mitigated in the Member Statesthat have introduced bespoke regimes on crypto-assets, consumers, investors and market
participants in other Member States remain unprotected against some of the most significant
risks posed by crypto-assets (e.g. fraud, cyber-attacks, market manipulation).

Action at EU level, such as this proposal for a Regulation, would create an environment inwhich a larger cross-border market for crypto-assets and crypto-asset service providers could
develop, thereby reaping the full benefits of the internal market. An EU framework would
significantly reduce the complexity as well as the financial and administrative burdens for all
stakeholders, such as service providers, issuers and consumers and investors. Harmonising
operational requirements for service providers as well as the disclosure requirements imposedon issuers could also bring clear benefits in terms of consumer and investor protection andfinancial stability.
•

Proportionality

Under the principle of proportionality, the content and form of EU action should not exceed
what is necessary to achieve the objectives of the Treaties. The proposed rules will not go
beyond what is necessary in order to achieve the objectives of the proposal. They will cover
only the aspects that Member States cannot achieve on their own and where the administrative
burden and costs are commensurate with the specific and general objectives to be achieved.
The proposed Regulation will ensure proportionality by design, differentiating clearly
between each type of services and activities in accordance with the associated risks, so thatthe applicable administrative burden is commensurate with the risks involved. Notably, therequirements set out in this regulation are proportionate to the limited associated risks, given
the relatively small market size to date. At the same time, the proposal imposes more stringent

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requirements on ‘stablecoins’, which are more likely to grow quickly in scale and possibly
result in higher levels of risk to investors, counterparties and the financial system.
•

Choice of the instrument

Article 114 TFEU allows the adoption of acts in the form of a Regulation or Directive. For
this proposal, a Regulation was chosen in order to lay down a single set of immediately
applicable rules throughout the Single Market.
The proposed Regulation establishes harmonised requirements for issuers that seek to offer
their crypto-assets across the Union and crypto-asset service providers wishing to apply for an
authorisation to provide their services in the Single Market. These issuers and service
providers must not be subject to specific national rules. Therefore, a Regulation is more
appropriate than a Directive.
3.

RESULTSOF
EX-POSTEVALUATIONS,CONSULTATIONS AND IMPACT ASSESSMENTS•

Ex-post evaluations/fitness checks of existing legislation

STAKEHOLDER

N/A•

Stakeholder consultations

The Commission has consulted stakeholders throughout the process of preparing this
proposal. In particular:i)

The Commission carried out a dedicated open public consultation (19 December
2019 - 19 March 2020)24

ii)

The Commission consulted the public on an inception impact assessment (19December 2019 - 16 January 2020)25

iii)

The Commission services consulted Member State experts in the Expert Group on
Banking, Payments and Insurance (EGBPI) on two occasions (18 May 2020 and 16
July 2020)26.

iv)

The Commission services held a dedicated webinar on an EU framework for cryptoassets, as part of the Digital Finance Outreach 2020 (“DFO”) series of events (19May 2020)

The purpose of the public consultation was to inform the Commission on the development ofa potential EU framework for crypto-assets. It covered both questions on crypto-assets notcovered by the existing EU financial services legislation, crypto-assets covered by the existing
EU financial services legislation (e.g. qualifying as transferable securities or electronic
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https://ec.europa.eu/info/sites/info/files/business_economy_euro/banking_and_finance/documents/2019-crypto-assets-consultation-document_en.pdf
Impact Assessment accompanying the document Proposal for a Regulation of the European Parliamentand of the Council on Markets in Crypto-assets (MiCA) SWD(2020)380
https://ec.europa.eu/info/publications/egbpi-meetings-2020_en

6ENmoney/e-money), specific questions on so-called ‘stablecoins’ as well as more generalquestions on the application of DLT in financial services.
Most respondents stressed that the creation of a bespoke regime for crypto-assets not currently
covered by the EU financial services legislation, including non-regulated ‘stablecoins’, would
be beneficial for the establishment of a sustainable crypto-asset ecosystem in the EU. The
majority of respondents confirmed that there is a need for legal certainty and harmonisation
across national legislations, and many stakeholders were in favour of the bulk of the
exemplified requirements that could be set for crypto-asset service providers.
Member State representatives in the EGBPI expressed overall support for the approachchosen, to create an appropriate bespoke regulatory framework for unregulated crypto-assets.
They highlighted the need to avoid regulatory arbitrage, avoid circumvention of rules by
crypto-asset issuers, and to ensure that all relevant rules from existing legislation on payments
and e-money is also present in a bespoke regime for the so-called ‘stablecoins’. The need toprovide a redemption right for ‘stablecoins’ was also mentioned whilst there were differing
opinions about the preferred solution in relation to supervision.
As part of a series of outreach events, the Commission hosted a webinar specifically on
crypto-assets. A wide range of industry stakeholders and public authorities participated in thewebinar, providing additional input from the sector on the interaction with the financial
services legislation.
The proposal also builds on and integrates feedback received through meetings withstakeholders and EU authorities. Most stakeholders, including crypto-asset service providers,have been overall supportive, underlining once again that the sector is very much looking forlegal certainty in order to develop further.
•

Collection and use of expertise

In preparing this proposal, the Commission has relied on qualitative and quantitative evidencecollected from recognised sources, including the two reports from the EBA and ESMA. Thishas been complemented with publicly available reports from supervisory authorities,
international standard setting bodies and leading research institutes, as well as quantitativeand qualitative input from identified stakeholders across the global financial sector.
•

Impact assessment

This proposal is accompanied by an impact assessment, which was submitted to theRegulatory Scrutiny Board (RSB) on 29 April 2020 and approved on 29 May 2020. 27 The
RSB recommended improvements in some areas with a view to: (i) put the initiative in thecontext of ongoing EU and international regulatory efforts; (ii) provide more clarity as to how
the initiative will mitigate the risks of fraud, hacking and market abuse and also explain thecoherence with the upcoming revision of the anti-money laundering legislation; and (iii)
explain better the financial stability concerns relating to ‘stablecoins’ and clarify how
supervisory bodies will ensure investor and consumer protection. The impact assessment has
been amended accordingly, also addressing the more detailed comments made by the RSB.

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Impact Assessment accompanying the document Proposal for a Regulation of the European Parliamentand of the Council on Markets in Crypto-assets (MiCA) SWD(2020)380.

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First, the Commission considered two policy options for developing a crypto-asset framework
for crypto-assets not covered by existing EU financial services legislation (except‘stablecoins’ for which a different set of options was considered – see below):

Option 1 - ‘Opt-in’ regime for unregulated crypto-assets

Under Option 1, issuers and service providers that opt in to the EU regime would benefit froman EU passport to expand their activities across borders. Service providers, which decide not
to opt in, would remain unregulated or would be subject to national bespoke regimes without
being granted the EU passport.


Option 2 - Full harmonisation

Under Option 2, all issuers (except those making small offerings) and service providers would
be subject to EU law and would benefit from an EU passport. The national bespoke regimes
on crypto-assets would no longer be applicable.
While Option 1 could be less burdensome for small issuers and service providers that can
decide not to opt in, Option 2 would ensure a higher level of legal certainty, investor
protection, market integrity and financial stability, and would reduce market fragmentation
across the Single Market. Full harmonisation represents a more coherent approach compared
to an opt-in regime. Therefore, Option 2 was the preferred option.
In addition, the Commission also assessed specific options for the so-called ‘stablecoins’
where these would also be considered crypto-assets not covered by existing EU financial
services legislation:


Option 1 – bespoke legislative regime aimed at addressing the risks posed by‘stablecoins’ and ‘global stablecoins’

By following a strict risk-based approach and building on recommendations currently being
developed by, for example, the FSB, this option would address vulnerabilities to financial
stability posed by stablecoins, while allowing for the development of different types of‘stablecoin’ business models. These would include specific disclosure requirements for‘stablecoin’ issuers as well as requirements imposed on the reserve backing the ‘stablecoin’.
Option 2 – regulating ‘stablecoins’ under the Electronic Money Directive‘Stablecoins’ whose value is backed by one single currency that is legal tender are close to thedefinition of e-money under the Electronic Money Directive. The aim of many ‘stablecoins’ isto create a “means of payments” and, when backed by a reserve of assets, some ‘stablecoins’
could become a credible means of exchange and store of value. In that sense, ‘stablecoins’ canarguably have common features with e-money. However, this option would require‘stablecoin’ issuers to comply with existing legislation that may not be fit for purpose.
Although the Electronic Money Directive and, by extension the Payment Services Directive,
could cover some ‘stablecoin’ service providers, it might not mitigate adequately the mostsignificant risks to consumer protection, for example, those raised by wallet providers. In
addition, the Electronic Money Directive does not set specific provisions for an entity thatwould be systemic, which is what ‘global stablecoins’ could potentially become.

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

Option 3 – measures aimed at limiting the use of ‘stablecoins’ within the EU’

Option 3 would be to restrict the issuance of ‘stablecoins’ and the provision of services related
to this type of crypto-asset. This approach could potentially be justified, as the risks posed by‘stablecoins’ and in particular those that could reach global scale (including risks to financial
stability, monetary policy and monetary sovereignty) would exceed the benefits offered to EU
consumers in terms of fast, cheap, efficient and inclusive means of payment. However, Option
3 would not only create costs for ‘stablecoins’ already in operation, but it would also preventthe reaping of any benefits related to this new type of crypto-assets. Option 3 would not be
consistent with the objectives set at EU level to promote innovation in the financial sector.
Furthermore, Option 3 could leave some financial stability risks unaddressed, should EU
consumers widely use ‘stablecoins’ issued in third countries.
The Commission considered that Option 1 was the preferred option for ‘stablecoins’ incombination with Option 2, to avoid regulatory arbitrage between ‘stablecoins’ that are
indistinguishable from e-money and the treatment of e-money issued on a distributed ledger.
Together with Option 2 (full harmonisation as described above) for other types of cryptoassets not covered by existing EU financial services legislation, these would create acomprehensive and holistic EU framework on ‘stablecoins’, capable of mitigating the risks
identified by the Financial Stability Board28, in particular financial stability risks. The
structure of ‘stablecoins’ is complex and comprises many interdependent functions and legal
entities. The regulatory approach under Option 1 (in combination with Option 2 for hitherto
unregulated crypto-assets) would cover the different functions usually present in ‘stablecoin’
structures (governance body, asset management, payment and customer-interface functions)and would also capture those interactions between entities that can amplify the risk tofinancial stability.
•

Regulatory fitness and simplification

This Regulation imposes an obligation on issuers of crypto-assets to publish an information
document (called white paper) with mandatory disclosure requirements. In order to avoid thecreation of administrative burden, small and medium-sized enterprises (SMEs) will be
exempted from the publication of such an information document where the total considerationof the offering of crypto-assets is less than €1,000,000 over a period of 12 months. Issuers of‘stablecoins’ will not be subject to authorisation by a national competent authority (NCA) if
the outstanding amount of ’stablecoins’ is below €5,000,000. Furthermore, the requirements
imposed on crypto-asset service providers are proportionate to the risks created by theservices provided.
•

Fundamental rights

The EU is committed to high standards of protection of fundamental rights and is signatory toa broad set of conventions on human rights. In this context, the proposal is not likely to have a
direct impact on these rights, as listed in the main UN conventions on human rights, theCharter of Fundamental Rights of the European Union, which is an integral part of the EU
Treaties, and the European Convention on Human Rights (ECHR).

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Financial Stability Board, ‘Addressing the regulatory, supervisory and oversight challenges raised by“global stablecoin” arrangements’.

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4.

BUDGETARY IMPLICATIONSThis proposal holds implications in terms of costs and administrative burden for NCAs, the
EBA and ESMA. The magnitude and distribution of these costs will depend on the precise
requirements placed on crypto-asset issuers and service providers and the related supervisory
and monitoring tasks.
The estimated supervisory costs for each Member State (including staff, training, IT
infrastructure and dedicated investigative tools) can range from €350.000 to €500.000 per
year, with one-off costs estimated at €140.000. However, this would be partially offset by thesupervisory fees that NCAs would levy on crypto-asset service providers and issuers.
For the EBA, it will require over time a total of 18 full-time employees (FTE) to take on the
supervision of issuers of significant asset-referenced tokens or e-money tokens. The EBA will
also incur additional IT costs, mission expenses for the on-site inspections and translation
costs. However, all of these costs would be fully covered by the fees levied on the issuers ofsignificant asset-referenced tokens and issuers of significant e-money tokens.
For ESMA, the estimated costs of establishing a register of all crypto-asset service providers
and maintaining this with the information received from NCAs and the EBA is to be covered
within their operating budget.
The financial and budgetary impacts of this proposal are explained in detail in the legislative
financial statement annexed to this proposal.
5.

OTHER ELEMENTS•

Implementation plans and monitoring, evaluation and reporting arrangements

Providing for a robust monitoring and evaluation mechanism is crucial to ensure that theregulatory actions undertaken are effective in achieving their respective objectives. The
Commission has therefore established a programme for monitoring the outputs and impacts ofthis Regulation. The Commission will be in charge of monitoring the effects of the preferred
policy options on the basis of the non-exhaustive list of indicators indicated in the impact
assessment (p.64-65). The Commission will also be in charge of assessing the impact of thisRegulation and will be tasked with preparing a report to the Council and Parliament (Article
122 of the proposal).
•

Detailed explanation of the specific provisions of the proposal

This proposal seeks to provide legal certainty for crypto-assets not covered by existing EU
financial services legislation and establish uniform rules for crypto-asset service providers andissuers at EU level. The proposed Regulation will replace existing national frameworks
applicable to crypto-assets not covered by existing EU financial services legislation and alsoestablish specific rules for so-called ‘stablecoins’, including when these are e-money. The
proposed Regulation is divided into nine Titles.
Title I sets the subject matter, the scope and the definitions. Article 1 sets out that theRegulation applies to crypto-asset service providers and issuers, and establishes uniform
requirements for transparency and disclosure in relation to issuance, operation, organisationand governance of crypto-asset service providers, as well as establishes consumer protection

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rules and measures to prevent market abuse. Article 2 limits the scope of the Regulation to
crypto-assets that do not qualify as financial instruments, deposits or structured deposits underEU financial services legislation. Article 3 sets out the terms and definitions that are used forthe purposes of this Regulation, including ‘crypto-asset’, ‘issuer of crypto-assets’, ‘assetreferenced token’ (often described as ‘stablecoin’), ‘e-money token’ (often described as‘stablecoin’), ‘crypto-asset service provider’, ‘utility token’ and others. Article 3 also defines
the various crypto-asset services. Importantly, the Commission may adopt delegated acts tospecify some technical elements of the definitions, to adjust them to market and technologicaldevelopments.
Title II regulates the offerings and marketing to the public of crypto-assets other than assetreferenced tokens and e-money tokens. It indicates that an issuer shall be entitled to offer such
crypto-assets to the public in the Union or seek an admission to trading on a trading platform
for such crypto-assets if it complies with the requirements of Article 4, such as the obligation
to be established in the form of a legal person or the obligation to draw up a crypto-asset
white paper in accordance with Article 5 (with Annex I) and the notification of such a cryptoasset white paper to the competent authorities (Article 7) and its publication (Article 8). Oncea whitepaper has been published, the issuer of crypto-assets can offer its crypto-assets in the
EU or seeks an admission of such crypto-assets to trading on a trading platform (Article 10).
Article 4 also includes some exemptions from the publication of a whitepaper, including forsmall offerings of crypto-assets (below €1 million within a twelve-month period) andofferings targeting qualified investors as defined by the Prospectus Regulation (Regulation
EU 2017/1129). Article 5 and Annex I of the proposal set out the information requirements
regarding the crypto-asset white paper accompanying an offer to the public of crypto-assets oran admission of crypto-assets to a trading platform for crypto-assets, while Article 6 imposessome requirements related to the marketing materials produced by the issuers of crypto-assets,other than asset-referenced tokens or e-money tokens. The crypto-asset white paper will not
be subject to a pre-approval process by the national competent authorities (Article 7). It will
be notified to the national competent authorities with an assessment whether the crypto-asset
at stake constitutes a financial instrument under the Markets in Financial Instruments
Directive (Directive 2014/65/EU), in particular. After the notification of the crypto-asset
white paper, competent authorities will have the power to suspend or prohibit the offering,
require the inclusion of additional information in the crypto-asset white paper or make public
the fact that the issuer is not complying with the Regulation (Article 7). Title II also includes
specific provisions on the offers of crypto-assets that are limited in time (Article 9), theamendments of an initial crypto-asset white paper (Article 11), the right of withdrawal
granted to acquirers of crypto-assets (Article 12), the obligations imposed on all issuers ofcrypto-assets (Article 13) and on the issuers’ liability attached to the crypto-asset white paper(Article 14).
Title III, Chapter 1 describes the procedure for authorisation of asset-referenced token issuers
and the approval of their crypto-asset white paper by national competent authorities (Articles
16 to 19 and Annexes I and II). To be authorised to operate in the Union, issuers of assetreferenced tokens shall be incorporated in the form of a legal entity established in the EU(Article 15). Article 15 also indicates that no asset-referenced tokens can be offered to the
public in the Union or admitted to trading on a trading platform for crypto-assets if the issuer
is not authorised in the Union and it does not publish a crypto-asset white paper approved byits competent authority. Article 15 also includes exemptions for small-scale asset-referenced
tokens and for asset-referenced tokens that are marketed, distributed and exclusively held by
qualified investors. Withdrawal of an authorisation is detailed in Article 20 and Article 21 sets
out the procedure for modifying the crypto-asset white paper.

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Title III, Chapter 2 sets out the obligations for issuers of asset-referenced tokens. It states theyshall act honestly, fairly and professionally (Article 23). It lays down the rules for the
publication of the crypto-asset white paper and potential marketing communications (Article24) and the requirements for these communications (Article 25). Further, issuers are subject toongoing information obligations (Article 26) and they are required to establish a complainthandling procedure (Article 27).
They shall also comply with other requirements, such as rules on conflicts of interest (Article28), notification on changes to their management body to its competent authority (Article 29),
governance arrangements (Article 30), own funds (Article 31), rules on the reserve of assetsbacking the asset-referenced tokens (Article 32) and requirements for the custody of thereserve assets (Article 33). Article 34 explains that an issuer shall only invest the reserve
assets in assets that are secure, low risk assets. Article 35 also imposes on issuers of assetreferenced tokens the disclosure of the rights attached to the asset-referenced tokens,
including any direct claim on the issuer or on the reserve of assets. Where the issuer of assetreferenced tokens does not offer direct redemption rights or claims on the issuer or on thereserve assets to all holders of asset-reference tokens, Article 35 provides holders of assetreferenced tokens with minimum rights. Article 36 prevents issuers of asset-referenced tokens
and crypto-asset service providers from granting any interest to holders of asset-referenced
tokens.
Title III, Chapter 4, sets out the rules for the acquisition of issuers of asset-referenced tokens,with Article 37 detailing the assessment of an intended acquisition, and Article 38 the content
of such an assessment.
Title III, Chapter 5, Article 39 sets out the criteria that EBA shall use when determining
whether an asset-referenced token is significant. These criteria are: the size of the customer
base of the promoters of the asset-referenced tokens, the value of the asset-referenced tokens
or their market capitalisation, the number and value of transactions, size of the reserve ofassets, significance of the issuers’ cross-border activities and the interconnectedness with thefinancial system. Article 39 also includes an empowerment for the Commission to adopt adelegated act in order to specify further the circumstances under which and thresholds above
which an issuer of asset-referenced tokens will be considered significant. Article 39 includes
some minimum thresholds that the delegated act shall in any case respect. Article 40 details
the possibility for an issuer of an asset-referenced token to classify as significant at the time of
applying for an authorisation on their own initiative. Article 41 lists the additional obligations
applicable to issuers of significant asset-referenced tokens, such as additional own funds
requirements, liquidity management policy and interoperability.
Tittle III, Chapter 6, Article 42 obliges the issuer to have a procedure in place for an orderly
wind-down of their activities.
Title IV, Chapter 1 describes the procedure for authorisation as an issuer of e-money tokens.
Article 43 describes that no e-money tokens shall be offered to the public in the Union or
admitted to trading on a crypto-asset trading platform unless the issuer is authorised as acredit institution or as an ‘electronic money institution’ within the meaning of Article 2(1) of
Directive 2009/110/EC. Article 43 also states that ‘e-money tokens’ are deemed electronicmoney for the purpose of Directive 2009/110/EC.

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Article 44 describes how holders of e-money tokens shall be provided with a claim on theissuer: e-money tokens shall be issued at par value and on the receipt of funds, and uponrequest by the holder of e-money tokens, the issuers must redeem them at any moment and atpar value. Article 45 prevents issuers of e-money tokens and crypto-asset service providers
from granting any interest to holders of e-money tokens. Article 46 and Annex III sets out therequirements for the crypto-asset white paper accompanying the issuance of e-money tokens,for example: description of the issuer, detailed description of the issuer’s project, indication ofwhether it concerns an offering of e-money tokens to the public or admission of these to a
trading platform, as well as information on the risks relating to the e-money issuer, the emoney tokens and the implementation of any potential project. Article 47 includes provisionon the liability attached to such crypto-asset white paper related to e-money tokens. Article 48
sets requirements for potential marketing communications produced in relation to an offer of
e-money tokens and Article 49 states that any funds received by an issuer in exchange for emoney tokens, shall be invested in assets denominated in the same currency as the one
referenced by the e-money token.
Title IV, Chapter 2, Article 50 states that the EBA shall classify e-money tokens as significant
on the basis of the criteria listed in Article 39. Article 51 details the possibility of an issuer ofan e-money token to classify as significant at the time of applying for an authorisation on theirown initiative. Article 52 contains the additional obligations applicable to issuers ofsignificant e-money tokens. Issuers of significant e-money tokens must apply Article 33 on
the custody of the reserve assets and Article 34 on the investment of these assets instead of
Article 7 of Directive 2009/110/EC, Article 41, paragraphs 1, 2, and 3 on remuneration,interoperability and liquidity management, Article 41, paragraph 4 instead of Article 5 ofDirective 2009/110/EC and Article 42 on an orderly wind-down of their activities.
Title V sets out the provisions on authorisation and operating conditions of crypto-asset
service providers. Chapter 1 defines the provisions on authorisation (Article 53), detailing thecontent of such an application (Article 54), the assessment of the application (Article 55) andthe rights granted to competent authorities to withdraw an authorisation (Article 56). The
chapter also includes a mandate for ESMA to establish a register of all crypto-asset service
providers (Article 57), which will also include information on the crypto-asset white papers
notified by competent authorities. For the cross-border provision of crypto-asset services,
Article 58 sets out the details and the way information about cross-border activities of cryptoassets should be communicated from the competent authority of the home Member State tothat of the host Member State.
Chapter 2 imposes requirements on all crypto-asset service providers, such as the obligationto act honestly, fairly and professionally (Article 59) prudential safeguards (Article 60 andAnnex IV), organisational requirements (Article 61), rules on the safekeeping of clients’
crypto-assets and funds (Article 63) the obligation to establish a complaint handlingprocedure (Article 64), rules on conflict of interests (Article 65) and rules on outsourcing(66). Title V, Chapter 3 sets out requirements for specific services: custody of crypto-assets(Article 67), trading platforms for crypto-assets (Article 68), exchange of crypto-assets for fiat
currency or for other crypto-assets (Article 69), execution of orders (Article 70), placing of
crypto-assets (Article 71), reception and transmission of orders on behalf of third parties(Article 72) and advice on crypto-assets (Article 73). Chapter 4 specifies the rules onacquisition of crypto-assets service providers.

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Title VI puts in place prohibitions and requirements to prevent market abuse involving cryptoassets. Article 76 defines the scope of market abuse rules. Article 77 defines the notion of
inside information and indicates that an issuer whose crypto-assets are admitted to trading on
a trading platform for crypto-assets shall disclose inside information. Other provisions of thetitle ban insider dealing (Article 78), unlawful disclosure of inside information (Article 79)
and market manipulation (Article 80).
Title VII provides details on the powers of national competent authorities, the EBA and
ESMA. Title VII, Chapter 1 imposes on Member States the obligation to designate one orseveral competent authorities for the purpose of this regulation, including one competentauthority designated as a single point of contact (Article 81). Chapter 1 also sets out detailed
provisions on the powers of national competent authorities (Article 82), cooperation between
competent authorities (Article 83), with the EBA and ESMA (Article 84) or with otherauthorities (Article 85). It also details the notification duties of Member States (Article 86),
rules on professional secrecy (Article 87), data protection (Article 88) and on precautionary
measures that can be taken by national competent authorities of host Member States (Article
89). Article 90 sets out rules on cooperation with third countries and Article 91 specifies
complaint handling by competent authorities.
Title VII, Chapter 2 details the administrative sanctions and measures that can be imposed bycompetent authorities (Article 92), the exercise of their supervisory powers and powers to
impose penalties (Article 93), the right of appeal (Article 94), the publication of decisions(Article 95), the reporting of penalties to the EBA and ESMA (Article 96) and the reporting ofbreaches and protection of persons reporting such breaches (Article 97).
Title VII, Chapter 3 sets out detailed provisions on the EBA's powers and competences
related to the supervision of issuers of significant asset-referenced tokens and significant emoney tokens, including supervisory responsibilities (Article 98) and rules on supervisory
colleges for issuers of significant asset-referenced tokens are mentioned in Article 99. The
college shall consist of, among others, the competent authority of the home Member State
where the issuer of the asset-referenced tokens has been authorised, the EBA, ESMA, thecompetent authorities with supervision of the most relevant crypto-asset trading platforms,
custodians, credit institutions etc. providing services in relation to the significant assetreferenced token and the ECB. Where the issuer of significant asset-referenced tokens isestablished in a Member State the currency of which is not the euro, or where a currency thatis not euro is included in the reserve assets, the national central bank of that Member State ispart of the college. Competent authorities not belonging to the college may request from thecollege all information relevant to perform their supervisory duties. Article 99 also describes
how the EBA, in cooperation with ESMA and the European System of Central Banks, must
develop draft regulatory standards to determine the most relevant trading platforms andcustodians and the details of the practical arrangements of the college.
Powers to issue non-binding opinions are conferred to the college in Article 100. These
opinions can be related to require an issuer to hold a higher amount of own funds, an amended
crypto-asset white paper, envisaged withdrawal of authorisation, envisaged agreement of
exchange of information with a third-country supervisory authority etc. Competent authoritiesor the EBA shall duly consider the opinions of the college and where they do not agree withthe opinion, including any recommendations, their final decision shall contain explanations
for any significant deviation from the opinion or recommendations.

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Article 101 sets out the rules for supervisory colleges for issuers of significant e-money
tokens, which functions in the same way as the colleges for asset-referenced tokens(additional participants include competent authorities of most relevant payment institutions
providing payment services in relation to the significant e-money tokens) and Article 102 thepowers to issues non-binding opinions of such a college.
Chapter 4 specifies the EBA’s powers and competences on issuers of significant assetreferenced tokens and issuers of significant e-money tokens. Legal privilege (Article 103),
request for information (Article 104), general investigative powers (Article 105), on-site
inspections (Article 106), exchange of information (Article 107), agreement on exchange of
information with third countries (Article 108), disclosure of information from third countries(Article 109) and cooperation with other authorities (Article 110). The obligation of
professional secrecy is mentioned in Article 111 and supervisory measures by the EBA, in
Article 112. Administrative sanctions and other measures, in particular, fines are detailed in
Article 113, with the consequent Articles regulating periodic penalty payments (Article 114),
the disclosure, nature and enforcement of fines (Article 115) and the corresponding
procedural rules for taking supervisory measures and imposing fines (Article 116). Article
117 and Article 118 set out the requirements on the hearing of persons concerned and theunlimited jurisdiction of the Court of Justice over the EBA's decisions, respectively. In
accordance with Article 119, the EBA should be able to charge fees to the issuers ofsignificant asset-referenced tokens and the issuers of significant e-money tokens based on adelegated act adopted pursuant to the Regulation. Article 120 gives powers to the EBA todelegate specific supervisory tasks to competent authorities where necessary for the proper
supervision of an issuer of a significant asset-referenced token or an issuer of a significant emoney token.
The exercise of the delegation with a view to adopt Commission's delegated acts is covered in
Title VIII. The proposal for a Regulation contains empowerments for the Commission to
adopt delegated acts specifying certain details, requirements and arrangements as set out in
the Regulation (Article 121).
Title IX includes the transitional and final provisions, including the obligation for theCommission to produce a report evaluating the impact of the Regulation (Article 122).
Transitional measures include a grandfathering clause for crypto-assets issued before the entry
into force of this Regulation, with the exception of asset-referenced tokens and e-money
tokens, are listed in Article 123. Article 124 amends the directive on the protection of persons
who report breaches of Union law (Directive (EU) 2019/193729) by adding this Regulation toit and Article 125 specifies that this amendment must be transposed into national law 12months after the entry into force of this Regulation. Article 126 indicates that this Regulation
shall enter into application 18 months after its entry into force, except for the provisions
related to e-money tokens and asset-referenced tokens that shall enter into application on thedate of entry into force of this Regulation.

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Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on theprotection of persons who report breaches of Union law (OJ L 305, 26.11.2019, p. 17).

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EN2020/0265 (COD)
Proposal for a
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
on Markets in Crypto-assets, and amending Directive (EU) 2019/1937(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the Functioning of the European Union, and in particular
Article 114 thereof,
Having regard to the proposal from the European Commission,
After transmission of the draft legislative act to the national parliaments,
Having regard to the opinion of the European Central Bank30,
Having regard to the opinion of the European Economic and Social Committee31,
Acting in accordance with the ordinary legislative procedure,
Whereas:(1)

The Commission’s communication on a Digital Finance Strategy32 aims to ensure that
the Union’s financial services legislation is fit for the digital age, and contributes to afuture-ready economy that works for the people, including by enabling the use ofinnovative technologies. The Union has a stated and confirmed policy interest in
developing and promoting the uptake of transformative technologies in the financial
sector, including blockchain and distributed ledger technology (DLT).

(2)

In finance, crypto-assets are one of the major DLT applications. Crypto-assets are
digital representations of value or rights that have the potential to bring significant
benefits to both market participants and consumers. By streamlining capital-raisingprocesses and enhancing competition, issuances of crypto-assets can allow for acheaper, less burdensome and more inclusive way of financing small and mediumsized enterprises (SMEs). When used as a means of payment, payment tokens canpresent opportunities in terms of cheaper, faster and more efficient payments, inparticular on a cross-border basis, by limiting the number of intermediaries.

30

OJ C […], […], p. […].
OJ C , , p. .
Communication from the Commission to the European Parliament, the European Council, the Council,
the European Economic and Social Committee and the Committee of the Regions on a Digital Finance
Strategy for EU COM(2020)591.

31
32

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EN

(3)

Some crypto-assets qualify as financial instruments as defined in Article 4(1),point (15), of Directive 2014/65/EU of the European Parliament and of the Council33.
The majority of crypto-assets, however, fall outside of the scope of Union legislation
on financial services. There are no rules for services related to crypto-assets, including
for the operation of trading platforms for crypto-assets, the service of exchanging
crypto-assets against fiat currency or other crypto-assets, or the custody of cryptoassets. The lack of such rules leaves holders of crypto-assets exposed to risks, inparticular in areas not covered by consumer protection rules. The lack of such rules
can also lead to substantial risks to market integrity in the secondary market of cryptoassets, including market manipulation. To address those risks, some Member States
have put in place specific rules for all – or a subset of – crypto-assets that fall outside
Union legislation on financial services. Other Member States are considering tolegislate in this area.

(4)

The lack of an overall Union framework for crypto-assets can lead to a lack of users’
confidence in those assets, which will hinder the development of a market in thoseassets and can lead to missed opportunities in terms of innovative digital services,
alternative payment instruments or new funding sources for Union companies. In
addition, companies using crypto-assets will have no legal certainty on how theircrypto-assets will be treated in the different Member States, which will undermine
their efforts to use crypto-assets for digital innovation. The lack of an overall Union
framework on crypto-assets could also lead to regulatory fragmentation, which will
distort competition in the Single Market, make it more difficult for crypto-asset
service providers to scale up their activities on a cross-border basis and will give rise
to regulatory arbitrage. The crypto-asset market is still modest in size and does not yet
pose a threat to financial stability. It is, however, likely that a subset of crypto-assets
which aim to stabilise their price by linking their value to a specific asset or a basket
of assets could be widely adopted by consumers. Such a development could raise
additional challenges to financial stability, monetary policy transmission or monetary
sovereignty.

(5)

A dedicated and harmonised framework is therefore necessary at Union level toprovide specific rules for crypto-assets and related activities and services and to clarify
the applicable legal framework. Such harmonised framework should also coverservices related to crypto-assets where these services are not yet covered by Union
legislation on financial services. Such a framework should support innovation and faircompetition, while ensuring a high level of consumer protection and market integrityin crypto-asset markets. A clear framework should enable crypto-asset service
providers to scale up their business on a cross-border basis and should facilitate theiraccess to banking services to run their activities smoothly. It should also ensure
financial stability and address monetary policy risks that could arise from cryptoassets that aim at stabilising their price by referencing a currency, an asset or a basket
of such. While increasing consumer protection, market integrity and financial stability
through the regulation of offers to the public of crypto-assets or services related tosuch crypto-assets, a Union framework on markets in crypto-assets should not regulate
the underlying technology and should allow for the use of both permissionless andpermission-based distributed ledgers.

33

Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets infinancial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (OJ L 173,
12.6.2014, p. 349).

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(6)

Union legislation on financial services should not favour one particular technology.
Crypto-assets that qualify as ‘financial instruments’ as defined in Article 4(1),point (15), of Directive 2014/65/EU should therefore remain regulated under thegeneral existing Union legislation, including Directive 2014/65/EU, regardless of thetechnology used for their issuance or their transfer.

(7)

Crypto-assets issued by central banks acting in their monetary authority capacity or byother public authorities should not be subject to the Union framework covering cryptoassets, and neither should services related to crypto-assets that are provided by such
central banks or other public authorities.

(8)

Any legislation adopted in the field of crypto-assets should be specific, future-proof
and be able to keep pace with innovation and technological developments. ‘Cryptoassets’ and ‘distributed ledger technology’ should therefore be defined as widely as
possible to capture all types of crypto-assets which currently fall outside the scope ofUnion legislation on financial services. Such legislation should also contribute to theobjective of combating money laundering and the financing of terrorism. Any
definition of ‘crypto-assets’ should therefore correspond to the definition of ‘virtual
assets’ set out in the recommendations of the Financial Action Task Force (FATF)34.
For the same reason, any list of crypto-asset services should also encompass virtual
asset services that are likely to raise money-laundering concerns and that are identified
as such by the FATF.

(9)

A distinction should be made between three sub-categories of crypto-assets, whichshould be subject to more specific requirements. The first sub-category consists of a
type of crypto-asset which is intended to provide digital access to a good or service,
available on DLT, and that is only accepted by the issuer of that token (‘utility
tokens’). Such ‘utility tokens’ have non-financial purposes related to the operation of adigital platform and digital services and should be considered as a specific type of
crypto-assets. A second sub-category of crypto-assets are ‘asset-referenced tokens’.
Such asset-referenced tokens aim at maintaining a stable value by referencing several
currencies that are legal tender, one or several commodities, one or several cryptoassets, or a basket of such assets. By stabilising their value, those asset-referenced
tokens often aim at being used by their holders as a means of payment to buy goods
and services and as a store of value. A third sub-category of crypto-assets are cryptoassets that are intended primarily as a means of payment aim at stabilising their value
by referencing only one fiat currency. The function of such crypto-assets is very
similar to the function of electronic money, as defined in in Article 2, point 2, ofDirective 2009/110/EC of the European Parliament and of the Council35. Likeelectronic money, such crypto-assets are electronic surrogates for coins and banknotes
and are used for making payments. These crypto-assets are defined as ‘electronicmoney tokens’ or ‘e-money tokens’.

34

FATF (2012-2019), International Standards on Combating Money Laundering and the Financing ofTerrorism & Proliferation, FATF, Paris, France (www.fatf-gafi.org/recommendations.html).
Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009 on thetaking up, pursuit and prudential supervision of the business of electronic money institutions amending
Directives 2005/60/EC and 2006/48/EC and repealing Directive 2000/46/EC (OJ L 267, 10.10.2009,p. 7).

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(10)

Despite their similarities, electronic money and crypto-assets referencing a single fiat
currency differ in some important aspects. Holders of electronic money as defined in
Article 2, point 2, of Directive 2009/110/EC are always provided with a claim on theelectronic money institution and have a contractual right to redeem their electronicmoney at any moment against fiat currency that is legal tender at par value with thatcurrency. By contrast, some of the crypto-assets referencing one fiat currency which islegal tender do not provide their holders with such a claim on the issuers of such assets
and could fall outside the scope of Directive 2009/110/EC. Other crypto-asset
referencing one fiat currency do not provide a claim at par with the currency they arereferencing or limit the redemption period. The fact that holders of such crypto-assets
do not have a claim on the issuers of such assets, or that such claim is not at par withthe currency those crypto-assets are referencing, could undermine the confidence ofusers of those crypto-assets. To avoid circumvention of the rules laid down in
Directive 2009/110/EC, any definition of ‘e-money tokens’ should be as wide as
possible to capture all the types of crypto-assets referencing one single fiat currency
that is legal tender. To avoid regulatory arbitrage, strict conditions on the issuance of
e-money tokens should be laid down, including the obligation for such e-money
tokens to be issued either by a credit institution as defined in Regulation (EU)No 575/2013 of the European Parliament and of the Council36, or by an electronicmoney institution authorised under Directive 2009/110/EC. For the same reason,
issuers of such e-money tokens should also grant the users of such tokens with a claim
to redeem their tokens at any moment and at par value against the currency referencing
those tokens. Because e-money tokens are also crypto-assets and can also raise newchallenges in terms of consumer protection and market integrity specific to cryptoassets, they should also be subject to rules laid down in this Regulation to addressthese challenges to consumer protection and market integrity.

(11)

Given the different risks and opportunities raised by crypto-assets, it is necessary to
lay down rules for issuers of crypto-assets that should be any legal person who offers
to the public any type of crypto-assets or seeks the admission of such crypto-assets toa trading platform for crypto-assets.

(12)

It is necessary to lay down specific rules for entities that provide services related to
crypto-assets. A first category of such services consist of ensuring the operation of a
trading platform for crypto-assets, exchanging crypto-assets against fiat currencies thatare legal tender or other crypto-assets by dealing on own account, and the service, on
behalf of third parties, of ensuring the custody and administration of crypto-assets orensuring the control of means to access such crypto-assets. A second category of suchservices are the placing of crypto-assets, the reception or transmission of orders forcrypto-assets, the execution of orders for crypto-assets on behalf of third parties andthe provision of advice on crypto-assets. Any person that provides such crypto-asset
services on a professional basis should be considered as a ‘crypto-asset service
provider’.

36

Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on
prudential requirements for credit institutions and investment firms and amending Regulation (EU)No 648/2012 (OJ L 176, 27.6.2013, p. 1).

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(13)

To ensure that all offers to the public of crypto-assets, other than asset-referenced
tokens or e-money tokens, in the Union, or all the admissions of such crypto-assets totrading on a trading platform for crypto-assets are properly monitored and supervisedby competent authorities, all issuers of crypto-assets should be legal entities.

(14)

In order to ensure consumer protection, prospective purchasers of crypto-assets should
be informed about the characteristics, functions and risks of crypto-assets they intend
to purchase. When making a public offer of crypto-assets in the Union or whenseeking admission of crypto-assets to trading on a trading platform for crypto-assets,
issuers of crypto-assets should produce, notify to their competent authority and publish
an information document (‘a crypto-asset white paper’) containing mandatory
disclosures. Such crypto-asset white paper should contain general information on theissuer, on the project to be carried out with the capital raised, on the public offer ofcrypto-assets or on their admission to trading on a trading platform for crypto-assets,on the rights and obligations attached to the crypto-assets, on the underlying
technology used for such assets and on the related risks. To ensure fair and nondiscriminatory treatment of holders of crypto-assets, the information in the cryptoasset white paper, and where applicable in any marketing communications related tothe public offer, shall be fair, clear and not misleading.

(15)

In order to ensure a proportionate approach, the requirements to draw up and publish acrypto-asset white paper should not apply to offers of crypto-assets, other than assetreferenced tokens or e-money tokens, that are offered for free, or offers of cryptoassets that are exclusively offered to qualified investors as defined in Article 2, point(e), of Regulation (EU) 2017/1129 of the European Parliament and of the Council37
and can be exclusively held by such qualified investors, or that, per Member State, aremade to a small number of persons, or that are unique and not fungible with othercrypto-assets.

(16)

Small and medium-sized enterprises and start-ups should not be subject to excessive
administrative burdens. Offers to the public of crypto-assets in the Union that do not
exceed an adequate aggregate threshold over a period of 12 months should therefore
be exempted from the obligation to draw up a crypto-asset white paper. However, EU
horizontal legislation ensuring consumer protection, such as Directive 2011/83/EU of
the European Parliament and of the Council38, Directive 2005/29/EC of the European
Parliament and of the Council39 or the Council Directive 93/13/EEC of 5 April 1993
on unfair terms in consumer contracts40, including any information obligations

37

Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on theprospectus to be published when securities are offered to the public or admitted to trading on aregulated market, and repealing Directive 2003/71/EC (OJ L 168, 30.6.2017, p. 12).
Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer
rights, amending Council Directive 93/13/EEC and Directive 1999/44/EC of the European Parliamentand of the Council and repealing Council Directive 85/577/EEC and Directive 97/7/EC of the European
Parliament and of the Council (OJ L 304, 22.11.2011, p. 64).
Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair
business-to-consumer commercial practices in the internal market and amending Council Directive
84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of theCouncil and Regulation (EC) No 2006/2004 of the European Parliament and of the Council (‘Unfair
Commercial Practices Directive’) (OJ L 149, 11.6.2005, p. 22)
Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (OJ L 95,
21.4.1993, p. 29).

38

39

40

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contained therein, remain applicable to these offers to the public of crypto-assets
where involving business-to-consumer relations.

EN

(17)

Where an offer to the public concerns utility tokens for a service that is not yet inoperation, the duration of the public offer as described in the crypto-asset white paper
shall not exceed twelve months. This limitation on the duration of the public offer isunrelated to the moment when the product or service becomes factually operationaland can be used by the holder of a utility token after the end of the public offer.

(18)

In order to enable supervision, issuers of crypto-assets should, before any public offer
of crypto-assets in the Union or before those crypto-assets are admitted to trading on a
trading platform for crypto-assets, notify their crypto-asset white paper and, whereapplicable, their marketing communications, to the competent authority of the Member
State where they have their registered office or a branch. Issuers that are established ina third country should notify their crypto-asset white paper, and, where applicable,
their marketing communication, to the competent authority of the Member State where
the crypto-assets are intended to be offered or where the admission to trading on a
trading platform for crypto-assets is sought in the first place.

(19)

Undue administrative burdens should be avoided. Competent authorities should
therefore not be required to approve a crypto-asset white paper before its publication.
Competent authorities should, however, after publication, have the power to requestthat additional information is included in the crypto-asset white paper, and, whereapplicable, in the marketing communications.

(20)

Competent authorities should be able to suspend or prohibit a public offer of cryptoassets or the admission of such crypto-assets to trading on a trading platform for
crypto-assets where such an offer to the public or an admission to trading does notcomply with the applicable requirements. Competent authorities should also have thepower to publish a warning that an issuer has failed to meet those requirements, either
on its website or through a press release.

(21)

Crypto-asset white papers and, where applicable, marketing communications that havebeen duly notified to a competent authority should be published, after which issuers ofcrypto-assets should be allowed to offer their crypto-assets throughout the Union andto seek admission for trading such crypto-assets on a trading platform for cryptoassets.

(22)

In order to further ensure consumer protection, the consumers who are acquiring
crypto-assets, other than asset-referenced tokens or e-money tokens, directly from theissuer or from a crypto-asset service provider placing the crypto-assets on behalf of theissuer should be provided with a right of withdrawal during a limited period of timeafter their acquisition. In order to ensure the smooth completion of an offer to the
public of crypto-assets for which the issuer has set a time limit, this right ofwithdrawal should not be exercised by the consumer after the end of the subscription
period. Furthermore, the right of withdrawal should not apply where the crypto-assets,other than asset-referenced tokens or e-money tokens, are admitted to trading on a
trading platform for crypto-assets, as, in such a case, the price of such crypto-assets
would depend on the fluctuations of crypto-asset markets.

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(23)

Even where exempted from the obligation to publish a crypto-asset white paper, allissuers of crypto-assets, other than asset-referenced tokens or e-money tokens, should
act honestly, fairly and professionally, should communicate with holders of cryptoassets in a fair, clear and truthful manner, should identify, prevent, manage anddisclose conflicts of interest, should have effective administrative arrangements toensure that their systems and security protocols meet Union standards. In order toassist competent authorities in their supervisory tasks, the European Securities andMarkets Authority (ESMA), in close cooperation with the European Banking
Authority (EBA) should be mandated to publish guidelines on those systems andsecurity protocols in order to further specify these Union standards.

(24)

To further protect holders of crypto-assets, civil liability rules should apply to cryptoasset issuers and their management body for the information provided to the publicthrough the crypto-asset white paper.

(25)

Asset-referenced tokens aim at stabilising their value by reference to several fiat
currencies, to one or more commodities, to one or more other crypto-assets, or to abasket of such assets. They could therefore be widely adopted by users to transfer
value or as a means of payments and thus pose increased risks in terms of consumer
protection and market integrity compared to other crypto-assets. Issuers of assetreferenced tokens should therefore be subject to more stringent requirements thanissuers of other crypto-assets.

(26)

So-called algorithmic ‘stablecoins’ that aim at maintaining a stable value, via
protocols, that provide for the increase or decrease of the supply of such crypto-assets
in response to changes in demand should not be considered as asset-referenced tokens,provided that they do not aim at stabilising their value by referencing one or several
other assets.

(27)

To ensure the proper supervision and monitoring of offers to the public of assetreferenced tokens, issuers of asset-referenced tokens should have a registered office inthe Union.

(28)

Offers to the public of asset-referenced tokens in the Union or seeking an admission ofsuch crypto-assets to trading on a trading platform for crypto-assets should be possible
only where the competent authority has authorised the issuer of such crypto-assets andapproved the crypto-asset white paper regarding such crypto-assets. The authorisation
requirement should however not apply where the asset-referenced tokens are onlyoffered to qualified investors, or when the offer to the public of asset-referenced
tokens is below a certain threshold. Credit institutions authorised under Directive
2013/36/EU of the European Parliament and of the Council41 should not need anotherauthorisation under this Regulation in order to issue asset-referenced tokens. In thosecases, the issuer of such asset-referenced tokens should be still required to produce acrypto-asset white paper to inform buyers about the characteristics and risks of such
asset-referenced tokens and to notify it to the relevant competent authority, before
publication.

41

Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to theactivity of credit institutions and the prudential supervision of credit institutions and investment firms,
amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176,
27.6.2013, p. 338).

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(29)

A competent authority should refuse authorisation where the prospective issuer ofasset-referenced tokens’ business model may pose a serious threat to financial
stability, monetary policy transmission and monetary sovereignty. The competentauthority should consult the EBA and ESMA and, where the asset-referenced tokens isreferencing Union currencies, the European Central Bank (ECB) and the national
central bank of issue of such currencies before granting an authorisation or refusing an
authorisation. The EBA, ESMA, and, where applicable, the ECB and the national
central banks should provide the competent authority with a non-binding opinion on
the prospective issuer’s application. Where authorising a prospective issuer of assetreferenced tokens, the competent authority should also approve the crypto-asset white
paper produced by that entity. The authorisation by the competent authority should bevalid throughout the Union and should allow the issuer of asset-referenced tokens tooffer such crypto-assets in the Single Market and to seek an admission to trading on a
trading platform for crypto-assets. In the same way, the crypto-asset white paper
should also be valid for the entire Union, without possibility for Member States toimpose additional requirements.

(30)

To ensure consumer protection, issuers of asset-referenced tokens should always
provide holders of asset-referenced tokens with clear, fair and not misleading
information. The crypto-asset white paper on asset-referenced tokens should include
information on the stabilisation mechanism, on the investment policy of the reserve
assets, on the custody arrangements for the reserve assets, and on the rights provided
to holders. Where the issuers of asset-referenced tokens do not offer a direct claim orredemption right on the reserve assets to all the holders of such asset-referenced
tokens, the crypto-asset white paper related to asset-referenced tokens should contain aclear and unambiguous warning in this respect. Marketing communications of anissuer of asset-referenced tokens should also include the same statement, where theissuers do not offer such direct rights to all the holders of asset-referenced tokens.

(31)

In addition to information included in the crypto-asset white paper, issuers of assetreferenced tokens should also provide holders of such tokens with information on acontinuous basis. In particular, they should disclose the amount of asset-referenced
tokens in circulation and the value and the composition of the reserve assets, on atleast a monthly basis, on their website. Issuers of asset-referenced tokens should also
disclose any event that is likely to have a significant impact on the value of the assetreferenced tokens or on the reserve assets, irrespective of whether such crypto-assets
are admitted to trading on a trading platform for crypto-assets.

(32)

To ensure consumer protection, issuers of asset-referenced tokens should always act
honestly, fairly and professionally and in the best interest of the holders of assetreferenced tokens. Issuers of asset-referenced tokens should also put in place a clear
procedure for handling the complaints received from the holders of crypto-assets.

(33)

Issuers of asset-referenced tokens should put in place a policy to identify, manage andpotentially disclose conflicts of interest which can arise from their relations with their
managers, shareholders, clients or third-party service providers.

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(34)

Issuers of asset-referenced tokens should have robust governance arrangements,
including a clear organisational structure with well-defined, transparent and consistentlines of responsibility and effective processes to identify, manage, monitor and report
the risks to which they are or might be exposed. The management body of such issuers
and their shareholders should have good repute and sufficient expertise and be fit andproper for the purpose of anti-money laundering and combatting the financing ofterrorism. Issuers of asset-referenced tokens should also employ resources
proportionate to the scale of their activities and should always ensure continuity andregularity in the performance of their activities. For that purpose, issuers of assetreferenced tokens should establish a business continuity policy aimed at ensuring, inthe case of an interruption to their systems and procedures, the performance of theircore payment activities. Issuers of asset-referenced tokens should also have a strong
internal control and risk assessment mechanism, as well as a system that guarantees
the integrity and confidentiality of information received.

(35)

Issuers of asset-referenced tokens are usually at the centre of a network of entities that
ensure the issuance of such crypto-assets, their transfer and their distribution toholders. Issuers of asset-referenced tokens should therefore be required to establish
and maintain appropriate contractual arrangements with those third-party entities
ensuring the stabilisation mechanism and the investment of the reserve assets backing
the value of the tokens, the custody of such reserve assets, and, where applicable, thedistribution of the asset-referenced tokens to the public.

(36)

To address the risks to financial stability of the wider financial system, issuers ofasset-referenced tokens should be subject to capital requirements. Those capitalrequirements should be proportionate to the issuance size of the asset-referenced
tokens and therefore calculated as a percentage of the reserve of assets that back thevalue of the asset-referenced tokens. Competent authorities should however be able toincrease or decrease the amount of own fund requirements required on the basis of,inter alia, the evaluation of the risk-assessment mechanism of the issuer, the quality
and volatility of the assets in the reserve backing the asset-referenced tokens or theaggregate value and number of asset-referenced tokens.

(37)

In order to stabilise the value of their asset-referenced tokens, issuers of assetreferenced tokens should constitute and maintain a reserve of assets backing those
crypto-assets at all times. Issuers of asset-referenced tokens should ensure the prudent
management of such a reserve of assets and should in particular ensure that thecreation and destruction of asset-referenced tokens are always matched by acorresponding increase or decrease in the reserve assets and that such increase or
decrease is adequately managed to avoid adverse impacts on the market of the reserve
assets. Issuers of asset-backed crypto-assets should therefore establish, maintain anddetail policies that describe, inter alia, the composition of the reserve assets, theallocation of assets, the comprehensive assessment of the risks raised by the reserve
assets, the procedure for the creation and destruction of the asset-referenced tokens,the procedure to purchase and redeem the asset-referenced tokens against the reserve
assets and, where the reserve assets are invested, the investment policy that is followedby the issuer.

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(38)

To prevent the risk of loss for asset-referenced tokens and to preserve the value of
those assets issuers of asset-referenced tokens should have an adequate custody policy
for reserve assets. That policy should ensure that the reserve assets are entirelysegregated from the issuer’s own assets at all times, that the reserve assets are notencumbered or pledged as collateral, and that the issuer of asset-referenced tokens has
prompt access to those reserve assets. The reserve assets should, depending on theirnature, be kept in custody either by a credit institution within the meaning ofRegulation (EU) No 575/2013 or by an authorised crypto-asset service provider.
Credit institutions or crypto-asset service providers that keep in custody the reserve
assets that back the asset-referenced tokens should be responsible for the loss of suchreserve assets vis-à-vis the issuer or the holders of asset-referenced tokens, unless they
prove that such loss has arisen from an external event beyond reasonable control.

(39)

To protect holders of asset-referenced tokens against a decrease in value of the assetsbacking the value of the tokens, issuers of asset-referenced tokens should invest thereserve assets in secure, low risks assets with minimal market and credit risk. As theasset-referenced tokens can be used as a means of payment, all profits or losses
resulting from the investment of the reserve assets should be borne by the issuer of theasset-referenced tokens.

(40)

Some asset-referenced tokens may offer all their holders rights, such as redemption
rights or claims on the reserve assets or on the issuer, while other asset-referenced
tokens may not grant such rights to all their holders and may limit the right ofredemption to specific holders. Any rules regarding asset-referenced tokens should beflexible enough to capture all those situations. Issuers of asset-referenced tokens
should therefore inform the holders of asset-referenced tokens on whether they areprovided with a direct claim on the issuer or redemption rights. Where issuers of assetreferenced tokens grant direct rights on the issuer or on the reserve assets to all theholders, the issuers should precisely set out the conditions under which such rights canbe exercised. Where issuers of asset-referenced tokens restrict such direct rights on theissuer or on the reserve assets to a limited number of holders of asset-referenced
tokens, the issuers should still offer minimum rights to all the holders of assetreferenced tokens. Issuers of asset-referenced tokens should ensure the liquidity of
those tokens by concluding and maintaining adequate liquidity arrangements withcrypto-asset service providers that are in charge of posting firm quotes on a predictablebasis to buy and sell the asset-referenced tokens against fiat currency. Where the valueof the asset-referenced tokens varies significantly from the value of the reserve assets,
the holders of asset-referenced tokens should have a right to request the redemption of
their asset-referenced tokens against reserve assets directly from the issuer. Issuers ofasset-referenced tokens that voluntarily stop their operations or that are orderly
wound-down should have contractual arrangements in place to ensure that theproceeds of the reserve assets are paid to the holders of asset-referenced tokens.

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(41)

To ensure that asset-referenced tokens are mainly used as a means of exchange and not
as a store of value, issuers of asset-referenced tokens, and any crypto-asset service
providers, should not grant interests to users of asset-referenced tokens for time suchusers are holding those asset-referenced tokens. Some asset-referenced tokens and emoney tokens should be considered significant due to the potential large customer
base of their promoters and shareholders, their potential high market capitalisation, thepotential size of the reserve of assets backing the value of such asset-referenced tokens
or e-money tokens, the potential high number of transactions, the potential
interconnectedness with the financial system or the potential cross-border use of such
crypto-assets. Significant asset-referenced tokens or significant e-money tokens, that
could be used by a large number of holders and which could raise specific challenges
in terms of financial stability, monetary policy transmission or monetary sovereignty,
should be subject to more stringent requirements than other asset-referenced tokens or
e-money tokens.

(42)

Due to their large scale, significant asset-referenced tokens can pose greater risks tofinancial stability than other crypto-assets and asset-referenced tokens with more
limited issuance. Issuers of significant asset-referenced tokens should therefore be
subject to more stringent requirements than issuers of other crypto-assets or assetreferenced tokens with more limited issuance. They should in particular be subject tohigher capital requirements, to interoperability requirements and they should establish
a liquidity management policy.

(43)

Issuers of asset-referenced tokens should have an orderly wind-down plan to ensurethat the rights of the holders of the asset-referenced tokens are protected where issuersof asset-referenced tokens stop their operations or when they are orderly winding
down their activities according to national insolvency laws.

(44)

Issuers of e-money tokens should be authorised either as a credit institution underDirective 2013/36/EU or as an electronic money institution under Directive
2009/110/EC and they should comply with the relevant operational requirements of
Directive 2009/110/EC, unless specified otherwise in this Regulation. Issuers of emoney tokens should produce a crypto-asset white paper and notify it to theircompetent authority. Where the issuance of e-money tokens is below a certain
threshold or where e-money tokens can be exclusively held by qualified investors,
issuers of such e-money tokens should not be subject to the authorisation
requirements. However, issuers should always draw up a crypto-asset white paper andnotify it to their competent authority.

(45)

Holders of e-money tokens should be provided with a claim on the issuer of the emoney tokens concerned. Holders of e-money tokens should always be granted with aredemption right at par value with the fiat currency that the e-money token isreferencing and at any moment. Issuers of e-money tokens should be allowed to apply
a fee, where holders of e-money tokens are asking for the redemptions of their tokens
for fiat currency. Such a fee should be proportionate to the actual costs incurred by theissuer of electronic money tokens.

(46)

Issuers of e-money tokens, and any crypto-asset service providers, should not grantinterests to holders of e-money tokens for the time such holders are holdings those emoney tokens.

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(47)

The crypto-asset white paper produced by an issuer of e-money tokens should containall the relevant information concerning that issuer and the offer of e-money tokens or
their admission to trading on a trading platform for crypto-assets that is necessary toenable potential buyers to make an informed purchase decision and understand therisks relating to the offer of e-money tokens. The crypto-asset white paper should also
explicitly indicate that holders of e-money tokens are provided with a claim in theform of a right to redeem their e-money tokens against fiat currency at par value and at
any moment.

(48)

Where an issuer of e-money tokens invests the funds received in exchange for emoney tokens, such funds should be invested in assets denominated in the same
currency as the one that the e-money token is referencing to avoid cross-currency
risks.

(49)

Significant e-money tokens can pose greater risks to financial stability than nonsignificant e-money tokens and traditional electronic money. Issuers of suchsignificant e-money tokens should therefore be subject to additional requirements.
Issuers of e-money tokens should in particular be subject to higher capitalrequirements than other e-money token issuers, to interoperability requirements andthey should establish a liquidity management policy. Issuers of e-money tokens should
also comply with certain requirements applying to issuers of asset-referenced tokens,such as custody requirements for the reserve assets, investment rules for the reserve
assets and the obligation to establish an orderly wind-down plan.

(50)

Crypto-asset services should only be provided by legal entities that have a registeredoffice in a Member State and that have been authorised as a crypto-asset service
provider by the competent authority of the Member State where its registered office islocated.

(51)

This Regulation should not affect the possibility for persons established in the Union
to receive crypto-asset services by a third-country firm at their own initiative. Where athird-country firm provides crypto-asset services at the own initiative of a person
established in the Union, the crypto-asset services should not be deemed as provided
in the Union. Where a third-country firm solicits clients or potential clients in theUnion or promotes or advertises crypto-asset services or activities in the Union, it
should not be deemed as a crypto-asset service provided at the own initiative of theclient. In such a case, the third-country firm should be authorised as a crypto-asset
service provider.

(52)

Given the relatively small scale of crypto-asset service providers to date, the power toauthorise and supervise such service providers should be conferred to national
competent authorities. The authorisation should be granted, refused or withdrawn by
the competent authority of the Member State where the entity has its registered office.
Such an authorisation should indicate the crypto-asset services for which the cryptoasset service provider is authorised and should be valid for the entire Union.

(53)

To facilitate transparency for holders of crypto-assets as regards the provision of
crypto-asset services, ESMA should establish a register of crypto-asset service
providers, which should include information on the entities authorised to provide thoseservices across the Union. That register should also include the crypto-asset white
papers notified to competent authorities and published by issuers of crypto-assets.

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(54)

Some firms subject to Union legislation on financial services should be allowed toprovide crypto-asset services without prior authorisation. Credit institutions authorised
under Directive 2013/36/EU should not need another authorisation to provide cryptoasset services. Investment firms authorised under Directive 2014/65/EU to provide one
or several investment services as defined under that Directive similar to the cryptoasset services they intend to provide should also be allowed to provide crypto-asset
services across the Union without another authorisation.

(55)

In order to ensure consumer protection, market integrity and financial stability, cryptoasset service providers should always act honestly, fairly and professionally in the bestinterest of their clients. Crypto-asset services should be considered ‘financial services’
as defined in Directive 2002/65/EC of the European Parliament and of the Council 42.
Where marketed at distance, the contracts between crypto-asset service providers andconsumers should be subject to that Directive. Crypto-asset service providers should
provide their clients with clear, fair and not misleading information and warn them
about the risks associated with crypto-assets. Crypto-asset service providers shouldmake their pricing policies public, should establish a complaint handling procedureand should have a robust policy to identify, prevent, manage and disclose conflicts ofinterest.

(56)

To ensure consumer protection, crypto-asset service providers should comply withsome prudential requirements. Those prudential requirements should be set as a fixedamount or in proportion to their fixed overheads of the preceding year, depending on
the types of services they provide.

(57)

Crypto-asset service providers should be subject to strong organisational requirements.
Their managers and main shareholders should be fit and proper for the purpose of antimoney laundering and combatting the financing of terrorism. Crypto-asset service
providers should employ management and staff with adequate skills, knowledge andexpertise and should take all reasonable steps to perform their functions, including
through the preparation of a business continuity plan. They should have sound internal
control and risk assessment mechanisms as well as adequate systems and procedures
to ensure integrity and confidentiality of information received. Crypto-asset service
providers should have appropriate arrangements to keep records of all transactions,orders and services related to crypto-assets that they provide. They should also havesystems in place to detect potential market abuse committed by clients.

42

Directive 2002/65/EC of the European Parliament and of the Council of 23 September 2002 concerning
the distance marketing of consumer financial services and amending Council Directive 90/619/EEC and
Directives 97/7/EC and 98/27/EC (OJ L 271, 9.10.2002, p. 16).

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(58)

In order to ensure consumer protection, crypto-asset service providers should haveadequate arrangements to safeguard the ownership rights of clients’ holdings ofcrypto-assets. Where their business model requires them to hold funds as defined in
Article 4, point (25), of Directive (EU) 2015/2366 of the European Parliament and of
the Council43 in the form of banknotes, coins, scriptural money or electronic money
belonging to their clients, crypto-asset service providers should place such funds witha credit institution or a central bank. Crypto-assets service providers should be
authorised to make payment transactions in connection with the crypto-asset services
they offer, only where they are authorised as payment institutions in accordance with
Directive (EU) 2015/2366.

(59)

Depending on the services they provide and due to the specific risks raised by eachtype of services, crypto-asset service providers should be subject to requirements
specific to those services. Crypto-asset service providers providing the service ofcustody and administration of crypto-assets on behalf of third parties should have acontractual relation with their clients with mandatory contractual provisions andshould establish and implement a custody policy. Those crypto-asset service providers
should also be held liable for any damages resulting from an ICT-related incident,
including an incident resulting from a cyber-attack, theft or any malfunctions.

(60)

To ensure an orderly functioning of crypto-asset markets, crypto-asset service
providers operating a trading platform for crypto-assets should have detailed operating
rules, should ensure that their systems and procedures are sufficiently resilient andshould be subject to pre-trade and post-trade transparency requirements adapted to thecrypto-asset market. Crypto-asset service providers should ensure that the trades
executed on their trading platform for crypto-assets are settled and recorded on the
DLT swiftly. Crypto-asset service providers operating a trading platform for cryptoassets should also have a transparent fee structure for the services provided to avoid
the placing of orders that could contribute to market abuse or disorderly trading
conditions.

(61)

To ensure consumer protection, crypto-asset service providers that exchange cryptoassets against fiat currencies or other crypto-assets by using their own capital should
establish a non-discriminatory commercial policy. They should publish either firm
quotes or the method they are using for determining the price of crypto-assets theywish to buy or sell. They should also be subject to post-trade transparency
requirements. Crypto-asset service providers that execute orders for crypto-assets onbehalf of third parties should establish an execution policy and should always aim at
obtaining the best result possible for their clients. They should take all necessary steps
to avoid the misuse of information related to clients’ orders by their employees.
Crypto-assets service providers that receive orders and transmit those orders to othercrypto-asset service providers should implement procedures for the prompt and proper
sending of those orders. Crypto-assets service providers should not receive any
monetary or non-monetary benefits for transmitting those orders to any particular
trading platform for crypto-assets or any other crypto-asset service providers.

43

Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on
payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC (OJ L 337,
23.12.2015, p. 35).

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(62)

Crypto-asset service providers that place crypto-assets for potential users should
communicate to those persons information on how they intend to perform their service
before the conclusion of a contract. They should also put in place specific measures toprevent conflicts of interest arising from that activity.

(63)

To ensure consumer protection, crypto-asset service providers that provide advice on
crypto-assets, either at the request of a third party or at their own initiative, shouldmake a preliminary assessment of their clients’ experience, knowledge, objectives andability to bear losses. Where the clients do not provide information to the crypto-asset
service providers on their experience, knowledge, objectives and ability to bear losses,
or it is clear that those clients do not have sufficient experience or knowledge tounderstand the risks involved, or the ability to bear losses, crypto-asset service
providers should warn those clients that the crypto-asset or the crypto-asset services
may not be suitable for them. When providing advice, crypto-asset service providers
should establish a report, summarising the clients’ needs and demands and the advice
given.

(64)

It is necessary to ensure users’ confidence in crypto-asset markets and market
integrity. It is therefore necessary to lay down rules to deter market abuse for cryptoassets that are admitted to trading on a trading platform for crypto-assets. However, as
issuers of crypto-assets and crypto-asset service providers are very often SMEs, itwould be disproportionate to apply all the provisions of Regulation (EU) No 596/2014of the European Parliament and of the Council44 to them. It is therefore necessary to
lay down specific rules prohibiting certain behaviours that are likely to undermine
users’ confidence in crypto-asset markets and the integrity of crypto-asset markets,
including insider dealings, unlawful disclosure of inside information and market
manipulation related to crypto-assets. These bespoke rules on market abuse committed
in relation to crypto-assets should be applied, where crypto-assets are admitted to
trading on a trading platform for crypto-assets.

(65)

Competent authorities should be conferred with sufficient powers to supervise theissuance of crypto-assets, including asset-referenced tokens or e-money tokens, as wellas crypto-asset service providers, including the power to suspend or prohibit anissuance of crypto-assets or the provision of a crypto-asset service, and to investigate
infringements of the rules on market abuse. Given the cross-border nature of cryptoasset markets, competent authorities should cooperate with each other to detect anddeter any infringements of the legal framework governing crypto-assets and markets
for crypto-assets. Competent authorities should also have the power to impose
sanctions on issuers of crypto-assets, including asset-referenced tokens or e-money
tokens and crypto-asset service providers.

(66)

Significant asset-referenced tokens can be used as a means of exchange and to makelarge volumes of payment transactions on a cross-border basis. To avoid supervisory
arbitrage across Member States, it is appropriate to assign to the EBA the task ofsupervising the issuers of significant asset-referenced tokens, once such assetreferenced tokens have been classified as significant.

44

Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on
market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliamentand of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (OJ L 173,
12.6.2014, p. 1).

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(67)

The EBA should establish a college of supervisors for issuers of significant assetreferenced tokens. Those issuers are usually at the centre of a network of entities that
ensure the issuance of such crypto-assets, their transfer and their distribution toholders. The members of the college of supervisors should therefore include all thecompetent authorities of the relevant entities and crypto-asset service providers that
ensure, among others, the custody of the reserve assets, the operation of trading
platforms for crypto-assets where the significant asset-referenced tokens are admitted
to trading and the crypto-asset service providers ensuring the custody andadministration of the significant asset-referenced tokens on behalf of holders. The
college of supervisors should facilitate the cooperation and exchange of information
among its members and should issue non-binding opinions on supervisory measures orchanges in authorisation concerning the issuers of significant asset-referenced tokens
or on the relevant entities providing services or activities in relation to the significant
asset-referenced tokens.

(68)

Competent authorities in charge of supervision under Directive 2009/110/EC shouldsupervise issuers of e-money tokens. However, given the potential widespread use ofsignificant e-money tokens as a means of payment and the risks they can pose tofinancial stability, a dual supervision by both competent authorities and the EBA ofissuers of significant e-money tokens is necessary. The EBA should supervise thecompliance by issuers of significant e-money tokens with the specific additional
requirements set out in this Regulation for significant e-money tokens.

(69)

The EBA should establish a college of supervisors for issuers of significant e-money
tokens. Issuers of significant e-money tokens are usually at the centre of a network ofentities which ensure the issuance of such crypto-assets, their transfer and theirdistribution to holders. The members of the college of supervisors for issuers ofsignificant e-money tokens should therefore include all the competent authorities of
the relevant entities and crypto-asset service providers that ensure, among others, theoperation of trading platforms for crypto-assets where the significant e-money tokens
are admitted to trading and the crypto-asset service providers ensuring the custody andadministration of the significant e-money tokens on behalf of holders. The college ofsupervisors for issuers of significant e-money tokens should facilitate the cooperationand exchange of information among its members and should issue non-binding
opinions on changes in authorisation or supervisory measures concerning the issuersof significant e-money tokens or on the relevant entities providing services or
activities in relation to those significant e-money tokens.

(70)

To supervise the issuers of significant asset-referenced tokens, the EBA should havethe powers, among others, to carry out on-site inspections, take supervisory measuresand impose fines. The EBA should also have powers to supervise the compliance ofissuers of significant e-money tokens with additional requirements set out in thisRegulation.

(71)

The EBA should charge fees on issuers of significant asset-referenced tokens andissuers of significant e-money tokens to cover its costs, including overheads. For
issuers of significant asset-referenced tokens, the fee should be proportionate to thesize of their reserve assets. For issuers of significant e-money tokens, the fee should be
proportionate to the amount of funds received in exchange for the significant e-money
tokens.

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EN

(72)

In order to ensure the uniform application of this Regulation, the power to adopt acts
in accordance with Article 290 of the Treaty on the Functioning of the European
Union (TFEU) should be delegated to the Commission in respect of the modificationsof the definitions set out in this Regulation in order to adapt them to market andtechnological developments, to specify the criteria and thresholds to determine
whether an asset-referenced token or an e-money token should be classified as
significant and to specify the type and amount of fees that can be levied by EBA forthe supervision of issuers of significant asset-referenced tokens or significant e-money
tokens. It is of particular importance that the Commission carry out appropriate
consultations during its preparatory work, including at expert level, and that those
consultations be conducted in accordance with the principles laid down in theInterinstitutional Agreement of 13 April 2016 on Better Law-Making45. In particular,
to ensure equal participation in the preparation of delegated acts, the European
Parliament and the Council should receive all documents at the same time as Member
States' experts, and their experts systematically have access to meetings ofCommission expert groups dealing with the preparation of delegated acts.

(73)

In order to promote the consistent application of this Regulation, including adequate
protection of investors and consumers across the Union, technical standards should be
developed. It would be efficient and appropriate to entrust the EBA and ESMA, asbodies with highly specialised expertise, with the development of draft regulatory
technical standards which do not involve policy choices, for submission to theCommission.

(74)

The Commission should be empowered to adopt regulatory technical standards
developed by the EBA and ESMA with regard to the procedure for approving cryptoasset white papers produced by credit institutions when issuing asset-referenced
tokens, the information to be provided in an application for authorisation as an issuerof asset-referenced tokens, the methodology for the calculation of capital requirements
for issuers of asset-referenced tokens, governance arrangements for issuers of assetreferenced tokens, the information necessary for the assessment of a qualifying
holdings in an asset-referenced token issuer’s capital, the procedure of conflicts ofinterest established by issuers of asset-referenced tokens, the type of assets which theissuers of asset-referenced token can invest in, the obligations imposed on crypto-asset
service providers ensuring the liquidity of asset-referenced tokens, the complainthandling procedure for issuers of asset-referenced tokens, the functioning of thecollege of supervisors for issuers of significant asset-referenced tokens and issuers ofsignificant e-money tokens, the information necessary for the assessment of qualifying
holdings in the crypto-asset service provider’s capital, the exchange of information
between competent authorities, the EBA and ESMA under this Regulation and thecooperation between the competent authorities and third countries. The Commission
should adopt those regulatory technical standards by means of delegated acts pursuant
to Article 290 TFEU and in accordance with Articles 10 to 14 of Regulation (EU) No

45

OJ L 123, 12.5.2016, p. 1.

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1093/2010 of the European Parliament and of the Council46 and Regulation (EU) No
1095/2010 of the European Parliament and of the Council47.
(75)

The Commission should be empowered to adopt implementing technical standards
developed by the EBA and ESMA, with regard to machine readable formats forcrypto-asset white papers, the standard forms, templates and procedures for theapplication for authorisation as an issuer of asset-referenced tokens, the standard forms
and template for the exchange of information between competent authorities andbetween competent authorities, the EBA and ESMA. The Commission should adopt
those implementing technical standards by means of implementing acts pursuant to
Article 291 TFEU and in accordance with Article 15 of Regulation (EU) No
1093/2010 and Article 15 of Regulation (EU) No 1095/2010.

(76)

Since the objectives of this Regulation, namely to address the fragmentation of thelegal framework applying to issuers of crypto-assets and crypto-asset service providers
and to ensure the proper functioning of crypto-asset markets while ensuring investor
protection, market integrity and financial stability cannot be sufficiently achieved by
the Member States but can rather, be better achieved at Union level by creating aframework on which a larger cross-border market for crypto-assets and crypto-asset
service providers could develop, the Union may adopt measures, in accordance withthe principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In
accordance with the principle of proportionality as set out in that Article, thisRegulation does not go beyond what is necessary in order to achieve those objectives.

(77)

In order to avoid disrupting market participants that provide services and activities inrelation to crypto-assets that have been issued before the entry into force of thisRegulation, issuers of such crypto-assets should be exempted from the obligation to
publish a crypto-asset white paper and other applicable requirements. However, thosetransitional provisions should not apply to issuers of asset-referenced tokens, issuers of
e-money tokens or to crypto-asset service providers that, in any case, should receive an
authorisation as soon as this Regulation enters into application.

(78)

Whistleblowers can bring new information to the attention of competent authorities
which helps them in detecting infringements of this Regulation and imposing
penalties. This Regulation should therefore ensure that adequate arrangements are inplace to enable whistleblowers to alert competent authorities to actual or potential
infringements of this Regulation and to protect them from retaliation. This should bedone by amending Directive (EU) 2019/1937 of the European Parliament and of theCouncil48 in order to make it applicable to breaches of this Regulation.

46

Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010
establishing a European Supervisory Authority (European Banking Authority), amending Decision No
716/2009/EC and repealing Commission Decision 2009/78/EC (OJ L 331, 15.12.2010, p. 12).
Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010
establishing a European Supervisory Authority (European Securities and Markets Authority), amending
Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC (OJ L 331, 15.12.2010,
p. 84).
Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on theprotection of persons who report breaches of Union law (OJ L 305, 26.11.2019, p. 17).

47

48

EN

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(79)

The date of application of this Regulation should be deferred by 18 months in order toallow for the adoption of regulatory technical standards, implementing technicalstandards and delegated acts that are necessary to specify certain elements of thisRegulation,

HAVE ADOPTED THIS REGULATION:

EN

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TITLE I
Subject Matter, Scope and Definitions
Article 1
Subject matter
This Regulation lays down uniform rules for the following:(a)transparency and disclosure requirements for the issuance and admission to tradingof crypto-assets;(b)

the authorisation and supervision of crypto-asset service providers and issuers ofasset-referenced tokens and issuers of electronic money tokens;(c)the operation, organisation and governance of issuers of asset-referenced tokens,issuers of electronic money tokens and crypto-asset service providers;(d)consumer protection rules for the issuance, trading, exchange and custody of cryptoassets;(e)measures to prevent market abuse to ensure the integrity of crypto-asset markets.
Article 2
Scope

1.

This Regulation applies to persons that are engaged in the issuance of crypto-assets
or provide services related to crypto-assets in the Union.

2.

However, this Regulation does not apply to crypto-assets that qualify as:

49
50

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(a)

financial instruments as defined in Article 4(1), point (15), of Directive
2014/65/EU;(b)electronic money as defined in Article 2, point (2), of Directive 2009/110/EC,
except where they qualify as electronic money tokens under this Regulation;(c)deposits as defined in Article 2(1), point (3), of Directive 2014/49/EU of theEuropean Parliament and of the Council49;(d)structured deposits as defined in Article 4(1), point (43), of Directive
2014/65/EU;(e)securitisation as defined in Article 2, point (1), of Regulation (EU) 2017/2402
of the European Parliament and of the Council50.

Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit
guarantee schemes (OJ L 173, 12.6.2014, p. 149).
Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 laying
down a general framework for securitisation and creating a specific framework for simple, transparent

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3.

4.

This Regulation does not apply to the following entities and persons:(a)the European Central Bank, national central banks of the Member States whenacting in their capacity as monetary authority or other public authorities;(b)

insurance undertakings or undertakings carrying out the reinsurance andretrocession activities as defined in Directive 2009/138/EC of the European
Parliament and of the Council51 when carrying out the activities referred to inthat Directive;(c)a liquidator or an administrator acting in the course of an insolvency procedure,
except for the purpose of Article 42;(d)persons who provide crypto-asset services exclusively for their parent
companies, for their subsidiaries or for other subsidiaries of their parent
companies;(e)the European investment bank;(f)

the European Financial Stability Facility and the European Stability
Mechanism;(g)public international organisations.

Where issuing asset-referenced tokens, including significant asset-referenced tokens,
credit institutions authorised under Directive 2013/36/EU shall not be subject to:(a)the provisions of chapter I of Title III, except Articles 21 and 22;(b)

Article 31.

5.

Where providing one or more crypto-asset services, credit institutions authorised
under Directive 2013/36/EU shall not be subject to the provisions of chapter I of
Title V, except Articles 57 and 58.

6.

Investment firms authorised under Directive 2014/65/EU shall not be subject to theprovisions of chapter I of Title V, except Articles 57, 58, 60 and 61, where they only
provide one or several crypto-asset services equivalent to the investment services andactivities for which they are authorised under Directive 2014/65/EU. For that
purpose:
(a)

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the crypto-asset services defined in Article 3(1), point (11), of this Regulation
are deemed to be equivalent to the investment activities referred to in points (8)and (9) of Section A of Annex I to Directive 2014/65/EU;

and standardised securitisation, and amending Directives 2009/65/EC, 2009/138/EC and 2011/61/EU
and Regulations (EC) No 1060/2009 and (EU) No 648/2012 (OJ L 347, 28.12.2017, p. 35).
Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on thetaking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 335,
17.12.2009, p. 1).

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(b)

the crypto-asset services defined in Article 3(1), points (12) and (13), of thisRegulation are deemed to be equivalent to the investment services referred toin point (3) of Section A of Annex I to Directive 2014/65/EU;(c)

the crypto-asset services defined in Article 3(1), point (14), of this Regulation
are deemed to be equivalent to the investment services referred to in point (2)of Section A of Annex I to Directive 2014/65/EU;(d)the crypto-asset services defined in Article 3(1), point (15), of this Regulation
are deemed to be equivalent to the investment services referred to in points (6)and (7) of Section A of Annex I to Directive 2014/65/EU;(e)

the crypto-asset services defined in Article 3(1), point (16), of this Regulation
are deemed to be equivalent to the investment services referred to in point (1)of Section A of Annex I to Directive 2014/65/EU.

(f)

the crypto-asset services defined in Article 3(1), point (17), of this Regulation
are deemed to be equivalent to the investment services referred to in points (5)of Section A of Annex I to Directive 2014/65/EU.
Article 3
Definitions

1.

EN

For the purposes of this Regulation, the following definitions apply:(1)‘distributed ledger technology’ or ‘DLT’ means a type of technology that
support the distributed recording of encrypted data;(2)‘crypto-asset’ means a digital representation of value or rights which may betransferred and stored electronically, using distributed ledger technology orsimilar technology;(3)‘asset-referenced token’ means a type of crypto-asset that purports to maintaina stable value by referring to the value of several fiat currencies that are legal
tender, one or several commodities or one or several crypto-assets, or a
combination of such assets;(4)‘electronic money token’ or ‘e-money token’ means a type of crypto-asset themain purpose of which is to be used as a means of exchange and that purports
to maintain a stable value by referring to the value of a fiat currency that islegal tender;(5)‘utility token’ means a type of crypto-asset which is intended to provide digitalaccess to a good or service, available on DLT, and is only accepted by theissuer of that token;(6)‘issuer of crypto-assets’ means a legal person who offers to the public any typeof crypto-assets or seeks the admission of such crypto-assets to a trading
platform for crypto-assets;

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(7)

‘offer to the public’ means an offer to third parties to acquire a crypto-asset in
exchange for fiat currency or other crypto-assets;(8)‘crypto-asset service provider’ means any person whose occupation or businessis the provision of one or more crypto-asset services to third parties on aprofessional basis;(9)‘crypto-asset service’ means any of the services and activities listed below
relating to any crypto-asset:(a)the custody and administration of crypto-assets on behalf of third parties;(b)

the operation of a trading platform for crypto-assets;(c)the exchange of crypto-assets for fiat currency that is legal tender;(d)the exchange of crypto-assets for other crypto-assets;(e)

the execution of orders for crypto-assets on behalf of third parties;(f)

placing of crypto-assets;(g)

the reception and transmission of orders for crypto-assets on behalf ofthird parties(h)providing advice on crypto-assets;(10) ‘the custody and administration of crypto-assets on behalf of third parties’means safekeeping or controlling, on behalf of third parties, crypto-assets or
the means of access to such crypto-assets, where applicable in the form ofprivate cryptographic keys;(11) ‘the operation of a trading platform for crypto-assets’ means managing one ormore trading platforms for crypto-assets, within which multiple third-party
buying and selling interests for crypto-assets can interact in a manner that
results in a contract, either by exchanging one crypto-asset for another or acrypto-asset for fiat currency that is legal tender;(12) ‘the exchange of crypto-assets for fiat currency’ means concluding purchase orsale contracts concerning crypto-assets with third parties against fiat currency
that is legal tender by using proprietary capital;(13) ‘the exchange of crypto-assets for other crypto-assets’ means concluding
purchase or sale contracts concerning crypto-assets with third parties against
other crypto-assets by using proprietary capital;(14) ‘the execution of orders for crypto-assets on behalf of third parties’ means
concluding agreements to buy or to sell one or more crypto-assets or to
subscribe for one or more crypto-assets on behalf of third parties;(15) ‘placing of crypto-assets’ means the marketing of newly-issued crypto-assets
or of crypto-assets that are already issued but that are not admitted to trading
on a trading platform for crypto-assets, to specified purchasers and which does

EN

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not involve an offer to the public or an offer to existing holders of the issuer’s
crypto-assets;(16) ‘the reception and transmission of orders for crypto-assets on behalf of third
parties’ means the reception from a person of an order to buy or to sell one ormore crypto-assets or to subscribe for one or more crypto-assets and thetransmission of that order to a third party for execution;(17) ‘providing advice on crypto-assets’ means offering, giving or agreeing to give
personalised or specific recommendations to a third party, either at the third
party’s request or on the initiative of the crypto-asset service provider
providing the advice, concerning the acquisition or the sale of one or more
crypto-assets, or the use of crypto-asset services;(18) ‘management body’ means the body of an issuer of crypto-assets, or of acrypto-asset provider, which is appointed in accordance with national law, andwhich is empowered to set the entity’s strategy, objectives, the overall
direction and which oversees and monitors management decision-making andwhich includes persons who direct the business of the entity;(19) ‘credit institution’ means a credit institution as defined in Article 4(1), point(1), of Regulation (EU) No 575/2013;(20) ‘qualified investors’ means ‘qualified investors’ as defined in Article 2, point(e), of Regulation (EU) 2017/1129;(21) ‘reserve assets’ means the basket of fiat currencies that are legal tender,
commodities or crypto-assets, backing the value of an asset-referenced tokens,or the investment of such assets;(22) ‘home Member State’ means:

EN

(a)

where the issuer of crypto-assets, other than asset-referenced tokens orelectronic money tokens, has its registered office or a branch in theUnion, the Member State where the issuer of crypto-assets has its
registered office or a branch;(b)where the issuer of crypto-assets, other than asset-referenced tokens orelectronic money tokens, has no registered office in the Union but has
two or more branches in the Union, the Member State chosen by theissuer among those Member States where the issuer has branches;(c)where the issuer of crypto-assets, other than asset-referenced tokens orelectronic money tokens, is established in a third country and has nobranch in the Union, at the choice of that issuer, either the Member State
where the crypto-assets are intended to be offered to the public for the
first time or the Member State where the first application for admission
to trading on a trading platform for crypto-assets is made;(d)for issuer of asset-referenced tokens, the Member State where the issuerof asset-referenced tokens has its registered office;

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(e)

for issuers of electronic money tokens, the Member States where theissuer of electronic money tokens is authorised as a credit institution
under Directive 2013/36/EU or as a e-money institution under Directive
2009/110/EC;(f)

for crypto-asset service providers, the Member State where the cryptoasset service provider has its registered office;(23) ‘host Member State’ means the Member State where an issuer of crypto-assets
has made an offer of crypto-assets to the public or is seeking admission to
trading on a trading platform for crypto-assets, or where crypto-asset service
provider provides crypto-asset services, when different from the home Member
State;(24) ‘competent authority’ means:(a)the authority, designated by each Member State in accordance with
Article 81 for issuers of crypto-assets, issuers of asset-referenced tokens
and crypto-asset service providers;(b)the authority, designated by each Member State, for the application of
Directive 2009/110/EC for issuers of e-money tokens;(25) ‘commodity’ means ‘commodity’ under Article 2(6) of Commission
Delegated Regulation (EU) 2017/56552;(26) ‘qualifying holding’ means any direct or indirect holding in an issuer of assetreferenced tokens or in a crypto-asset service provider which represents at least
10% of the capital or the voting rights, as set out in Articles 9 and 10 of
Directive 2004/109/EC of the European Parliament and of the Council53, taking
into account the conditions regarding aggregation thereof laid down inparagraphs 4 and 5 of Article 12 of that Directive, or which makes it possible
to exercise a significant influence over the management of the investment firmin which that holding subsists.
(27) ‘inside information’ means any information of a precise nature that has notbeen made public, relating, directly or indirectly, to one or more issuers ofcrypto-assets or to one or more crypto-assets, and which, if it was made public,
would be likely to have a significant effect on the prices of those crypto-assets;(28) ‘consumer’ means any natural person who is acting for purposes which areoutside his trade, business, craft or profession.

52

53

EN

Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 supplementing Directive
2014/65/EU of the European Parliament and of the Council as regards organisational requirements andoperating conditions for investment firms and defined terms for the purposes of that Directive (OJ L 87,
31.3.2017, p. 1).
Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on theharmonisation of transparency requirements in relation to information about issuers whose securities areadmitted to trading on a regulated market and amending Directive 2001/34/EC (OJ L 390, 31.12.2004,
p. 38).

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2.

EN

The Commission is empowered to adopt delegated acts in accordance with Article
121 to specify technical elements of the definitions laid down in paragraph 1, and toadjust those definitions to market developments and technological developments.

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TITLE II
Crypto-Assets, other than asset-referenced tokens or emoney tokens
Article 4
Offers of crypto-assets, other than asset-referenced tokens or e-money tokens, to the public,
and admission of such crypto-assets to trading on a trading platform for crypto-assets
1.

2.

No issuer of crypto-assets, other than asset-referenced tokens or e-money tokens,shall, in the Union, offer such crypto-assets to the public, or seek an admission ofsuch crypto-assets to trading on a trading platform for crypto-assets, unless thatissuer:(a)

is a legal entity;(b)

has drafted a crypto-asset white paper in respect of those crypto-assets inaccordance with Article 5;(c)has notified that crypto-asset white paper in accordance with Article 7;(d)has published the crypto-asset white paper in accordance with Article 8;(e)complies with the requirements laid down in Article 13.

Paragraph 1, points (b) to (d) shall not apply where:(a)the crypto-assets are offered for free;(b)

the crypto-assets are automatically created through mining as a reward for the
maintenance of the DLT or the validation of transactions;(c)the crypto-assets are unique and not fungible with other crypto-assets;(d)the crypto-assets are offered to fewer than 150 natural or legal persons per
Member State where such persons are acting on their own account;(e)over a period of 12 months, the total consideration of an offer to the public ofcrypto-assets in the Union does not exceed EUR 1 000 000, or the equivalentamount in another currency or in crypto-assets;(f)

the offer to the public of the crypto-assets is solely addressed to qualified
investors and the crypto-assets can only be held by such qualified investors.

For the purpose of point (a), crypto-assets shall not be considered to be offered forfree where purchasers are required to provide or to undertake to provide personal
data to the issuer in exchange for those crypto-assets, or where the issuer of those
crypto-assets receives from the prospective holders of those crypto-assets any third

EN

42

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party fees, commissions, monetary benefits or non-monetary benefits in exchange forthose crypto-assets.

3.

Where the offer to the public of crypto-assets, other than asset-referenced tokens or
e-money tokens, concerns utility tokens for a service that is not yet in operation, theduration of the public offer as described in the crypto-asset white paper shall not
exceed 12 months.
Article 5Content and form of the crypto-asset white paper

1.

EN

The crypto-asset white paper referred to in Article 4(1), point (b), shall contain all
the following information:(a)a detailed description of the issuer and a presentation of the main participants
involved in the project's design and development;(b)a detailed description of the issuer’s project, the type of crypto-asset that will
be offered to the public or for which admission to trading is sought, the reasons
why the crypto-assets will be offered to the public or why admission to trading
is sought and the planned use of the fiat currency or other crypto-assets
collected via the offer to the public;(c)a detailed description of the characteristics of the offer to the public, inparticular the number of crypto-assets that will be issued or for which
admission to trading is sought, the issue price of the crypto-assets and thesubscription terms and conditions;(d)a detailed description of the rights and obligations attached to the crypto-assets
and the procedures and conditions for exercising those rights;(e)

information on the underlying technology and standards applied by the issuerof the crypto-assets allowing for the holding, storing and transfer of those
crypto-assets;(f)a detailed description of the risks relating to the issuer of the crypto-assets, thecrypto-assets, the offer to the public of the crypto-asset and the implementationof the project;(g)

the disclosure items specified in Annex I.

2.

All information referred to in paragraph 1 shall be fair, clear and not misleading. The
crypto-asset white paper shall not contain material omissions and shall be presented
in a concise and comprehensible form.

3.

The crypto-asset white paper shall contain the following statement: “The issuer ofthe crypto-assets is solely responsible for the content of this crypto-asset white paper.
This crypto-asset white paper has not been reviewed or approved by any competentauthority in any Member State of the European Union”.

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EN

4.

The crypto-asset white paper shall not contain any assertions on the future value ofthe crypto-assets, other than the statement referred to in paragraph 5, unless theissuer of those crypto-assets can guarantee such future value.

5.

The crypto-asset white paper shall contain a clear and unambiguous statement that:(a)the crypto-assets may lose their value in part or in full;(b)

the crypto-assets may not always be transferable;(c)the crypto-assets may not be liquid;(d)where the offer to the public concerns utility tokens, that such utility tokens
may not be exchangeable against the good or service promised in the cryptoasset white paper, especially in case of failure or discontinuation of the project.

6.

Every crypto-asset white paper shall contain a statement from the management bodyof the issuer of the crypto-assets. That statement shall confirm that the crypto-asset
white paper complies with the requirements of this Title and that, to the best
knowledge of the management body, the information presented in the crypto-asset
white paper is correct and that there is no significant omission.

7.

The crypto-asset white paper shall contain a summary which shall in brief and nontechnical language provide key information about the offer to the public of thecrypto-assets or about the intended admission of crypto-assets to trading on a trading
platform for crypto-assets, and in particular about the essential elements of thecrypto-assets concerned. The format and content of the summary of the crypto-asset
white paper shall provide, in conjunction with the crypto-asset white paper,
appropriate information about essential elements of the crypto-assets concerned inorder to help potential purchasers of the crypto-assets to make an informed decision.
The summary shall contain a warning that:(a)it should be read as an introduction to the crypto-asset white paper;(b)

the prospective purchaser should base any decision to purchase a crypto-asseton the content of the whole crypto-asset white paper;(c)the offer to the public of crypto-assets does not constitute an offer orsolicitation to sell financial instruments and that any such offer or solicitation
to sell financial instruments can be made only by means of a prospectus orother offering documents pursuant to national laws;(d)the crypto-asset white paper does not constitute a prospectus as referred to in
Regulation (EU) 2017/1129 or another offering document pursuant to Union
legislation or national laws.

8.

Every crypto-asset white paper shall be dated.

9.

The crypto-asset white paper shall be drawn up in at least one of the official
languages of the home Member State or in a language customary in the sphere ofinternational finance.

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10.

The crypto-asset white paper shall be made available in machine readable formats.

11.

ESMA, after consultation of the EBA, shall develop draft implementing technicalstandards to establish standard forms, formats and templates for the purposes ofparagraph 10.
ESMA shall submit those draft implementing technical standards to the Commission
by [please insert date 12 months after entry into force].
Power is conferred on the Commission to adopt the implementing technical standards
referred to in the first subparagraph in accordance with Article 15 of Regulation (EU)No 1095/2010.
Article 6Marketing communications

Any marketing communications relating to an offer to the public of crypto-assets, other thanasset-referenced tokens or e-money tokens, or to the admission of such crypto-assets totrading on a trading platform for crypto-assets, shall comply with all of the following:(a)the marketing communications shall be clearly identifiable as such;(b)

the information in the marketing communications shall be fair, clear and not
misleading;(c)the information in the marketing communications shall be consistent with theinformation in the crypto-asset white paper, where such a crypto-asset white
paper is required in accordance with Article 4;(d)the marketing communications shall clearly state that a crypto-asset white
paper has been published and indicate the address of the website of the issuerof the crypto-assets concerned.

Article 7
Notification of the crypto-asset white paper, and, where applicable, of the marketing
communications

EN

1.

Competent authorities shall not require an ex ante approval of a crypto-asset white
paper, nor of any marketing communications relating to it before their publication.

2.

Issuers of crypto-assets, other than asset-referenced tokens or e-money tokens, shallnotify their crypto-asset white paper, and, in case of marketing communications as
referred to in Article 6, such marketing communications, to the competent authorityof their home Member State at least 20 working days before publication of thecrypto-asset white paper. That competent authority may exercise the powers laid
down in Article 82(1).

3.

The notification of the crypto-asset white paper shall explain why the crypto-asset
described in the crypto-asset white paper is not to be considered:

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EN

4.

(a)

a financial instrument as defined in Article 4(1), point (15), of Directive
2014/65/EU;(b)electronic money as defined in in Article 2, point 2, of Directive 2009/110/EC;(c)a deposit as defined in Article 2(1), point (3), of Directive 2014/49/EU;(d)a structured deposit as defined in Article 4(1), point (43), of Directive
2014/65/EU.

Issuers of crypto-assets, other than asset-referenced tokens or e-money tokens, shall,
together with the notification referred to in paragraphs 2 and 3, provide thecompetent authority of their home Member State with a list of host Member States, ifany, where they intend to offer their crypto-assets to the public or intend to seek
admission to trading on a trading platform for crypto-assets. They shall also informtheir home Member State of the starting date of the intended offer to the public or
intended admission to trading on such a trading platform for crypto-assets.
The competent authority of the home Member State shall notify the competentauthority of the host Member State of the intended offer to the public or the intended
admission to trading on a trading platform for crypto-assets within 2 working days
following the receipt of the list referred to in the first subparagraph.

5.

Competent authorities shall communicate to ESMA the crypto-asset white papers
that have been notified to them and the date of their notification. ESMA shall makethe notified crypto-asset white papers available in the register referred to in Article
57.
Article 8
Publication of the crypto-asset white paper, and, where applicable, of the marketing
communications

EN

1.

Issuers of crypto-assets, other than asset-referenced tokens or e-money tokens, shall
publish their crypto-asset white paper, and, where applicable, their marketing
communications, on their website, which shall be publicly accessible, by no later
than the starting date of the offer to the public of those crypto-assets or the admissionof those crypto-assets to trading on a trading platform for crypto-assets. The cryptoasset white paper, and, where applicable, the marketing communications, shallremain available on the issuer’s website for as long as the crypto-assets are held by
the public.

2.

The published crypto-asset white paper, and, where applicable, the marketing
communications, shall be identical to the version notified to the relevant competentauthority in accordance with Article 7, or, where applicable, modified in accordancewith Article 11.

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ENArticle 9
Offers to the public of crypto-assets, other than asset-referenced tokens or e-money tokens,that are limited in time
1.

Issuers of crypto-assets, other than asset-referenced tokens or e-money tokens, that
set a time limit on their offer to the public of those crypto-assets shall publish on
their website the result of the offer within 16 working days from the end of thesubscription period.

2.

Issuers of crypto-assets, other than asset-referenced tokens or e-money tokens, that
set a time limit for their offer to the public of crypto-assets shall have effective
arrangements in place to monitor and safeguard the funds, or other crypto-assets,raised during such offer. For that purpose, such issuers shall ensure that the funds orother crypto-assets collected during the offer to the public are kept in custody byeither of the following:(a)a credit institution, where the funds raised during the offer to the public takes
the form of fiat currency;(b)a crypto-asset service provider authorised for the custody and administration of
crypto-assets on behalf of third parties.

Article 10
Permission to offer crypto-assets, other than asset-referenced tokens or e-money tokens, tothe public or to seek admission for trading such crypto-assets on a trading platform for
crypto-assets
1.

After publication of the crypto-asset white paper in accordance with Article 8, and,
where applicable, Article 11, issuers of crypto-assets may offer their crypto-assets,other than asset-referenced tokens or e-money tokens, throughout the Union and seek
admission to trading of such crypto-assets on a trading platform for crypto-assets.

2.

Issuers of crypto-assets, other than asset-referenced tokens or e-money tokens, thathave published a crypto-asset white paper in accordance with Article 8, and whereapplicable Article 11, shall not be subject to any further information requirements,
with regard to the offer of those crypto-assets or the admission of such crypto-assets
to a trading platform for crypto-assets.
Article 11
Modification of published crypto-asset white papers and, where applicable, publishedmarketing communications after their publication

1.

EN

Issuers of crypto-assets, other than asset-referenced tokens or e-money tokens, shallmodify their published crypto-asset white paper, and, where applicable, publishedmarketing communications, to describe any change or new fact that is likely to havea significant influence on the purchase decision of any potential purchaser of such
crypto-assets, or on the decision of holders of such crypto-assets to sell or exchangesuch crypto-assets.

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EN

2.

The issuer shall immediately inform the public on its website of the notification of amodified crypto-asset white paper with the competent authority of its home Member
State and shall provide a summary of the reasons for which it has notified a modified
crypto-asset white paper.

3.

The order of the information in a modified crypto-asset white paper, and, whereapplicable, in modified marketing communications, shall be consistent with that of
the crypto-asset white paper or marketing communications published in accordancewith Article 8.

4.

Issuers of crypto-assets, other than asset-referenced tokens or e-money tokens, shallnotify their modified crypto-asset white papers, and where applicable, modified
marketing communications, to the competent authority of their home Member State,including the reasons for such modification, at least seven working days before their
publication. That competent authority may exercise the powers laid down in Article
82(1).

5.

Within 2 working days of the receipt of a draft modified crypto-asset white paper,
and, where applicable, the modified marketing communications, the competentauthority of the home Member State shall notify the modified crypto-asset white
paper and, where applicable, the modified marketing communications, to thecompetent authority of the host Member State referred to in Article 7(4).

6.

Issuers of crypto-assets, other than asset-referenced tokens or e-money tokens, shall
publish the modified crypto-asset white paper, and, where applicable, the modified
marketing communications, including the reasons for such modification, on theirwebsite in accordance with Article 8.

7.

The modified crypto-asset white paper, and, where applicable, the modified
marketing communications, shall be time-stamped. The latest modified crypto-asset
white paper, and, where applicable, the modified marketing communications, shallbe marked as the applicable version. All the modified crypto-asset white papers, and,
where applicable, the modified marketing communication, shall remain available foras long as the crypto-assets are held by the public.

8.

Where the offer to the public concerns utility tokens, the changes made in themodified crypto-asset white paper, and, where applicable, the modified marketing
communications, shall not extend the time limit of 12 months referred to in Article
4(3).
Article 12
Right of withdrawal

1.

EN

Issuers of crypto-assets, other than asset-referenced tokens and e-money tokens, shalloffer a right of withdrawal to any consumer who buys such crypto-assets directlyfrom the issuer or from a crypto-asset service provider placing crypto-assets onbehalf of that issuer.

48

ENConsumers shall have a period of 14 calendar days to withdraw their agreement topurchase those crypto-assets without incurring any cost and without giving reasons.
The period of withdrawal shall begin from the day of the consumers’ agreement topurchase those crypto-assets.
2.

All payments received from a consumer, including, if applicable, any charges, shallbe reimbursed without undue delay and in any event not later than 14 days from theday on which the issuer of crypto-assets or a crypto-asset service provider placing
crypto-assets on behalf of that issuer is informed of the consumer’s decision towithdraw from the agreement.
The reimbursement shall be carried out using the same means of payment as theconsumer used for the initial transaction, unless the consumer has expressly agreed
otherwise and provided that the consumer does not incur any fees as a result of such
reimbursement.

3.

Issuers of crypto-assets shall provide information on the right of withdrawal referred
to in paragraph 1 in their crypto-asset white paper.

4.

The right of withdrawal shall not apply where the crypto-assets are admitted to
trading on a trading platform for crypto-assets.

5.

Where issuers of crypto-assets have set a time limit on their offer to the public ofsuch crypto-assets in accordance with Article 9, the right of withdrawal shall not be
exercised after the end of the subscription period.
Article 13
Obligations of issuers of crypto-assets, other than asset-referenced tokens or e-money
tokens1.

Issuers of crypto-assets, other than asset-referenced tokens or e-money tokens, shall:(a)act honestly, fairly and professionally;(b)communicate with the holders of crypto-assets in a fair, clear and not
misleading manner;(c)

prevent, identify, manage and disclose any conflicts of interest that may arise;(d)maintain all of their systems and security access protocols to appropriate Union
standards.

For the purposes of point (d), ESMA, in cooperation with the EBA, shall develop
guidelines pursuant to Article 16 of Regulation (EU) No 1095/2010 to specify theUnion standards.
2.

EN

Issuers of crypto-assets, other than asset-referenced tokens or e-money tokens, shallact in the best interests of the holders of such crypto-assets and shall treat themequally, unless any preferential treatment is disclosed in the crypto-asset white paper,
and, where applicable, the marketing communications.

49

EN

3.

Where an offer to the public of crypto-assets, other than asset-referenced tokens or emoney tokens, is cancelled for any reason, issuers of such crypto-assets shall ensurethat any funds collected from purchasers or potential purchasers are duly returned tothem as soon as possible.

Article 14
Liability of issuers of crypto-assets, other than asset-referenced tokens or e-money tokens
for the information given in a crypto-asset white paper
1.

Where an issuer of crypto-assets, other than asset-referenced tokens or e-money
tokens, or its management body has infringed Article 5, by providing in its cryptoasset white paper or in a modified crypto-asset white paper information which is notcomplete, fair or clear or by providing information which is misleading, a holder ofcrypto-assets may claim damages from that issuer of crypto-assets, other than assetreferenced tokens or e-money tokens, or its management body for damage caused toher or him due to that infringement.
Any exclusion of civil liability shall be deprived of any legal effect.

2.

It shall be the responsibility of the holders of crypto-assets to present evidence
indicating that the issuer of crypto-assets, other than asset-referenced tokens or emoney tokens, has infringed Article 5 and that such an infringement had an impact
on his or her decision to buy, sell or exchange the said crypto-assets.

3.

A holder of crypto-assets shall not be able to claim damages for the information
provided in a summary as referred to in Article 5(7), including the translation
thereof, except where:

4.

EN

(a)

the summary is misleading, inaccurate or inconsistent when read together withthe other parts of the crypto-asset white paper;(b)

the summary does not provide, when read together with the other parts of thecrypto-asset white paper, key information in order to aid consumers andinvestors when considering whether to purchase such crypto-assets.

This Article does not exclude further civil liability claims in accordance withnational law.

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EN

TITLE III: Asset-referenced tokens
Chapter 1
Authorisation to offer asset-referenced tokens to the public and toseek their admission to trading on a trading platform for cryptoassets
Article 15
Authorisation1.

No issuer of asset-referenced tokens shall, within the Union, offer such tokens to the
public, or seek an admission of such assets to trading on a trading platform for
crypto-assets, unless such issuers have been authorised to do so in accordance with
Article 19 by the competent authority of their home Member State.

2.

Only legal entities that are established in the Union shall be granted an authorisation
as referred to in paragraph 1.

3.

Paragraph 1 shall not apply where:(a)over a period of 12 months, calculated at the end of each calendar day, theaverage outstanding amount of asset-referenced tokens does not exceed EUR
5 000 000, or the equivalent amount in another currency;(b)the offer to the public of the asset-referenced tokens is solely addressed toqualified investors and the asset-referenced tokens can only be held by suchqualified investors.

Issuers of such asset-referenced tokens shall, however, produce a crypto-asset white
paper as referred to in Article 17 and notify that crypto-asset white paper, and whereapplicable, their marketing communications, to the competent authority of theirhome Member State in accordance with Article 7.
4.

Paragraph 1 shall not apply where the issuers of asset-referenced tokens areauthorised as a credit institution in accordance with Article 8 of Directive
2013/36/EU.
Such issuers shall, however, produce a crypto-asset white paper as referred to in
Article 17, and submit that crypto-asset white paper for approval by the competentauthority of their home Member State in accordance with paragraph 7.

5.

EN

The authorisation granted by the competent authority shall be valid for the entire
Union and shall allow an issuer to offer the asset-referenced tokens for which it has
been authorised throughout the Union, or to seek an admission of such assetreferenced tokens to trading on a trading platform for crypto-assets.

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EN

6.

The approval granted by the competent authority of the issuers’ crypto-asset white
paper under Article 19 or on a modified crypto-asset white paper under Article 21
shall be valid for the entire Union.

7.

The EBA shall, in close cooperation with ESMA, develop draft regulatory technicalstandards to specify the procedure for the approval of a crypto-asset white paper
referred to in paragraph 4.
EBA shall submit those draft regulatory technical standards to the Commission by[please insert date 12 months after the entry into force].
Power is delegated to the Commission to adopt the regulatory technical standards
referred to in the first subparagraph in accordance with Articles 10 to 14 ofRegulation (EU) No 1093/2010.
Article 16
Application for authorisation

EN

1.

Issuers of asset-referenced tokens shall submit their application for an authorisation
as referred to in Article 15 to the competent authority of their home Member State.

2.

The application referred to in paragraph 1 shall contain all of the following
information:(a)the address of the applicant issuer;(b)

the articles of association of the applicant issuer;(c)a programme of operations, setting out the business model that the applicant
issuer intends to follow;(d)a legal opinion that the asset-referenced tokens do not qualify as financial
instruments, electronic money, deposits or structured deposits;(e)a detailed description of the applicant issuer’s governance arrangements;(f)

the identity of the members of the management body of the applicant issuer;(g)

proof that the persons referred to in point (f) are of good repute and possess
appropriate knowledge and experience to manage the applicant issuer;(h)where applicable, proof that natural persons who either own, directly or
indirectly, more than 20% of the applicant issuer's share capital or voting
rights, or who exercise, by any other means, control over the said applicant
issuer, have good repute and competence;(i)a crypto-asset white paper as referred to in Article 17;(j)

the policies and procedures referred to in Article 30(5), points (a) to (k);(k)

a description of the contractual arrangements with the third parties referred toin the last subparagraph of Article 30(5);

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EN

(l)

a description of the applicant issuer’s business continuity policy referred to in
Article 30(8);(m) a description of the internal control mechanisms and risk management
procedures referred to in Article 30(9);

3.

4.

(n)

a description of the procedures and systems to safeguard the security, including
cyber security, integrity and confidentiality of information referred to in
Article 30(10);(o)

a description of the applicant issuer’s complaint handling procedures asreferred to in Article 27.

For the purposes of paragraph 2, points (g) and (h), applicant issuers of assetreferenced tokens shall provide proof of all of the following:(a)for all the persons involved in the management of the applicant issuer of assetreferenced tokens, the absence of a criminal record in respect of convictions or
penalties under national rules in force in the fields of commercial law,
insolvency law, financial services legislation, anti-money laundering
legislation, counter-terrorism legislation, fraud, or professional liability;(b)that the members of the management body of the applicant issuer of assetreferenced tokens collectively possess sufficient knowledge, skills andexperience to manage the issuer of asset-referenced tokens and that those
persons are required to commit sufficient time to perform their duties.

The EBA shall, in close cooperation with ESMA, develop draft regulatory technicalstandards to specify the information that an application shall contain, in addition to
the information referred to in paragraph 2.
The EBA shall submit those draft regulatory technical standards to the Commission
by [please insert date 12 months after the entry into force].
Power is delegated to the Commission to adopt the regulatory technical standards
referred to in the first subparagraph in accordance with Articles 10 to 14 ofRegulation (EU) No 1093/2010.

5.

The EBA shall, in close cooperation with ESMA, develop draft implementing
technical standards to establish standard forms, templates and procedures for theapplication for authorisation.
The EBA shall submit those draft implementing technical standards to theCommission by [please insert date 12 months after the entry into force].
Power is conferred on the Commission to adopt the implementing technical standards
referred to in the first subparagraph in accordance with Article 15 of Regulation (EU)No 1093/2010.

EN

53

EN

Article 17Content and form of the crypto-asset white paper for asset-referenced tokens
1.

The crypto-asset white paper referred to in Article 16(2), point (i), shall comply withall the requirements laid down in Article 4. In addition to the information referred toin Article 4, however, the crypto-asset white paper shall contain all of the following
information:(a)a detailed description of the issuer’s governance arrangements, including adescription of the role, responsibilities and accountability of the third-party
entities referred to in Article 30(5), point (h);(b)

a detailed description of the reserve of assets referred to in Article 32;(c)a detailed description of the custody arrangements for the reserve assets,
including the segregation of the assets, as referred to in Article 33;(d)in case of an investment of the reserve assets as referred to in Article 34, adetailed description of the investment policy for those reserve assets;(e)detailed information on the nature and enforceability of rights, including any
direct redemption right or any claims, that holders of asset-referenced tokens
and any legal or natural person as referred in Article 35(3), may have on thereserve assets or against the issuer, including how such rights may be treated ininsolvency procedures.

(f)where the issuer does not offer a direct right on the reserve assets, detailed
information on the mechanisms referred to in Article 35(4) to ensure theliquidity of the asset-referenced tokens;(g)a detailed description of the complaint handling procedure referred to in Article
27;

(h)

the disclosure items specified in Annexes I and II.

For the purposes of point (e), where no direct claim or redemption right has been
granted to all the holders of asset-referenced tokens, the crypto-asset white paper
shall contain a clear and unambiguous statement that all the holders of the cryptoassets do not have a claim on the reserve assets, or cannot redeem those reserve
assets with the issuer at any time.
2.

EN

The crypto-asset white paper shall contain a summary which shall in brief and nontechnical language provide key information about the offer to the public of the assetreferenced tokens or about the intended admission of asset-referenced tokens to
trading on a trading platform for crypto-assets, and in particular about the essential
elements of the asset-referenced tokens concerned. The format and content of thesummary of the crypto-asset white paper shall provide, in conjunction with thecrypto-asset white paper, appropriate information about essential elements of theasset-referenced tokens concerned in order to help potential purchasers of the assetreferenced tokens to make an informed decision. The summary shall contain awarning that:

54

EN

(i)

it should be read as an introduction to the crypto-asset white paper;(j)

the prospective purchaser should base any decision to purchase an assetreferenced token on the content of the whole crypto-asset white paper;(k)the offer to the public of asset-referenced tokens does not constitute an offer orsolicitation to sell financial instruments and that any such offer or solicitation
to sell financial instruments can be made only by means of a prospectus orother offering documents pursuant to national laws;(l)the crypto-asset white paper does not constitute a prospectus as referred to in
Regulation (EU) 2017/1129 or another offering document pursuant to Union
legislation or national laws.

3.

Every crypto-asset white paper shall be dated.

4.

The crypto-asset white paper shall be drawn up in at least one of the official
languages of the home Member State or in a language customary in the sphere ofinternational finance.

5.

The crypto-asset white paper shall be made available in machine readable formats.

6.

ESMA, after consultation of the EBA, shall develop draft implementing technicalstandards to establish standard forms, formats and templates for the purposes ofparagraph 10.
ESMA shall submit those draft implementing technical standards to the Commission
by [please insert date 12 months after entry into force].
Power is conferred on the Commission to adopt the implementing technical standards
referred to in the first subparagraph in accordance with Article 15 of Regulation (EU)No 1095/2010.

Article 18
Assessment of the application for authorisationEN

1.

Competent authorities receiving an application for authorisation as referred to in
Article 16 shall, within 20 working days of receipt of such application, assess
whether that application, including the crypto-asset white paper referred to in
Article 16(2), point (i), is complete. They shall immediately notify the applicant
issuer of whether the application, including the crypto-asset white paper, is complete.
Where the application, including the crypto-asset white paper, is not complete, theyshall set a deadline by which the applicant issuer is to provide any missing
information.

2.

The competent authorities shall, within 3 months from the receipt of a complete
application, assess whether the applicant issuer complies with the requirements set
out in this Title and take a fully reasoned draft decision granting or refusing
authorisation. Within those three months, competent authorities may request from the55

ENapplicant issuer any information on the application, including on the crypto-asset
white paper referred in Article 16(2), point (i).
3.

Competent authorities shall, after the three months referred to in paragraph 2,transmit their draft decision to the applicant issuer, and their draft decision and theapplication file to the EBA, ESMA and the ECB. Where the applicant issuer isestablished in a Member State the currency of which is not the euro, or where acurrency that is not the euro is included in the reserve assets, competent authorities
shall consult the central bank of that Member State. Applicant issuers shall have theright to provide their competent authority with observations and comments on theirdraft decisions.

4.

The EBA, ESMA, the ECB and, where applicable, a central bank as referred to inparagraph 3 shall, within 2 months after having received the draft decision and theapplication file, issue a non-binding opinion on the application and transmit their
non-binding opinions to the competent authority concerned. That competentauthority shall duly consider those non-binding opinions and the observations andcomments of the applicant issuer.
Article 19
Grant or refusal of the authorisation

1.

Competent authorities shall, within one month after having received the non-binding
opinion referred to in Article 18(4), take a fully reasoned decision granting or
refusing authorisation to the applicant issuer and, and, within 5 working days, notifythat decision to applicant issuers. Where an applicant issuer is authorised, its cryptoasset white paper shall be deemed to be approved.

2.

Competent authorities shall refuse authorisation where there are objective anddemonstrable grounds for believing that:

3.

EN

(a)

the management body of the applicant issuer may pose a threat to its effective,
sound and prudent management and business continuity and to the adequate
consideration of the interest of its clients and the integrity of the market;(b)

the applicant issuer fails to meet or is likely to fail to meet any of therequirements of this Title;(c)the applicant issuer’s business model may pose a serious threat to financial
stability, monetary policy transmission or monetary sovereignty.

Competent authorities shall inform the EBA, ESMA and the ECB and, whereapplicable, the central banks referred to in Article 18(3), of all authorisations granted.
ESMA shall include the following information in the register of crypto-assets andcrypto-asset service providers referred to in Article 57:(a)the name, legal form and the legal entity identifier of the issuer of assetreferenced tokens;(b)

the commercial name, physical address and website of the issuer of the assetreferenced tokens;

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EN

(c)

the crypto-asset white papers or the modified crypto-asset white papers;(d)any other services provided by the issuer of asset-referenced tokens notcovered by this Regulation, with a reference to the relevant Union or nationallaw.
Article 20
Withdrawal of the authorisation

1.

Competent authorities shall withdraw the authorisation of issuers of asset-referenced
tokens in any of the following situations:(a)the issuer has not used its authorisation within 6 months after the authorisation
has been granted;(b)

the issuer has not used its authorisation for 6 successive months;(c)the issuer has obtained its authorisation by irregular means, including making
false statements in the application for authorisation referred to in Article 16 orin any crypto-asset white paper modified in accordance with Article 21;(d)the issuer no longer meets the conditions under which the authorisation was
granted;(e)the issuer has seriously infringed the provisions of this Title;(f)has been put under an orderly wind-down plan, in accordance with applicablenational insolvency laws;(g)

has expressly renounced its authorisation or has decided to stop its operations.

Issuers of asset-referenced tokens shall notify their competent authority of any of thesituations referred to in points (f) and (g).
2.

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EN

Competent authorities shall notify the competent authority of an issuer of assetreferenced tokens of the following without delay:(a)the fact that a third-party entity as referred to in Article 30(5), point (h) has lostits authorisation as a credit institution as referred to in Article 8 of Directive
2013/36/EU, as a crypto-asset service provider as referred to in Article 53 of
this Regulation, as a payment institution as referred to in Article 11 of
Directive (EU) 2015/2366, or as an electronic money institution as referred toin Article 3 of Directive 2009/110/EC;(b)

the fact that an issuer of asset-referenced tokens, or the members of its
management body, have breached national provisions transposing Directive(EU) 2015/849 of the European Parliament and of the Council 54 in respect ofmoney laundering or terrorism financing.

Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on theprevention of the use of the financial system for the purposes of money laundering or terrorist
financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and

57

EN

3.

Competent authorities shall withdraw the authorisation of an issuer of assetreferenced tokens where they are of the opinion that the facts referred to in paragraph
2, points (a) and (b), affect the good repute of the management body of that issuer, or
indicate a failure of the governance arrangements or internal control mechanisms as
referred to in Article 30.
When the authorisation is withdrawn, the issuer of asset-referenced tokens shall
implement the procedure under Article 42.
Article 21
Modification of published crypto-asset white papers for asset-referenced tokens

1.

2.

Issuers of asset-referenced tokens shall also notify the competent authority of theirhome Member States of any intended change of the issuer’s business model likely tohave a significant influence on the purchase decision of any actual or potential holder
of asset-referenced tokens, which occurs after the authorisation mentioned in Article
19. Such changes include, among others, any material modifications to:(a)the governance arrangements;(b)

the reserve assets and the custody of the reserve assets;(c)

the rights granted to the holders of asset-referenced tokens;(d)the mechanism through which asset-referenced tokens are issued, created anddestroyed;(e)the protocols for validating the transactions in asset-referenced tokens;(f)

the functioning of the issuer’s proprietary DLT, where the asset-referenced
tokens are issued, transferred and stored on such a DLT;(g)the mechanisms to ensure the redemption of the asset-referenced tokens or toensure their liquidity;(h)the arrangements with third parties, including for managing the reserve assets
and the investment of the reserve, the custody of reserve assets, and, whereapplicable, the distribution of the asset-referenced tokens to the public;(i)

the liquidity management policy for issuers of significant asset-referenced
tokens;(j)

the complaint handling procedure.

Where any intended change as referred to in paragraph 1 has been notified to thecompetent authority, the issuer of asset-referenced tokens shall produce a draft
modified crypto-asset white paper and shall ensure that the order of the information
appearing there is consistent with that of the original crypto-asset white paper.

repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission
Directive 2006/70/EC (OJ L 141, 5.6.2015, p. 73).

EN

58

EN

The competent authority shall electronically acknowledge receipt of the draft
modified crypto-asset white paper as soon as possible, and within 2 working days
after receiving it.
The competent authority shall grant its approval or refuse to approve the draft
modified crypto-asset white paper within 20 working days following
acknowledgement of receipt of the application. During the examination of the draft
amended crypto-asset white paper, the competent authority may also request any
additional information, explanations or justifications on the draft amended cryptoasset white paper. When the competent authority requests such additional
information, the time limit of 20 working days shall commence only when thecompetent authority has received the additional information requested.
The competent authority may also consult the EBA, ESMA and the ECB, and, whereapplicable, the central banks of Member States the currency of which is not euro.
3.

Where approving the modified crypto-asset white paper, the competent authority
may request the issuer of asset-referenced tokens:(a)to put in place mechanisms to ensure the protection of holders of asset-referenced
tokens, when a potential modification of the issuer’s operations can have a material
effect on the value, stability, or risks of the asset-referenced tokens or the reserve
assets;(b)take any appropriate corrective measures to ensure financial stability.

Article 22
Liability of issuers of asset-referenced tokens for the information given in a crypto-asset
white paper
1.

Where an issuer of asset-referenced tokens or its management body has infringed
Article 17, by providing in its crypto-asset white paper or in a modified crypto-asset
white paper information which is not complete, fair or clear or by providing
information which is misleading, a holder of such asset-referenced tokens may claim
damages from that issuer of asset-referenced tokens or its management body fordamage caused to her or him due to that infringement.
Any exclusion of civil liability shall be deprived of any legal effect.

2.

It shall be the responsibility of the holders of asset-referenced tokens to present
evidence indicating that the issuer of asset-referenced tokens has infringed Article 17
and that such an infringement had an impact on his or her decision to buy, sell or
exchange the said asset-referenced tokens.

3.

A holder of asset-referenced tokens shall not be able to claim damages for the
information provided in a summary as referred to in Article 17(2), including thetranslation thereof, except where:(a)EN

the summary is misleading, inaccurate or inconsistent when read together withthe other parts of the crypto-asset white paper;

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EN

(b)

4.

the summary does not provide, when read together with the other parts of thecrypto-asset white paper, key information in order to aid consumers andinvestors when considering whether to purchase such asset-referenced tokens.

This Article does not exclude further civil liability claims in accordance withnational law.

Chapter 2
Obligations of all issuers of asset-referenced tokens
Article 23
Obligation to act honestly, fairly and professionally in the best interest of the holders ofasset-referenced tokens
1.

2.

Issuers of asset-referenced tokens shall:(a)act honestly, fairly and professionally;(b)communicate with the holders of asset-referenced tokens in a fair, clear and not
misleading manner.

Issuers of asset-referenced tokens shall act in the best interests of the holders of suchtokens and shall treat them equally, unless any preferential treatment is disclosed in
the crypto-asset white paper, and, where applicable, the marketing communications.
Article 24
Publication of the crypto-asset white paper, and, where applicable, of the marketing
communications

Issuers of asset-referenced tokens shall publish on their website their approved crypto-asset
white paper as referred to in Article 19(1) and, where applicable, their modified crypto-asset
white paper referred to in Article 21 and their marketing communications referred to in
Article 25. The approved crypto-asset white papers shall be publicly accessible by no later
than the starting date of the offer to the public of the asset-referenced tokens or the admissionof those tokens to trading on a trading platform for crypto-assets. The approved crypto-asset
white paper, and, where applicable, the modified crypto-asset white paper and the marketing
communications, shall remain available on the issuer’s website for as long as the assetreferenced tokens are held by the public.
Article 25
Marketing communications
1.

EN

Any marketing communications relating to an offer to the public of asset-referenced
tokens, or to the admission of such asset-referenced tokens to trading on a trading
platform for crypto-assets, shall comply with all of the following:

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EN

2.

(a)

the marketing communications shall be clearly identifiable as such;(b)

the information in the marketing communications shall be fair, clear and not
misleading;(c)the information in the marketing communications shall be consistent with theinformation in the crypto-asset white paper;(d)the marketing communications shall clearly state that a crypto-asset white
paper has been published and indicate the address of the website of the issuerof the crypto-assets.

Where no direct claim or redemption right has been granted to all the holders ofasset-referenced tokens, the marketing communications shall contain a clear andunambiguous statement that all the holders of the asset-referenced tokens do not havea claim on the reserve assets or cannot redeem those reserve assets with the issuer at
any time.
Article 26
Ongoing information to holders of asset-referenced tokens

1.

Issuers of asset-referenced tokens shall at least every month and in a clear, accurate
and transparent manner disclose on their website the amount of asset-referenced
tokens in circulation and the value and the composition of the reserve assets referred
to in Article 32.

2.

Issuers of asset-referenced tokens shall as soon as possible and in a clear, accurate
and transparent manner disclose on their website the outcome of the audit of thereserve assets referred to in Article 32.

3.

Without prejudice to Article 77, issuers of asset-referenced tokens shall as soon as
possible and in a clear, accurate and transparent manner disclose on their website any
event that has or is likely to have a significant effect on the value of the assetreferenced tokens, or on the reserve assets referred to in Article 32.
Article 27
Complaint handling procedure

EN

1.

Issuers of asset-referenced tokens shall establish and maintain effective andtransparent procedures for the prompt, fair and consistent handling of complaints
received from holders of asset-referenced tokens. Where the asset-referenced tokens
are distributed, totally or partially, by third-party entities as referred to in Article
30(5) point (h), issuers of asset-referenced tokens shall establish procedures tofacilitate the handling of such complaints between holders of asset-referenced tokens
and such third-party entities.

2.

Holders of asset-referenced tokens shall be able to file complaints with the issuers of
their asset-referenced tokens free of charge.

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3.

Issuers of asset-referenced tokens shall develop and make available to clients a
template for filing complaints and shall keep a record of all complaints received andany measures taken in response thereof.

4.

Issuers of asset-referenced tokens shall investigate all complaints in a timely and fairmanner and communicate the outcome of such investigations to the holders of theirasset-referenced tokens within a reasonable period of time.

5.

The EBA, in close cooperation with ESMA, shall develop draft regulatory technicalstandards to specify the requirements, templates and procedures for complainthandling.
The EBA shall submit those draft regulatory technical standards to the Commission
by ... [please insert date 12 months after the date of entry into force of thisRegulation].
Power is delegated to the Commission to adopt the regulatory technical standards
referred to in the first subparagraph in accordance with Articles 10 to 14 ofRegulation (EU) No 1093/2010.
Article 28
Prevention, identification, management and disclosure of conflicts of interest

1.

Issuers of asset-referenced tokens shall maintain and implement effective policies
and procedures to prevent, identify, manage and disclose conflicts of interest
between themselves and:(a)their shareholders;(b)the members of their management body;(c)their employees;(d)any natural persons who either own, directly or indirectly, more than 20% of
the asset-backed crypto-asset issuer's share capital or voting rights, or who
exercise, by any other means, a power of control over the said issuer;(e)the holders of asset-referenced tokens;(f)any third party providing one of the functions as referred in Article 30(5), point
(h);

(g)

where applicable, any legal or natural persons referred to in Article 35(3).

Issuers of asset-referenced tokens shall, in particular, take all appropriate steps toprevent, identify, manage and disclose conflicts of interest arising from the
management and investment of the reserve assets referred to in Article 32.
2.

EN

Issuers of asset-referenced tokens shall disclose to the holders of their assetreferenced tokens the general nature and sources of conflicts of interest and the steps
taken to mitigate them.

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3.

Such disclosure shall be made on the website of the issuer of asset-referenced tokens
in a prominent place.

4.

The disclosure referred to in paragraph 3 shall be sufficiently precise to enable
holders of their asset-referenced tokens to take an informed purchasing decision
about the asset-referenced tokens.

5.

The EBA shall develop draft regulatory technical standards to specify:(a)the requirements for the policies and procedures referred to in paragraph 1;(b)

the arrangements for the disclosure referred to in paragraphs 3.

The EBA shall submit those draft regulatory technical standards to the Commission
by ... [please insert date 12 months after the date of entry into force of thisRegulation].
Power is delegated to the Commission to adopt the regulatory technical standards
referred to in the first subparagraph of this paragraph in accordance with Articles 10
to 14 of Regulation (EU) No 1093/2010.
Article 29
Information to competent authorities
Issuers of asset-referenced tokens shall notify their competent authorities of any changes totheir management body.
Article 30
Governance arrangements

EN

1.

Issuers of asset-referenced tokens shall have robust governance arrangements,
including a clear organisational structure with well-defined, transparent andconsistent lines of responsibility, effective processes to identify, manage, monitor
and report the risks to which it is or might be exposed, and adequate internal control
mechanisms, including sound administrative and accounting procedures.

2.

Members of the management body of issuers of asset-referenced tokens shall havethe necessary good repute and competence, in terms of qualifications, experience andskills, to perform their duties and to ensure the sound and prudent management ofsuch issuers. They shall also demonstrate that they are capable of committing
sufficient time to effectively carry out their functions.

3.

Natural persons who either own, directly or indirectly, more than 20% of the sharecapital or voting rights of issuers of asset-referenced tokens, or who exercise, by anyother means, a power of control over such issuers shall have the necessary good
repute and competence.

4.

None of the persons referred to in paragraphs 2 or 3 shall have been convicted ofoffences relating to money laundering or terrorist financing or other financial crimes.

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EN

5.

Issuers of asset-referenced tokens shall adopt policies and procedures that are
sufficiently effective to ensure compliance with this Regulation, including
compliance of its managers and employees with all the provisions of this Title. In
particular, issuers of asset-referenced tokens shall establish, maintain and implement
policies and procedures on:(a)the reserve of assets referred to in Article 32;(b)

the custody of the reserve assets, as specified in Article 33;(c)the rights or the absence of rights granted to the holders of asset-referenced
tokens, as specified in Article 35;(d)the mechanism through which asset-referenced tokens are issued, created anddestroyed;(e)the protocols for validating transactions in asset-referenced tokens;(f)

the functioning of the issuer’s proprietary DLT, where the asset-referenced
tokens are issued, transferred and stored on such DLT or similar technologythat is operated by the issuer or a third party acting on its behalf;(g)the mechanisms to ensure the redemption of asset-referenced tokens or toensure their liquidity, as specified in Article 35(4);(h)

arrangements with third-party entities for operating the reserve of assets, andfor the investment of the reserve assets, the custody of the reserve assets, and,
where applicable, the distribution of the asset-referenced tokens to the public;(i)

complaint handling, as specified in Article 27;(j)conflicts of interests, as specified in Article 28;(k)a liquidity management policy for issuers of significant asset-referenced
tokens, as specified in Article 41(3).

Issuers of asset-referenced tokens that use third-party entities to perform thefunctions set out in point (h), shall establish and maintain contractual arrangementswith those third-party entities that precisely set out the roles, responsibilities, rights
and obligations of both the issuers of asset-referenced tokens and of each of thosethird-party entities. A contractual arrangement with cross-jurisdictional implications
shall provide for an unambiguous choice of law.

EN

6.

Unless they have initiated a plan as referred to in Article 42, issuers of assetreferenced tokens shall employ appropriate and proportionate systems, resources andprocedures to ensure the continued and regular performance of their services andactivities. To that end, issuers of asset-referenced tokens shall maintain all theirsystems and security access protocols to appropriate Union standards.

7.

Issuers of asset-referenced tokens shall identify sources of operational risk andminimise those risks through the development of appropriate systems, controls andprocedures.

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EN

8.

Issuers of asset-referenced tokens shall establish a business continuity policy that
ensures, in case of an interruption of their systems and procedures, the preservationof essential data and functions and the maintenance of their activities, or, where thatis not possible, the timely recovery of such data and functions and the timely
resumption of their activities.

9.

Issuers of asset-referenced tokens shall have internal control mechanisms andeffective procedures for risk assessment and risk management, including effective
control and safeguard arrangements for managing ICT systems as required byRegulation (EU) 2021/xx of the European Parliament and of the Council.55 The
procedures shall provide for a comprehensive assessment relating to the reliance onthird-party entities as referred to in paragraph 5, point (h). Issuers of asset-referenced
tokens shall monitor and evaluate on a regular basis the adequacy and effectivenessof the internal control mechanisms and procedures for risk assessment and takeappropriate measures to address any deficiencies.

10.

Issuers of asset-backed crypto-assets shall have systems and procedures in place thatare adequate to safeguard the security, integrity and confidentiality of information as
required by Regulation (EU) 2021/xx of the European parliament and of theCouncil56. Those systems shall record and safeguard relevant data and informationcollected and produced in the course of the issuers’ activities.

11.

Issuers of asset-referenced tokens shall ensure that they are regularly audited byindependent auditors. The results of those audits shall be communicated to the
management body of the issuer concerned and made available to the competentauthority.

12.

The EBA, in close cooperation with ESMA, shall develop draft regulatory technicalstandards specifying the minimum content of the governance arrangements on:(a)the monitoring tools for the risks referred to in paragraph 1 and in theparagraph 7;(b)

the internal control mechanism referred to in paragraphs 1 and 9;(c)the business continuity plan referred to in paragraph 8;(d)the audits referred to in paragraph 11;

The EBA shall submit those draft regulatory technical standards to the Commission
by [please insert date 12 months after entry into force].
Power is delegated to the Commission to adopt the regulatory technical standards
referred to in the first subparagraph in accordance with Articles 10 to 14 ofRegulation (EU) No 1093/2010.

55

56

EN

Proposal for a Regulation of the European Parliament and the Council on digital operational resilience
for the financial sector and amending Regulations (EC) No 1060/2009, (EU) No 648/2012, (EU) No
600/2014 and (EU) No 909/2014 - COM(2020)595
Proposal for a Regulation of the European Parliament and the Council on digital operational resilience
for the financial sector and amending Regulations (EC) No 1060/2009, (EU) No 648/2012, (EU) No
600/2014 and (EU) No 909/2014 - COM(2020)595

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ENArticle 31
Own funds requirements
1.

Issuers of asset-referenced tokens shall, at all times, have in place own funds equal toan amount of at least the higher of the following:(a)

EUR 350 000;(b)

2% of the average amount of the reserve assets referred to in Article 32.

For the purpose of points (b), the average amount of the reserve assets shall mean the
average amount of the reserve assets at the end of each calendar day, calculated overthe preceding 6 months.
Where an issuer offers more than one category of asset-referenced tokens, theamount referred to in point (b) shall be the sum of the average amount of the reserve
assets backing each category of asset-referenced tokens.

EN

2.

The own funds referred to in paragraph 1 shall consist of the Common Equity Tier 1
items and instruments referred to in Articles 26 to 30 of Regulation (EU) No
575/2013 after the deductions in full, pursuant to Article 36 of that Regulation,
without the application of threshold exemptions referred to in Articles 46 and 48 ofthat Regulation.

3.

Competent authorities of the home Member States may require issuers of assetreferenced tokens to hold an amount of own funds which is up to 20 % higher than
the amount resulting from the application of paragraph 1, point (b), or permit such
issuers to hold an amount of own funds which is up to 20 % lower than the amountresulting from the application of paragraph 1, point (b), where an assessment of thefollowing indicates a higher or a lower degree of risk:(a)the evaluation of the risk-management processes and internal control
mechanisms of the issuer of asset-referenced tokens as referred to in Article 30,
paragraphs 1, 7 and 9;(b)

the quality and volatility of the reserve assets referred to in Article 32;(c)the types of rights granted by the issuer of asset-referenced tokens to holders ofasset-referenced tokens in accordance with Article 35;(d)where the reserve assets are invested, the risks posed by the investment policyon the reserve assets;(e)

the aggregate value and number of transactions carried out in asset-referenced
tokens;(f)

the importance of the markets on which the asset-referenced tokens are offered
and marketed;(g)where applicable, the market capitalisation of the asset-referenced tokens.

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EN

4.

The EBA, in close cooperation with ESMA, shall develop draft regulatory technicalstandards further specifying:(a)the methodology for the calculation of the own funds set out in paragraph 1;(b)

the procedure and timeframe for an issuer of significant asset-referenced tokens
to adjust to higher own funds requirements as set out in paragraph 3;(c)

the criteria for requiring higher own funds or for allowing lower own funds, as
set out in paragraph 3.

The EBA shall submit those draft regulatory technical standards to the Commission
by [please insert date 12 months after entry into force].
Power is delegated to the Commission to adopt the regulatory technical standards
referred to in the first subparagraph in accordance with Articles 10 to 14 ofRegulation (EU) No 1093/2010.

CHAPTER 3
RESERVE OF ASSETS

Article 32
Obligation to have reserve assets, and composition and management of such reserve ofassets1.

Issuers of asset-references tokens shall at all times constitute and maintain a reserveof assets.

2.

Issuers that offers two or more categories of asset-referenced tokens to the public
shall operate and maintain separate reserve of assets for each category of assetreferenced tokens which shall be managed separately.
Issuers of asset-referenced tokens that offer the same asset-referenced tokens to the
public shall operate and maintain only one reserve of assets for that category ofasset-referenced tokens.

EN

3.

The management bodies of issuers of asset-referenced tokens shall ensure effective
and prudent management of the reserve assets. The issuers shall ensure that thecreation and destruction of asset-referenced tokens is always matched by acorresponding increase or decrease in the reserve of assets and that such increase or
decrease is adequately managed to avoid any adverse impacts on the market of thereserve assets.

4.

Issuers of asset-referenced tokens shall have a clear and detailed policy describing
the stabilisation mechanism of such tokens. That policy and procedure shall inparticular:

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EN

5.

(a)

list the reference assets to which the asset-referenced tokens aim at stabilising
their value and the composition of such reference assets;(b)

describe the type of assets and the precise allocation of assets that are includedin the reserve of assets;(c)contain a detailed assessment of the risks, including credit risk, market risk andliquidity risk resulting from the reserve assets;(d)describe the procedure by which the asset-referenced tokens are created anddestroyed, and the consequence of such creation or destruction on the increase
and decrease of the reserve assets;(e)mention whether the reserve assets are invested;(f)where issuers of asset-referenced tokens invest a part of the reserve assets,
describe in detail the investment policy and contain an assessment of how thatinvestment policy can affect the value of the reserve assets;(g)

describe the procedure to purchase asset-referenced tokens and to redeem suchtokens against the reserve assets, and list the persons or categories of persons
who are entitled to do so.

Without prejudice to Article 30(11), issuers of asset-referenced tokens shall mandate
an independent audit of the reserve assets every six months, as of the date of its
authorisation as referred to in Article 19.
Article 33
Custody of reserve assets

1.

Issuers of asset-referenced tokens shall establish, maintain and implement custody
policies, procedures and contractual arrangements that ensure at all times that:(a)the reserve assets are segregated from the issuers’ own assets;(b)

the reserve assets are not encumbered nor pledged as a ‘financial collateralarrangement’, a ‘title transfer financial collateral arrangement’ or as a ‘security
financial collateral arrangement’ within the meaning of Article 2(1), points (a),(b) and (c) of Directive 2002/47/EC of the European Parliament and of theCouncil57;(c)

the reserve assets are held in custody in accordance with paragraph 4;(d)the issuers of asset-referenced tokens have prompt access to the reserve assets
to meet any redemption requests from the holders of asset-referenced tokens.

Issuers of asset-referenced tokens that issue two or more categories of assetreferenced tokens in the Union shall have a custody policy for each reserve of assets.

57

EN

Directive 2002/47/EC of the European Parliament and of the Council of 6 June 2002 on financial
collateral arrangements (OJ L 168, 27.6.2002, p. 43).

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EN

Issuers of asset-referenced tokens that have issued the same category of assetreferenced tokens shall operate and maintain only one custody policy.
2.

3.

The reserve assets received in exchange for the asset-referenced tokens shall be heldin custody by no later than 5 business days after the issuance of the asset-referenced
tokens by:(a)a crypto-asset service provider authorised under Article 53 for the service
mentioned in Article 3(1), point (10), where the reserve assets take the form ofcrypto-assets;(b)a credit institution for all other types of reserve assets.

Issuers of asset-referenced tokens shall exercise all due skill, care and diligence inthe selection, appointment and review of credit institutions and crypto-asset
providers appointed as custodians of the reserve assets in accordance with paragraph2.
Issuers of asset-referenced tokens shall ensure that the credit institutions and cryptoasset service providers appointed as custodians of the reserve assets have thenecessary expertise and market reputation to act as custodians of such reserve assets,taking into account the accounting practices, safekeeping procedures and internal
control mechanisms of those credit institutions and crypto-asset service providers.
The contractual arrangements between the issuers of asset-referenced tokens and thecustodians shall ensure that the reserve assets held in custody are protected against
claims of the custodians’ creditors.
The custody policies and procedures referred to in paragraph 1 shall set out the
selection criteria for the appointments of credit institutions or crypto-asset service
providers as custodians of the reserve assets and the procedure to review suchappointments.
Issuers of asset-referenced tokens shall review the appointment of credit institutions
or crypto-asset service providers as custodians of the reserve assets on a regularbasis. For that purpose, the issuer of asset-referenced tokens shall evaluate its
exposures to such custodians, taking into account the full scope of its relationshipwith them, and monitor the financial conditions of such custodians on an ongoingbasis.

4.

EN

The reserve assets held on behalf of issuers of asset-referenced tokens shall be
entrusted to credit institutions or crypto-asset service providers appointed inaccordance with paragraph 3 in the following manner:(a)credit institutions shall hold in custody fiat currencies in an account opened in
the credit institutions’ books;(b)for financial instruments that can be held in custody, credit institutions shallhold in custody all financial instruments that can be registered in a financial
instruments account opened in the credit institutions’ books and all financial
instruments that can be physically delivered to such credit institutions;

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EN

(c)

for crypto-assets that can be held in custody, the crypto-asset service providers
shall hold the crypto-assets included in the reserve assets or the means ofaccess to such crypto-assets, where applicable, in the form of private
cryptographic keys;(d)for other assets, the credit institutions shall verify the ownership of the issuersof the asset-referenced tokens and shall maintain a record of those reserve
assets for which they are satisfied that the issuers of the asset-referenced tokens
own those reserve assets.

For the purpose of point (a), credit institutions shall ensure that fiat currencies areregistered in the credit institutions’ books within segregated account in accordancewith national provisions transposing Article 16 of Commission Directive
2006/73/EC58 into the legal order of the Member States. The account shall be openedin the name of the issuers of the asset-referenced tokens for the purpose of managing
the reserve assets, so that the fiat currencies held in custody can be clearly identified
as belonging to the reserve of assets.
For the purposes of point (b), credit institutions shall ensure that all those financial
instruments that can be registered in a financial instruments account opened in thecredit institution’s books are registered in the credit institutions’ books withinsegregated accounts in accordance with national provisions transposing Article 16 ofCommission Directive 2006/73/EC59 into the legal order of the Member States. The
financial instruments account shall be opened in the name of the issuers of the assetreferenced tokens for the purpose of managing the reserve assets, so that the financial
instruments held in custody can be clearly identified as belonging to the reserve ofassets.
For the purposes of point (c), crypto-asset service providers shall open a register of
positions in the name of the issuers of the asset-referenced tokens for the purpose ofmanaging the reserve assets, so that the crypto-assets held in custody can be clearly
identified as belonging to the reserve of assets.
For the purposes of point (d), the assessment whether issuers of asset-referenced
tokens own the reserve assets shall be based on information or documents provided
by the issuers of the asset-referenced tokens and, where available, on external
evidence.
5.

The appointment of a credit institution or a crypto-asset service provider as custodianof the reserve assets in accordance with paragraph 3 shall be evidenced by a written
contract as referred to in Article 30(5), second subparagraph. Those contracts shall,amongst others, regulate the flow of information deemed necessary to enable theissuers of asset-referenced tokens and the credit institutions and the crypto-assets
service providers to perform their functions.

58

Commission Directive 2006/73/EC of 10 August 2006 implementing Directive 2004/39/EC of theEuropean Parliament and of the Council as regards organisational requirements and operating
conditions for investment firms and defined terms for the purposes of that Directive (OJ L 241,2.9.2006, p. 26).
Commission Directive 2006/73/EC of 10 August 2006 implementing Directive 2004/39/EC of theEuropean Parliament and of the Council as regards organisational requirements and operating
conditions for investment firms and defined terms for the purposes of that Directive (OJ L 241,2.9.2006, p. 26).

59

EN

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EN

6.

The credit institutions and crypto-asset service providers that have been appointed ascustodians in accordance with paragraph 3 shall act honestly, fairly, professionally,
independently and in the interest of the issuer of the asset-referenced tokens and theholders of such tokens.

7.

The credit institutions and crypto-asset service providers that have been appointed ascustodians in accordance with paragraph 3 shall not carry out activities with regard toissuers of asset-referenced tokens that may create conflicts of interest between thoseissuers, the holders of the asset-referenced tokens, and themselves unless all of thefollowing conditions have been complied with:

8.

(a)

the credit institutions or the crypto-asset service providers have functionallyand hierarchically separated the performance of their custody tasks from theirpotentially conflicting tasks;(b)

the potential conflicts of interest have been properly identified, managed,
monitored and disclosed by the issuer of the asset-referenced tokens to theholders of the asset-referenced tokens, in accordance with Article 28.

In case of a loss of a financial instrument or a crypto-asset held in custody as referred
to in paragraph 4, the credit institution or the crypto-asset service provider that lostthat financial instrument or crypto-asset shall return to the issuer of the assetreferenced tokens a financial instrument or a crypto-asset of an identical type or thecorresponding value without undue delay. The credit institution or the crypto-asset
service provider concerned shall not be liable where it can prove that the loss has
arisen as a result of an external event beyond its reasonable control, theconsequences of which would have been unavoidable despite all reasonable efforts tothe contrary.
Article 34
Investment of the reserve assets

EN

1.

Issuers of asset-referenced tokens that invest a part of the reserve assets shall invest
those reserve assets only in highly liquid financial instruments with minimal market
and credit risk. The investments shall be capable of being liquidated rapidly withminimal adverse price effect.

2.

The financial instruments in which the reserve assets are invested shall be held incustody in accordance with Article 33.

3.

All profits or losses, including fluctuations in the value of the financial instruments
referred to in paragraph 1, and any counterparty or operational risks that result fromthe investment of the reserve assets shall be borne by the issuer of the assetreferenced tokens.

4.

The EBA shall, after consulting ESMA and the European System of Central Banks,develop draft regulatory technical standards specifying the financial instruments thatcan be considered highly liquid and bearing minimal credit and market risk as
referred to in paragraph 1. When specifying the financial instruments referred to inparagraph 1, the EBA shall take into account:

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(a)

the various types of reserve assets that can back an asset-referenced token;(b)the correlation between those reserve assets and the highly liquid financial
instruments the issuers may invest in;(c)the conditions for recognition as high quality liquid assets under Article 412 ofRegulation (EU) No 575/2013 and Commission Delegated Regulation (EU)2015/6160.

EBA shall submit those draft regulatory technical standards to the Commission by[please insert date 12 months after entry into force].
Power is delegated to the Commission to adopt the regulatory technical standards
referred to in the first subparagraph in accordance with Articles 10 to 14 ofRegulation (EU) No 1093/2010.
Article 35
Rights on issuers of asset-referenced tokens or on the reserve assets
1.

Issuers of asset-referenced tokens shall establish, maintain and implement clear anddetailed policies and procedures on the rights granted to holders of asset-referenced
tokens, including any direct claim or redemption rights on the issuer of those assetreferenced tokens or on the reserve assets.

2.

Where holders of asset-referenced tokens are granted rights as referred to inparagraph 1, issuers of asset-referenced tokens shall establish a policy setting out:(a)the conditions, including thresholds, periods and timeframes, for holders ofasset-referenced tokens to exercise those rights;(b)

the mechanisms and procedures to ensure the redemption of the assetreferenced tokens, including in stressed market circumstances, in case of anorderly wind-down of the issuer of asset-referenced tokens as referred to in
Article 42, or in case of a cessation of activities by such issuer;(c)the valuation, or the principles of valuation, of the asset-referenced tokens andof the reserve assets when those rights are exercised by the holder of assetreferenced tokens;(d)the settlement conditions when those rights are exercised;(e)the fees applied by the issuers of asset-referenced tokens when the holders
exercise those rights.

The fees referred to in point (e) shall be proportionate and commensurate with theactual costs incurred by the issuers of asset-referenced tokens.

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EN

Commission Delegated Regulation (EU) 2015/61 of 10 October 2014 to supplement Regulation (EU)No 575/2013 of the European Parliament and the Council with regard to liquidity coverage requirement
for Credit Institutions (OJ L 011 17.1.2015, p. 1).

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EN

3.

Where issuers of asset-referenced tokens do not grant rights as referred to inparagraph 1 to all the holders of asset-referenced tokens, the detailed policies andprocedures shall specify the natural or legal persons that are provided with suchrights. The detailed policies and procedures shall also specify the conditions forexercising such rights and the obligations imposed on those persons.
Issuers of asset-referenced tokens shall establish and maintain appropriate
contractual arrangements with those natural or legal persons who are granted suchrights. Those contractual arrangements shall precisely set out the roles,
responsibilities, rights and obligations of the issuers of asset-referenced tokens andeach of those natural or legal persons. A contractual arrangement with crossjurisdictional implications shall provide for an unambiguous choice of law.

4.

Issuers of asset-referenced tokens that do not grant rights as referred to in paragraph1 to all the holders of such asset-referenced tokens shall put in place mechanisms toensure the liquidity of the asset-referenced tokens. For that purpose, they shallestablish and maintain written agreements with crypto-asset service providers
authorised for the crypto-asset service referred to in Article 3(1) point (12). The
issuer of asset-referenced tokens shall ensure that a sufficient number of crypto-asset
service providers are required to post firm quotes at competitive prices on a regularand predictable basis.
Where the market value of asset-referenced tokens varies significantly from the valueof the reference assets or the reserve assets, the holders of asset-referenced tokens
shall have the right to redeem the crypto-assets from the issuer of crypto-assets
directly. In that case, any fee applied for such redemption shall be proportionate andcommensurate with the actual costs incurred by the issuer of asset-referenced tokens.
The issuer shall establish and maintain contractual arrangements to ensure that theproceeds of the reserve assets are paid to the holders of asset-referenced tokens,
where the issuer decides to stop operating or where it has been placed under anorderly wind-down, or when its authorisation has been withdrawn.

5.

The EBA shall, in close cooperation with ESMA, develop draft regulatory technicalstandards specifying:(a)the obligations imposed on the crypto-asset service providers ensuring theliquidity of asset-referenced tokens as set out in the first subparagraph ofparagraph 4;(b)the variations of value triggering a direct right of redemption from the issuer ofasset-referenced tokens as set out in the second subparagraph of paragraph 4,
and the conditions for exercising such a right.

EBA shall submit those draft regulatory technical standards to the Commission by ...
[please insert 12 months after the date of entry into force of this Regulation].
Power is delegated to the Commission to adopt the regulatory technical standards
referred to in the first subparagraph of this paragraph in accordance with Articles 10
to 14 of Regulation (EU) No 1093/2010.

EN

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EN

Article 36
Prohibition of interest
Issuers of asset-referenced tokens or crypto-asset service providers shall not provide forinterest or any other benefit related to the length of time during which a holder of assetreferenced tokens holds asset-referenced assets.

CHAPTER 4
ACQUISITIONS OF ISSUERS OF ASSET-REFERENCED TOKENS

Article 37
Assessment of intended acquisitions of issuers of asset-referenced tokens
1.

Any natural or legal person or such persons acting in concert (the ‘proposed
acquirer’), who intends to acquire, directly or indirectly, a qualifying holding in anissuer of asset-referenced tokens or to further increase, directly or indirectly, such a
qualifying holding so that the proportion of the voting rights or of the capital held
would reach or exceed 10 %, 20 %, 30 % or 50 %, or so that the issuer of assetreferenced tokens would become its subsidiary (the ‘proposed acquisition’), shallnotify the competent authority of that issuer thereof in writing, indicating the size ofthe intended holding and the information required by the regulatory technicalstandards adopted by the Commission in accordance with Article 38(4).

2.

Any natural or legal person who has taken a decision to dispose, directly or
indirectly, of a qualifying holding in an issuer of asset-referenced tokens (the‘proposed vendor’) shall first notify the competent authority in writing thereof,
indicating the size of such holding. Such a person shall likewise notify the competentauthority where it has taken a decision to reduce a qualifying holding so that the
proportion of the voting rights or of the capital held would fall below 10 %, 20 %, 30% or 50 % or so that the issuer of asset-referenced tokens would cease to be that
person’s subsidiary.

3.

Competent authorities shall promptly and in any event within two working days
following receipt of the notification required under paragraph 1 acknowledge receipt
thereof in writing.

4.

Competent authorities shall assess the intended acquisition referred to in paragraph 1
and the information required by the regulatory technical standards adopted by theCommission in accordance with Article 38(4), within 60 working days from the dateof the written acknowledgement of receipt referred to in paragraph 3.
When acknowledging receipt of the notification, competent authorities shall informthe persons referred to in paragraph 1 of the date on which the assessment will befinalised.

5.

EN

When performing the assessment referred to in paragraph 4, first subparagraph,competent authorities may request from the persons referred to in paragraph 1 any
additional information that is necessary to complete that assessment. Such request

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ENshall be made before the assessment is finalised, and in any case no later than on the50th working day from the date of the written acknowledgement of receipt referred
to in paragraph 3. Such requests shall be made in writing and shall specify theadditional information needed.
Competent authorities shall halt the assessment referred to in paragraph 4, firstsubparagraph, until they have received the additional information referred to in thefirst subparagraph of this paragraph, but for no longer than 20 working days. Any
further requests by competent authorities for additional information or forclarification of the information received shall not result in an additional interruptionof the assessment.
Competent authority may extend the interruption referred to in the second
subparagraph of this paragraph up to 30 working days where the persons referred toin paragraph 1 are situated or regulated outside the Union.
6.

Competent authorities that, upon completion of the assessment, decide to oppose theintended acquisition referred to in paragraph 1 shall notify the persons referred to inparagraph 1 thereof within two working days, but before the date referred to inparagraph 4, second subparagraph, extended, where applicable, in accordance withparagraph 5, second and third subparagraph. That notification shall provide thereasons for that decision.

7.

Where competent authorities do not oppose the intended acquisition referred to inparagraph 1 before the date referred to in paragraph 4, second subparagraph,extended, where applicable, in accordance with paragraph 5, second and third
subparagraph, the intended acquisition or intended disposal shall be deemed to beapproved.

8.

Competent authority may set a maximum period for concluding the intended
acquisition referred to in paragraph 1, and extend that maximum period whereappropriate.
Article 38
Content of the assessment of intended acquisitions of issuers of asset-referenced tokens

1.

EN

When performing the assessment referred to in Article 37(4), competent authorities
shall appraise the suitability of the persons referred to in Article 37(1) and thefinancial soundness of intended acquisition against all of the following criteria:(a)the reputation of the persons referred to in Article 37(1);(b)

the reputation and experience of any person who will direct the business of theissuer of asset-referenced tokens as a result of the intended acquisition or
disposal;(c)the financial soundness of the persons referred to in Article 37(1), in particular
in relation to the type of business pursued and envisaged in the issuer of assetreferenced tokens in which the acquisition is intended;

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(d)

whether the issuer of asset-referenced tokens will be able to comply andcontinue to comply with the provisions of this Title;(e)whether there are reasonable grounds to suspect that, in connection with theintended acquisition, money laundering or terrorist financing within themeaning of Article 1 of Directive (EU) 2015/849/EC is being or has beencommitted or attempted, or that the intended acquisition could increase the risk
thereof.

2.

Competent authorities may oppose the intended acquisition only where there arereasonable grounds for doing so on the basis of the criteria set out in paragraph 1 orwhere the information provided in accordance with Article 37(4) is incomplete orfalse.

3.

Member States shall not impose any prior conditions in respect of the level ofholding that must be acquired nor allow their competent authorities to examine theproposed acquisition in terms of the economic needs of the market.

4.

The EBA, in close cooperation with ESMA, shall develop draft regulatory technicalstandards to establish an exhaustive list of information that is necessary to carry out
the assessment referred to in Article 37(4), first subparagraph and that shall be
provided to the competent authorities at the time of the notification referred to inparagraph 37(1). The information required shall be relevant for a prudential
assessment, be proportionate and be adapted to the nature of the persons and theintended acquisition referred to in Article 37(1).
The EBA shall submit those draft regulatory technical standards to the Commission
by [please insert 12 months after the entry into force of this Regulation].
Power is delegated to the Commission to adopt the regulatory technical standards
referred to in the first subparagraph in accordance with Articles 10 to 14 ofRegulation (EU) No 1093/2010.

CHAPTER 5
SIGNIFICANT ASSET-REFERENCED TOKENS

Article 39
Classification of asset-referenced tokens as significant asset-referenced tokens
1.

The EBA shall classify asset-referenced tokens as significant asset-referenced tokens
on the basis of the following criteria, as specified in accordance with paragraph 6 andwhere at least three of the following criteria are met:(a)EN

the size of the customer base of the promoters of the asset-referenced tokens,the shareholders of the issuer of asset-referenced tokens or of any of the thirdparty entities referred to in Article 30(5), point (h);

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EN

(b)

the value of the asset-referenced tokens issued or, where applicable, theirmarket capitalisation;(c)the number and value of transactions in those asset-referenced tokens;(d)the size of the reserve of assets of the issuer of the asset-referenced tokens;(e)the significance of the cross-border activities of the issuer of the assetreferenced tokens, including the number of Member States where the assetreferenced tokens are used, the use of the asset-referenced tokens for crossborder payments and remittances and the number of Member States where thethird-party entities referred to in Article 30(5), point (h), are established;(f)the interconnectedness with the financial system.

2.

Competent authorities that authorised an issuer of asset-referenced tokens inaccordance with Article 19 shall provide the EBA with information on the criteria
referred to in paragraph 1 and specified in accordance with paragraph 6 on at least ayearly basis.

3.

Where the EBA is of the opinion that asset-referenced tokens meet the criteria
referred to in paragraph 1, as specified in accordance with paragraph 6, the EBA
shall prepare a draft decision to that effect and notify that draft decision to the issuersof those asset-referenced tokens and the competent authority of the issuer’s home
Member State. The EBA shall give issuers of such asset-referenced tokens and theircompetent authorities the opportunity to provide observations and comments inwriting prior the adoption of its final decision. The EBA shall duly consider thoseobservations and comments.

4.

The EBA shall take its final decision on whether an asset-referenced token is asignificant asset-referenced token within three months after the notification referred
to in paragraph 3 and immediately notify the issuers of such asset-referenced tokens
and their competent authorities thereof.

5.

The supervisory responsibilities on issuers of significant asset-referenced tokens
shall be transferred to the EBA one month after the notification of the decisionreferred to in paragraph 4.
The EBA and the competent authority concerned shall cooperate in order to ensure
the smooth transition of supervisory competences.

6.

The Commission shall be empowered to adopt delegated acts in accordance with
Article 121 to further specify the criteria set out in paragraph 1 for an assetreferenced token to be deemed significant and determine:(a)the thresholds for the criteria referred to in points (a) to (e) of paragraph 1,
subject to the following:i)ENthe threshold for the customer base shall not be lower than two million ofnatural or legal persons;

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ii)

the threshold for the value of the asset-referenced token issued or, whereapplicable, the market capitalisation of such an asset-referenced token
shall not be lower than EUR 1 billion;iii)

the threshold for the number and value of transactions in those assetreferenced tokens shall not be lower than 500 000 transactions per day or
EUR 100 million per day respectively;iv)

the threshold for the size of the reserve assets as referred to in point (d)shall not be lower than EUR 1 billion;v)

the threshold for the number of Member States where the assetreferenced tokens are used, including for cross-border payments andremittances, or where the third parties as referred to in Article 30(5),point (h), are established shall not be lower than seven;(b)the circumstances under which asset-referenced tokens and their issuers shallbe considered as interconnected with the financial system;(c)

the content and format of information provided by competent authorities to
EBA under paragraph 2.

(d)the procedure and timeframe for the decisions taken by the EBA underparagraphs 3 to 5.

Article 40
Voluntary classification of asset-referenced tokens as significant asset-referenced tokens
1.

Applicant issuers of asset-referenced tokens that apply for an authorisation as
referred to in Article 16, may indicate in their application for authorisation that theywish to classify their asset-referenced tokens as significant asset-referenced tokens.
In that case, the competent authority shall immediately notify the request from theprospective issuer to the EBA.
For the asset-referenced tokens to be classified as significant at the time ofauthorisation, applicant issuers of asset-referenced tokens shall demonstrate, throughits programme of operations as referred to in Article 16(2), point (c) that it is likely tomeet at least three criteria referred to in Article 39(1), as specified in accordance with
Article 39(6).

2.

Where, on the basis of the programme of operation, the EBA is of the opinion that
asset-referenced tokens meet the criteria referred to in Article 39(1), as specified inaccordance with Article 39(6), the EBA shall prepare a draft decision to that effectand notify that draft decision to the competent authority of the applicant issuer’s
home Member State.
The EBA shall give competent authority of the applicant issuer’s home Member
State the opportunity to provide observations and comments in writing prior the
adoption of its final decision. The EBA shall duly consider those observations andcomments.

EN

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EN

3.

Where, on the basis of the programme of operation, the EBA is of the opinion that
asset-referenced tokens do not meet the criteria referred to in Article 39(1), as
specified in accordance with Article 39(6), the EBA shall prepare a draft decision tothat effect and notify that draft decision to the applicant issuer and the competentauthority of the applicant issuer’s home Member State.
The EBA shall give the applicant issuer and the competent authority of its home
Member State the opportunity to provide observations and comments in writing prior
the adoption of its final decision. The EBA shall duly consider those observations
and comments.

4.

The EBA shall take its final decision on whether an asset-referenced token is asignificant asset-referenced token within three months after the notification referred
to in paragraph 1 and immediately notify the issuers of such asset-referenced tokens
and their competent authorities thereof.

5.

Where asset-referenced tokens have been classified as significant in accordance witha decision referred to in paragraph 4, the supervisory responsibilities shall betransferred to the EBA on the date of the decision by which the competent authority
grants the authorisation referred to in Article 19(1).
Article 41
Specific additional obligations for issuers of significant asset-referenced tokens

EN

1.

Issuers of significant asset-referenced tokens shall adopt, implement and maintain aremuneration policy that promotes sound and effective risk management of such
issuers and that does not create incentives to relax risk standards.

2.

Issuers of significant asset-referenced tokens shall ensure that such tokens can beheld in custody by different crypto-asset service providers authorised for the service
referred to in Article 3(1) point (10), including by crypto-asset service providers that
do not belong to the same group, as defined in Article 2(11) of Directive 2013/34/EUof the European Parliament and of the Council61, on a fair, reasonable and nondiscriminatory basis.

3.

Issuers of significant asset-referenced tokens shall assess and monitor the liquidity
needs to meet redemption requests or the exercise of rights, as referred to in Article
34, by holders of asset-referenced tokens. For that purpose, issuers of significant
asset-referenced tokens shall establish, maintain and implement a liquidity
management policy and procedures. That policy and those procedures shall ensurethat the reserve assets have a resilient liquidity profile that enable issuer ofsignificant asset-referenced tokens to continue operating normally, including underliquidity stressed scenarios.

61

Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual
financial statements, consolidated financial statements and related reports of certain types ofundertakings, amending Directive 2006/43/EC of the European Parliament and of the Council andrepealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19).

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EN

4.

The percentage referred to in Article 31(1), point (b), shall be set at 3% of theaverage amount of the reserve assets for issuers of significant asset-referenced
tokens.

5.

Where several issuers offer the same asset-referenced token that is classified as
significant, each of those issuers shall be subject to the requirements set out in theparagraphs 1 to 4.
Where an issuer offers two or more categories of asset-referenced tokens in theUnion and at least one of those asset-referenced tokens is classified as significant,such an issuer shall be subject to the requirements set out in paragraphs 1 to 4.

6.

The EBA, in close cooperation with ESMA, shall develop draft regulatory technicalstandards specifying:(a)the minimum content of the governance arrangements on the remuneration
policy referred to in paragraph 1;(b)

the procedure and timeframe for an issuer of significant asset-referenced tokens
to adjust to higher own funds requirements as set out in paragraph 4.

The EBA shall submit those draft regulatory technical standards to the Commission
by [please insert date 12 months after entry into force].
Power is delegated to the Commission to adopt the regulatory technical standards
referred to in the first subparagraph in accordance with Articles 10 to 14 ofRegulation (EU) No 1093/2010.

Chapter 6
Orderly wind-down
Article 42
Orderly wind-down

EN

1.

Issuers of asset-referenced tokens shall have in place a plan that is appropriate tosupport an orderly wind-down of their activities under applicable national law,
including continuity or recovery of any critical activities performed by those issuers
or by any third-party entities as referred in Article 30(5), point (h). That plan shalldemonstrate the ability of the issuer of asset-referenced tokens to carry out an orderly
wind-down without causing undue economic harm to the holders of asset-referenced
tokens or to the stability of the markets of the reserve assets.

2.

The plan referred to in paragraph 1 shall include contractual arrangements,
procedures and systems to ensure that the proceeds from the sale of the remaining
reserve assets are paid to the holders of the asset-referenced tokens.

3.

The plan referred to in paragraph 1 shall be reviewed and updated regularly.

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TITLE IV: Electronic money tokens
Chapter 1
Requirements to be fulfilled by all issuers of electronic money
tokens
Article 43
Authorisation
1.

No electronic money tokens shall be offered to the public in the Union or shall be
admitted to trading on a trading platform for crypto-assets unless the issuer of suchelectronic money tokens:(a)

is authorised as a credit institution or as an ‘electronic money institution’ within themeaning of Article 2(1) of Directive 2009/110/EC;(b)complies with requirements applying to electronic money institution set out in Titles
II and III of Directive 2009/110/EC, unless stated otherwise in this Title;(c)publishes a crypto-asset white paper notified to the competent authority, in
accordance with Article 46.
For the purpose of point (a), an ‘electronic money institution’ as defined in Article
2(1) of Directive 2009/110/EC shall be authorised to issue ‘e-money tokens’ and emoney tokens shall be deemed to be ‘electronic money’ as defined in Article 2(2) ofDirective 2009/110/EC.
An e-money token which references a Union currency shall be deemed to be offeredto the public in the Union.

2.

Paragraph 1 shall not apply to:(a)e-money tokens that are marketed, distributed and held by qualified investors and can
only be held by qualified investors;(b)

if the average outstanding amount of e-money tokens does not exceed EUR
5 000 000, or the corresponding equivalent in another currency, over a periodof 12 months, calculated at the end of each calendar day.

For the purpose of point (b), where the Member State has set a threshold lower than
EUR 5 000 000 in accordance with Article 9 (1)(a) of Directive 2009/110/EC, such athreshold shall apply.
In the case referred to in points (a) and (b), the issuers of electronic money tokens
shall produce a crypto-asset white paper and notify such crypto-asset white paper tothe competent authority in accordance with Article 46.

EN

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EN

Article 44
Issuance and redeemability of electronic money tokens
1.

By derogation of Article 11 of Directive 2009/110/EC, only the following
requirements regarding the issuance and redeemability of e-money tokens shall apply
to issuers of e-money tokens.

2.

Holders of e-money tokens shall be provided with a claim on the issuer of such emoney tokens. Any e-money token that does not provide all holders with a claim
shall be prohibited.

3.

Issuers of such e-money tokens shall issue e-money tokens at par value and on thereceipt of funds within the meaning of Article 4(25) of Directive 2015/2366.

4.

Upon request by the holder of e-money tokens, the respective issuer must redeem, at
any moment and at par value, the monetary value of the e-money tokens held to theholders of e-money tokens, either in cash or by credit transfer.

5.

Issuers of e-money tokens shall prominently state the conditions of redemption,
including any fees relating thereto, in the crypto-asset white paper as referred to in
Article 46.

6.

Redemption may be subject to a fee only if stated in the crypto-asset white paper.
Any such fee shall be proportionate and commensurate with the actual costs incurredby issuers of e-money tokens.

7.

Where issuers of e-money tokens does not fulfil legitimate redemption requests fromholders of e-money tokens within the time period specified in the crypto-asset white
paper and which shall not exceed 30 days, the obligation set out in paragraph 3
applies to any following third party entities that has been in contractual arrangementswith issuers of e-money tokens:(a)entities ensuring the safeguarding of funds received by issuers of e-money
tokens in exchange for e-money tokens in accordance with Article 7 of
Directive 2009/110/EC;(b)

any natural or legal persons in charge of distributing e-money tokens on behalfof issuers of e-money tokens.
Article 45
Prohibition of interests

By derogation to Article 12 of Directive 2009/110/EC, no issuer of e-money tokens or cryptoasset service providers shall grant interest or any other benefit related to the length of time
during which a holder of e-money tokens holds such e-money tokens.

EN

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EN

Article 46
Content and form of the crypto-asset white paper for electronic money tokens

EN

1.

Before offering e-money tokens to the public in the EU or seeking an admission ofsuch e-money tokens to trading on a trading platform, the issuer of e-money tokens
shall publish a crypto-asset white paper on its website.

2.

The crypto-asset white paper referred to in paragraph 1 shall contain all the following
relevant information:(a)a description of the issuer of e-money tokens;(b)a detailed description of the issuer’s project, and a presentation of the main
participants involved in the project's design and development;(c)an indication on whether the crypto-asset white paper concerns an offering of
e-money tokens to the public and/or an admission of such e-money tokens to
trading on a trading platform for crypto-assets;(d)a detailed description of the rights and obligations attached to the e-money
tokens, including the redemption right at par value as referred to in Article 44
and the procedures and conditions of exercise of these rights;(e)the information on the underlying technology and standards met by the issuerof e-money tokens allowing for the holding, storing and transfer of such emoney tokens;(f)the risks relating to the issuer of e-money issuer, the e-money tokens and theimplementation of the project, including the technology;(g)the disclosure items specified in Annex III.

3.

All such information referred to in paragraph 2 shall be fair, clear and not
misleading. The crypto-asset white paper shall not contain material omissions and it
shall be presented in a concise and comprehensible form.

4.

Every crypto-asset white paper shall also include a statement from the management
body of the issuer of e-money confirming that the crypto-asset white paper complies
with the requirements of this Title and specifying that, to their best knowledge, theinformation presented in the crypto-asset white paper is correct and that there is no
significant omission.

5.

The crypto-asset white paper shall include a summary which shall, in brief and nontechnical language, provide key information in relation to the offer to the public of emoney tokens or admission of such e-money tokens to trading, and in particular
about the essential elements of the e-money tokens. The summary shall indicate that:(a)the holders of e-money tokens have a redemption right at any moment and atpar value;(b)

the conditions of redemption, including any fees relating thereto.

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6.

Every crypto-asset white paper shall be dated.

7.

The crypto-asset white paper shall be drawn up in at least one of the official
languages of the home Member State or in a language customary in the sphere ofinternational finance.

8.

The crypto-asset white paper shall be made available in machine readable formats, inaccordance with Article 5.

9.

The issuer of e-money tokens shall notify its draft crypto-asset white paper, andwhere applicable their marketing communications, to the relevant competentauthority as referred to in Article 3(1) point (24)(b) at least 20 working days before
its date of its publication.
After the notification and without prejudice of the powers laid down in Directive
2009/110/EC or the national laws transposing it, the competent authority of the home
Member State may exercise the powers laid down in Article 82(1) of this Regulation.

10.

Any change or new fact likely to have a significant influence on the purchasedecision of any potential purchaser or on the decision of holders of e-money tokens
to sell or exchange such e-money tokens to the issuer which occurs after the
publication of the initial crypto-asset white paper shall be described in a modified
crypto-asset white paper prepared by the issuer and notified to the relevant
competent authority, in accordance with paragraph 9.

Article 47
Liability of issuers of e-money tokens for the information given in a crypto-asset white
paper
1.

Where an issuer of e-money tokens or its management body has infringed Article 46,
by providing in its crypto-asset white paper or in a modified crypto-asset white paper
information which is not complete, fair or clear or by providing information which is
misleading, a holder of such e-money tokens may claim damages from that issuer of
e-money tokens or its management body for damage caused to her or him due to that
infringement.
Any exclusion of civil liability shall be deprived of any legal effect.

2.

It shall be the responsibility of the holders of e-money tokens to present evidence
indicating that the issuer of e-money tokens has infringed Article 46 and that such an
infringement had an impact on his or her decision to buy, sell or exchange the said emoney tokens.

3.

A holder of e-money tokens shall not be able to claim damages for the information
provided in a summary as referred to in Article 46(5), including the translation
thereof, except where:(a)EN

the summary is misleading, inaccurate or inconsistent when read together withthe other parts of the crypto-asset white paper;

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(b)

4.

the summary does not provide, when read together with the other parts of thecrypto-asset white paper, key information in order to aid consumers andinvestors when considering whether to purchase such e-money tokens.

This Article does not exclude further civil liability claims in accordance withnational law.
Article 48
Marketing communications

1.

2.

Any marketing communications relating to an offer of e-money tokens to the public,or to the admission of such e-money tokens to trading on a trading platform for
crypto-assets, shall comply with all of the following:(a)the marketing communications shall be clearly identifiable as such;(b)

the information in the marketing communications shall be fair, clear and not
misleading;(c)the information in the marketing communications shall be consistent with theinformation in the crypto-asset white paper;(d)the marketing communications shall clearly state that a crypto-asset white
paper has been published and indicate the address of the website of the issuerof the e-money tokens.

The marketing communications shall contain a clear and unambiguous statement that
all the holders of the e-money tokens have a redemption right at any time and at parvalue on the issuer.
Article 49
Investment of funds received in exchange of e-money token issuers

Funds received by issuers of e-money tokens in exchange of e-money tokens and that areinvested in secure, low-risk assets in accordance with Article 7(2) of Directive 2009/110/EC
shall be invested in assets denominated in the same currency as the one referenced by the emoney token.

EN

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EN

Chapter 2
Significant e-money tokens
Article 50
Classification of e-money tokens as significant e-money tokens
1.

The EBA shall classify e-money tokens as significant e-money tokens on the basis of
the criteria referred to in Article 39(1), as specified in accordance with Article 39(6),and where at least three of those criteria are met.

2.

Competent authorities of the issuer’s home Member State shall provide the EBA
with information on the criteria referred to in Article 39(1) of this Article andspecified in accordance with Article 39(6) on at least a yearly basis.

3.

Where the EBA is of the opinion that e-money tokens meet the criteria referred to in
Article 39(1), as specified in accordance with Article 39(6), the EBA shall prepare a
draft decision to that effect and notify that draft decision to the issuers of those emoney tokens and the competent authority of the issuer’s home Member State. The
EBA shall give issuers of such e-money tokens and their competent authorities theopportunity to provide observations and comments in writing prior the adoption of its
final decision. The EBA shall duly consider those observations and comments.

4.

The EBA shall take its final decision on whether an e-money token is a significant emoney token within three months after the notification referred to in paragraph 3 andimmediately notify the issuers of such e-money tokens and their competentauthorities thereof.
Article 51
Voluntary classification of e-money tokens as significant e-money tokens

1.

An issuer of e-money tokens, authorised as a credit institution or as an ‘electronicmoney institution’ as defined in Article 2(1) of Directive 2009/110/EC or applying
for such authorisation, may indicate that they wish to classify their e-money tokens
as significant e-money tokens. In that case, the competent authority shallimmediately notify the request from the issuer or applicant issuer to EBA.
For the e-money tokens to be classified as significant, the issuer or applicant issuer of
e-money tokens shall demonstrate, through a detailed programme of operations, that
it is likely to meet at least three criteria referred to in Article 39(1), as specified inaccordance with Article 39(6).

2.

ENWhere, on the basis of the programme of operation, the EBA is of the opinion thatthe e-money tokens meet the criteria referred to in Article 39(1), as specified inaccordance with Article 39(6), the EBA shall prepare a draft decision to that effectand notify that draft decision to the competent authority of the issuer or applicant
issuer’s home Member State.

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EN

The EBA shall give competent authority of the issuer or applicant issuer’s home
Member State the opportunity to provide observations and comments in writing prior
the adoption of its final decision. The EBA shall duly consider those observations
and comments.
3.

Where, on the basis of the programme of operation, the EBA is of the opinion thatthe e-money tokens do not meet the criteria referred to in Article 39(1), as specified
in accordance with Article 39(6), the EBA shall prepare a draft decision to that effectand notify that draft decision to the issuer or applicant issuer and the competentauthority of the issuer or applicant issuer’s home Member State.
The EBA shall give the issuer or applicant issuer and the competent authority of its
home Member State the opportunity to provide observations and comments inwriting prior the adoption of its final decision. The EBA shall duly consider thoseobservations and comments.

4.

The EBA shall take its final decision on whether an e-money token is a significant emoney token within three months after the notification referred to in paragraph 1 andimmediately notify the issuers or applicant issuer of such e-money tokens and theircompetent authorities thereof. The decision shall be immediately notified to theissuer or applicant issuer of e-money tokens and to the competent authority of its
home Member State.
Article 52
Specific additional obligations for issuers of significant e-money tokens

Issuers of at least one category of e-money tokens shall apply the following requirements
applying to issuers of asset-referenced tokens or significant asset-referenced tokens:

EN

(a)

Articles 33 and 34 of this Regulation, instead of Article 7 of Directive 2009/110/EC;(b)

Article 41, paragraphs 1, 2, and 3 of this Regulation;(c)

Article 41 paragraph 4 of this Regulation, instead of Article 5 of Directive
2009/110/EC;(d)

Article 42 of this Regulation.

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TITLE V: Authorisation and operating conditions for
Crypto-Asset Service providers
Chapter 1: Authorisation of crypto-asset service providers
Article 53
Authorisation
1.

Crypto-asset services shall only be provided by legal persons that have a registeredoffice in a Member State of the Union and that have been authorised as crypto-asset
service providers in accordance with Article 55
Crypto-asset service providers shall, at all times, meet the conditions for theirauthorisation.
No person who is not a crypto-asset service provider shall use a name, or a corporate
name, or issue marketing communications or use any other process suggesting thathe or she is authorised as a crypto-asset service provider or that is likely to create
confusion in that respect.

2.

Competent authorities that grant an authorisation under Article 55 shall ensure thatsuch authorisation specifies the crypto-asset services that crypto-asset service
providers are authorised to provide.

3.

An authorisation as a crypto-asset service provider shall be valid for the entire Unionand shall allow crypto-asset service providers to provide throughout the Union theservices for which they have been authorised, either through the right ofestablishment, including through a branch, or through the freedom to provide
services.
Crypto-asset service providers that provide crypto-asset services on a cross-borderbasis shall not be required to have a physical presence in the territory of a host
Member State.

4.

Crypto-asset service providers seeking to add crypto-asset services to theirauthorisation shall request the competent authorities that granted the authorisation foran extension of their authorisation by complementing and updating the informationreferred to in Article 54. The request for extension shall be processed in accordancewith Article 55.
Article 54
Application for authorisation

1.

EN

Legal persons that intend to provide crypto-asset services shall apply for
authorisation as a crypto-asset service provider to the competent authority of theMember State where they have their registered office.

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2.

The application referred to in paragraph 1 shall contain all of the following:(a)the name, including the legal name and any other commercial name to be used,
the legal entity identifier of the applicant crypto-asset service provider, thewebsite operated by that provider, and its physical address;(b)

the legal status of the applicant crypto-asset service provider;(c)the articles of association of the applicant crypto-asset service provider;(d)a programme of operations setting out the types of crypto-asset services thatthe applicant crypto-asset service provider wishes to provide, including where
and how these services are to be marketed;(e)a description of the applicant crypto-asset service provider’s governancearrangements;(f)for all natural persons involved in the management body of the applicant
crypto-asset service provider, and for all natural persons who, directly or
indirectly, hold 20% or more of the share capital or voting rights, proof of theabsence of a criminal record in respect of infringements of national rules in thefields of commercial law, insolvency law, financial services law, anti-money
laundering law, counter-terrorism legislation, and professional liability
obligations;(g)proof that the natural persons involved in the management body of theapplicant crypto-asset service provider collectively possess sufficientknowledge, skills and experience to manage that provider and that those natural
persons are required to commit sufficient time to the performance of theirduties;(h)a description of the applicant crypto-asset service provider’s internal control
mechanism, procedure for risk assessment and business continuity plan;(i)

descriptions both in technical and non-technical language of applicant cryptoasset service provider’s IT systems and security arrangements;(j)proof that the applicant crypto-asset service provider meets the prudential
safeguards in accordance with Article 60;(k)a description of the applicant crypto-asset service provider’s procedures tohandle complaints from clients;(l)a description of the procedure for the segregation of client’s crypto-assets andfunds;(m) a description of the procedure and system to detect market abuse.
(n)ENwhere the applicant crypto-asset service provider intends to ensure the custody
and administration of crypto-assets on behalf of third parties, a description of
the custody policy;

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3.

(o)

where the applicant crypto-asset service provider intends to operate a trading
platform for crypto-assets, a description of the operating rules of the trading
platform;(p)where the applicant crypto-asset service provider intends to exchange cryptoassets for fiat currency or crypto-assets for other crypto-assets, a description of
the non-discriminatory commercial policy;(q)where the applicant crypto-asset service provider intends to execute orders forcrypto-assets on behalf of third parties, a description of the execution policy;(r)where the applicant intends to receive and transmit orders for crypto-assets onbehalf of third parties, proof that the natural persons giving advice on behalf of
the applicant crypto-asset service provider have the necessary knowledge andexpertise to fulfil their obligations.

Competent authorities shall not require an applicant crypto-asset service provider toprovide any information they have already received pursuant to Directive
2009/110/EC, Directive 2014/65/EU, Directive 2015/2366/EU or national law
applicable to crypto-asset services prior to the entry into force of this Regulation,
provided that such information or documents are still up-to-date and are accessible tothe competent authorities.
Article 55
Assessment of the application for authorisation and grant or refusal of authorisationEN

1.

Competent authorities shall, within 25 working days of receipt of the applicationreferred to in Article 54(1), assess whether that application is complete by checking
that the information listed in Article 54(2) has been submitted. Where the application
is not complete, the authorities shall set a deadline by which the applicant cryptoasset service providers are to provide the missing information.

2.

Competent authorities may refuse to review applications where such applications
remain incomplete after the deadline referred to in paragraph 1.

3.

Competent authorities shall immediately notify applicant crypto-asset service
providers of the fact that an application is complete.

4.

Before granting or refusing to an authorisation as a crypto-asset service provider,competent authorities shall consult the competent authorities of another Member
State in any of the following cases:(a)the applicant crypto-asset service provider is a subsidiary of a crypto-asset
service provider authorised in that other Member State;(b)the applicant crypto-asset service provider is a subsidiary of the parent
undertaking of a crypto-asset service provider authorised in that other Member
State;

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(c)

5.

the applicant crypto-asset service provider is controlled by the same natural or
legal persons who control a crypto-asset service provider authorised in that
other Member State.

Competent authorities shall, within three months from the date of receipt of acomplete application, assess whether the applicant crypto-asset service provider
complies with the requirements of this Title and shall adopt a fully reasoned decision
granting or refusing an authorisation as a crypto-asset service provider. That
assessment shall take into account the nature, scale and complexity of the cryptoasset services that the applicant crypto-asset service provider intends to provide.
Competent authorities may refuse authorisation where there are objective anddemonstrable grounds for believing that:(a)the management body of the applicant crypto-asset service provider poses athreat to its effective, sound and prudent management and business continuity,and to the adequate consideration of the interest of its clients and the integrityof the market;(b)

the applicant fails to meet or is likely to fail to meet any requirements of thisTitle.

6.

Competent authorities shall inform ESMA of all authorisations granted under this
Article. ESMA shall add all the information submitted in successful applications to
the register of authorised crypto-asset service providers provided for in Article57.
ESMA may request information in order to ensure that competent authorities grantauthorisations under this Article in a consistent manner.

7.

Competent authorities shall notify applicant crypto-asset service providers of theirdecisions to grant or to refuse authorisation within three working days of the date ofthat decision.
Article 56
Withdrawal of authorisation

1.

EN

Competent authorities shall withdraw the authorisations in any of the following
situations the crypto-asset service provider:(a)has not used its authorisation within 18 months of the date of granting of theauthorisation;(b)

has expressly renounced to its authorisation;(c)has not provided crypto-asset services for nine successive months;(d)has obtained its authorisation by irregular means, including making false
statements in its application for authorisation;(e)no longer meets the conditions under which the authorisation was granted andhas not taken the remedial actions requested by the competent authority within
a set-time frame;

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(f)
2.

EN

has seriously infringed this Regulation.

Competent authorities shall also have the power to withdraw authorisations in any of
the following situations:(a)the crypto-asset service provider or the members of its management body haveinfringed national law implementing Directive (EU) 2015/84962 in respect ofmoney laundering or terrorist financing;(b)

the crypto-asset service provider has lost its authorisation as a payment
institution in accordance with Article 13 of Directive (EU) 2015/2366 or its
authorisation as an electronic money institution granted in accordance withTitle II of Directive 2009/110/EC and that crypto-asset service provider has
failed to remedy the situation within 40 calendar days.

3.

Where a competent authority withdraws an authorisation, the competent authority
designated as a single point of contact in that Member State in accordance with
Article 81 shall notify ESMA and the competent authorities of the host Member
States thereof without undue delay. ESMA shall register the information on thewithdrawal of the authorisation in the register referred to in Article 57.

4.

Competent authorities may limit the withdrawal of authorisation to a particularservice.

5.

Before withdrawing an the authorisation, competent authorities shall consult thecompetent authority of another Member State where the crypto-asset service provider
concerned is:(a)a subsidiary of a crypto-asset service provider authorised in that other Member
State;(b)a subsidiary of the parent undertaking of a crypto-asset service provider
authorised in that other Member State;(c)controlled by the same natural or legal persons who control a crypto-asset
service provider authorised in that other Member State.

6.

The EBA, ESMA and any competent authority of a host Member State may at any
time request that the competent authority of the home Member State examines
whether the crypto-asset service provider still complies with the conditions underwhich the authorisation was granted.

7.

Crypto-asset service providers shall establish, implement and maintain adequate
procedures ensuring the timely and orderly transfer of the clients’ crypto-assets andfunds to another crypto-asset service provider when an authorisation is withdrawn.

62

Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on theprevention of the use of the financial system for the purposes of money laundering or terrorist
financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, andrepealing Directive 2005/60/EC of the European Parliament and of the Council and Commission
Directive 2006/70/EC (OJ L 141, 5.6.2015, p. 73–117)

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Article 57
Register of crypto-asset service providers
1.

ESMA shall establish a register of all crypto-asset service providers. That registershall be publicly available on its website and shall be updated on a regular basis.

2.

The register referred to in paragraph 1 shall contain the following data:

3.

(a)

the name, legal form and the legal entity identifier and the branches of thecrypto-asset service provider;(b)the commercial name, physical address and website of the crypto-asset service
provider or the trading platform for crypto-assets operated by the crypto-asset
service provider;(c)the name and address of the competent authority which granted authorisationand its contact details;(d)the list of crypto-asset services for which the crypto-asset service provider isauthorised;(e)the list of Member States in which the crypto-asset service provider has
notified its intention to provide crypto-asset services in accordance with Article
58;

(f)

any other services provided by the crypto-asset service provider not covered bythis Regulation with a reference to the relevant Union or national law.

Any withdrawal of an authorisation of a crypto-asset service provider in accordancewith Article 56 shall remain published in the register for five years.
Article 58
Cross-border provision of crypto-asset services

1.

2.

EN

Crypto-asset service providers that intend to provide crypto-asset services in morethan one Member State, shall submit the following information to the competentauthority designated as a single point of contact in accordance with Article 81.
(a)a list of the Member States in which the crypto-asset service provider intends
to provide crypto-asset services;(b)the starting date of the intended provision of the crypto-asset services;(c)a list of all other activities provided by the crypto-asset service provider notcovered by this Regulation.

The single point of contact of the Member State where authorisation was granted
shall, within 10 working days of receipt of the information referred to in paragraph 1
communicate that information to the competent authorities of the host Member
States, to ESMA and to the EBA. ESMA shall register that information in theregister referred to in Article 57.

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3.

The single point of contact of the Member State which granted authorisation shallinform the crypto-asset service provider concerned of the communication referred toin paragraph 2 without delay.

4.

Crypto-asset service providers may start to provide crypto-asset services in a
Member State other than their home Member State from the date of the receipt of thecommunication referred to in paragraph 3 or at the latest 15 calendar days after
having submitted the information referred to in paragraph 1.

Chapter 2: Obligation for all crypto-asset service providers
Article 59
Obligation to act honestly, fairly and professionally in the best interest of clients andinformation to clients
1.

Crypto-asset service providers shall act honestly, fairly and professionally inaccordance with the best interests of their clients and prospective clients.

2.

Crypto-asset service providers shall provide their clients with fair, clear and not
misleading information, in particular in marketing communications, which shall beidentified as such. Crypto-asset service providers shall not, deliberately or
negligently, mislead a client in relation to the real or perceived advantages of any
crypto-assets.

3.

Crypto-asset service providers shall warn clients of risks associated with purchasing
crypto-assets.

4.

Crypto-asset service providers shall make their pricing policies publicly available, by
online posting with a prominent place on their website.
Article 60
Prudential requirements

1.

2.

Crypto-asset service providers shall, at all times, have in place prudential safeguards
equal to an amount of at least the higher of the following:(a)the amount of permanent minimum capital requirements indicated in Annex
IV, depending on the nature of the crypto-asset services provided;(b)

one quarter of the fixed overheads of the preceding year, reviewed annually;

The prudential safeguards referred to in paragraph 1 shall take any of the following
forms:(a)EN

own funds, consisting of Common Equity Tier 1 items referred to in Articles
26 to 30 of Regulation (EU) No 575/2013 after the deductions in full, pursuant
to Article 36 of that Regulation, without the application of thresholdexemptions pursuant to Articles 46 and 48 of that Regulation;

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(b)
3.

Crypto-asset service providers that have not been in business for one year from thedate on which they started providing services shall use, for the calculation referred toin paragraph 1, point (b), the projected fixed overheads included in their projections
for the first 12 months’ of service provision, as submitted with their application forauthorisation.

4.

The insurance policy referred to in paragraph 2 shall have at least all of the following
characteristics:

5.

6.

EN

an insurance policy covering the territories of the Union where crypto-asset
services are actively provided or a comparable guarantee.

(a)

it has an initial term of no less than one year;(b)

the notice period for its cancellation is at least 90 days;(c)

it is taken out from an undertaking authorised to provide insurance, in
accordance with Union law or national law;(d)

it is provided by a third-party entity.

The insurance policy referred to in paragraph 2, point (b) shall include, coverageagainst the risk of:(a)loss of documents;(b)misrepresentations or misleading statements made;(c)acts, errors or omissions resulting in a breach of:i)legal and regulatory obligations;ii)

the duty to act honestly, fairly and professionally towards clients;iii)

obligations of confidentiality;(d)failure to establish, implement and maintain appropriate procedures to prevent
conflicts of interest;(e)losses arising from business disruption or system failures;(f)where applicable to the business model, gross negligence in safeguarding ofclients’ crypto-assets and funds.

For the purposes of paragraph 1 point (b), crypto-asset service providers shallcalculate their fixed overheads for the preceding year, using figures resulting fromthe applicable accounting framework, by subtracting the following items from thetotal expenses after distribution of profits to shareholders in their most recently
audited annual financial statements or, where audited statements are not available, inannual financial statements validated by national supervisors:

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(a)

staff bonuses and other remuneration, to the extent that those bonuses and that
remuneration depend on a net profit of the crypto-asset service providers in therelevant year;(b)

employees', directors' and partners' shares in profits;(c)other appropriations of profits and other variable remuneration, to the extent
that they are fully discretionary;(d)non-recurring expenses from non-ordinary activities.
Article 61
Organisational requirements

1.

Members of the management body of crypto-asset service providers shall have thenecessary good repute and competence, in terms of qualifications, experience andskills to perform their duties. They shall demonstrate that they are capable ofcommitting sufficient time to effectively carry out their functions.

2.

Natural persons who either own, directly or indirectly, more than 20% of the cryptoasset service provider's share capital or voting rights, or who exercise, by any othermeans, a power of control over the said crypto-asset service provider shall provide
evidence that they have the necessary good repute and competence.

3.

None of the persons referred to in paragraphs 1 or 2 shall have been convicted ofoffences relating to money laundering or terrorist financing or other financial crimes.

4.

Crypto-asset service providers shall employ personnel with the skills, knowledge andexpertise necessary for the discharge of responsibilities allocated to them, and taking
into account the scale, the nature and range of crypto-asset services provided.

5.

The management body shall assess and periodically review the effectiveness of thepolicies arrangements and procedures put in place to comply with the obligations set
out in Chapters 2 and 3 of this Title and take appropriate measures to address any
deficiencies.

6.

Crypto-asset service providers shall take all reasonable steps to ensure continuity andregularity in the performance of their crypto-asset services. To that end, crypto-asset
service providers shall employ appropriate and proportionate resources andprocedures, including resilient and secure ICT systems in accordance with
Regulation (EU) 2021/xx of the European Parliament and of the Council.63
They shall establish a business continuity policy, which shall include ICT business
continuity as well as disaster recovery plans set-up in accordance with Regulation(EU) 2021/xx of the European Parliament and of the Council64 aimed at ensuring, in

63

64

EN

Proposal for a Regulation of the European Parliament and the Council on digital operational resilience
for the financial sector and amending Regulations (EC) No 1060/2009, (EU) No 648/2012, (EU) No
600/2014 and (EU) No 909/2014 - COM(2020)595.
Proposal for a Regulation of the European Parliament and the Council on digital operational resilience
for the financial sector and amending Regulations (EC) No 1060/2009, (EU) No 648/2012, (EU) No
600/2014 and (EU) No 909/2014 - COM(2020)595.

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EN

the case of an interruption to their ICT systems and procedures, the preservation of
essential data and functions and the maintenance of crypto-asset services, or, wherethat is not possible, the timely recovery of such data and functions and the timely
resumption of crypto-asset services.
7.

Crypto-asset service providers shall have internal control mechanisms and effective
procedures for risk assessment, including effective control and safeguardarrangements for managing ICT systems in accordance with Regulation (EU)2021/xx of the European Parliament and of the Council.65 They shall monitor and, ona regular basis, evaluate the adequacy and effectiveness of internal control
mechanisms and procedures for risk assessment and take appropriate measures toaddress any deficiencies.
Crypto-asset service providers shall have systems and procedures to safeguard the
security, integrity and confidentiality of information in accordance with Regulation(EU) 2021/xx of the European Parliament and of the Council.66

8.

Crypto-asset service providers shall arrange for records to be kept of all crypto-asset
services, orders and transactions undertaken by them. Those records shall be
sufficient to enable competent authorities to fulfil their supervisory tasks and to
perform the enforcement actions, and in particular to ascertain whether the cryptoasset service provider has complied with all obligations including those with respect
to clients or potential clients and to the integrity of the market.

9.

Crypto-asset service providers shall have in place systems, procedures andarrangements to monitor and detect market abuse as referred in Title VI. They shallimmediately report to their competent authority any suspicion that there may exist
circumstances that indicate that any market abuse has been committed, is beingcommitted or is likely to be committed.
Article 62
Information to competent authorities

Crypto-asset service providers shall notify their competent authority of any changes to their
management body and shall provide their competent authority with all the necessary
information to assess compliance with Article 61.
Article 63
Safekeeping of clients’ crypto-assets and funds
1.

Crypto-asset service providers that hold crypto-assets belonging to clients or themeans of access to such crypto-assets shall make adequate arrangements to safeguard
the ownership rights of clients, especially in the event of the crypto-asset service

65

Proposal for a Regulation of the European Parliament and the Council on digital operational resilience
for the financial sector and amending Regulations (EC) No 1060/2009, (EU) No 648/2012, (EU) No
600/2014 and (EU) No 909/2014 - COM(2020)595.
Proposal for a Regulation of the European Parliament and the Council on digital operational resilience
for the financial sector and amending Regulations (EC) No 1060/2009, (EU) No 648/2012, (EU) No
600/2014 and (EU) No 909/2014 - COM(2020)595.

66

EN

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EN

provider’s insolvency, and to prevent the use of a client’s crypto-assets on own
account except with the client’s express consent.
2.

Where their business models or the crypto-asset services require holding clients’funds, crypto-asset service providers shall have adequate arrangements in place tosafeguard the rights of clients and prevent the use of clients’ funds, as defined under
Article 4(25) of Directive (EU) 2015/236667, for their own account.

3.

Crypto-asset service providers shall, promptly place any client’s funds, with a central
bank or a credit institution.
Crypto-asset service providers shall take all necessary steps to ensure that the clients’funds held with a central bank or a credit institution are held in an account or
accounts separately identifiable from any accounts used to hold funds belonging to
the crypto-asset service provider.

4.

Crypto-asset service providers may themselves, or through a third party, provide
payment services related to the crypto-asset service they offer, provided that thecrypto-asset service provider itself, or the third-party, is a payment institution as
defined in Article 4, point (4), of Directive (EU) 2015/2366.

5.

Paragraphs 2 and 3 of this Article shall not apply to crypto-asset service providers
that are electronic money institutions as defined in Article 2, point 1 of Directive
2009/110/EC or payment institutions as defined in Article 4, point (4), of Directive(EU) 2015/2366.
Article 64
Complaint handling procedureEN

1.

Crypto-asset service providers shall establish and maintain effective and transparent
procedures for the prompt, fair and consistent handling of complaints received fromclients.

2.

Clients shall be able to file complaints with crypto-asset service providers free ofcharge.

3.

Crypto-asset service providers shall develop and make available to clients a templatefor complaints and shall keep a record of all complaints received and any measurestaken in response thereof.

4.

Crypto-assets service providers shall investigate all complaints in a timely and fairmanner, and communicate the outcome of such investigations to their clients within areasonable period of time.

67

Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on
payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC (OJL 33,
23.12.2015, p.35)

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Article 65
Prevention, identification, management and disclosure of conflicts of interest
1.

2.

Crypto-asset service providers shall maintain and operate an effective policy toprevent, identify, manage and disclose conflicts of interest between themselves and:(a)their shareholders or any person directly or indirectly linked to them bycontrol;(b)their managers and employees,(c)their clients, or between one client and another client.

Crypto-asset service providers shall disclose to their clients and potential clients thegeneral nature and sources of conflicts of interest and the steps taken to mitigate
them.
Crypto-asset service providers shall make such disclosures on their website in aprominent place.

3.

The disclosure referred to in paragraph 2 shall be sufficiently precise, taking into
account the nature of each client and to enable each client to take an informed
decision about the service in the context of which the conflicts of interest arises.

4.

Crypto-asset service providers shall assess and at least annually review, their policy
on conflicts of interest and take all appropriate measures to address any deficiencies.
Article 66
Outsourcing

1.

EN

Crypto-asset service providers, that rely on third parties for the performance of
operational functions, take all reasonable steps to avoid additional operational risk.
They shall remain fully responsible for discharging all of their obligations under thisTitle and shall ensure at all times that all the following conditions are complied with:(a)outsourcing does not result in the delegation of
crypto-asset service providers;(b)outsourcing does not alter the relationship between the crypto-asset service
providers and their clients, nor the obligations of the crypto-asset service
providers towards their clients;(c)outsourcing does not change the conditions for the authorisation of the cryptoasset service providers;(d)third parties involved in the outsourcing cooperate with the competentauthority of the crypto-asset service providers’ home Member State and theoutsourcing does not prevent the exercise of supervisory functions by thosecompetent authorities, including on-site access to acquire any relevant
information needed to fulfil those functions;99

the responsibility of the

EN

(e)

crypto-asset service providers retain the expertise and resources necessary forevaluating the quality of the services provided, for supervising the outsourced
services effectively and for managing the risks associated with the outsourcing
on an ongoing basis;(f)crypto-asset service providers have direct access to the relevant information of
the outsourced services;(g)

crypto-asset service providers ensure that third parties involved in theoutsourcing meet the standards laid down in the relevant data protection law
which would apply if the third parties were established in the Union.

For the purposes of point (g), crypto-asset service providers are responsible for
ensuring that the standards laid down in the relevant data protection legislation are
set out in the contract referred to in paragraph 3.
2.

Crypto-asset service providers shall have a policy on their outsourcing, including on
contingency plans and exit strategies.

3.

Crypto-asset service providers shall enter into a written agreement with any third
parties involved in outsourcing. That written agreement shall specify the rights andobligations of both the crypto-asset service providers and of the third parties
concerned, and shall allow the crypto-asset service providers concerned to terminatethat agreement.

4.

Crypto-asset service providers and third parties shall, upon request, make available tothe competent authorities and the relevant authorities all information necessary toenable those authorities to assess compliance of the outsourced activities with therequirements of this Title.

Chapter 3: Obligations for the provision of specific crypto-asset
services
Article 67
Custody and administration of crypto-assets on behalf of third parties
1.

EN

Crypto-asset service providers that are authorised for the custody and administration
on behalf of third parties shall enter into an agreement with their clients to specify
their duties and their responsibilities. Such agreement shall include at least all thefollowing:(a)the identity of the parties to the agreement;(b)the nature of the service provided and a description of that service;(c)the means of communication between the crypto-asset service provider and theclient, including the client’s authentication system;(d)a description of the security systems used by the crypto-assets service provider;

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(e)

fees applied by the crypto-asset service provider;(f)the law applicable to the agreement.

2.

Crypto-asset service providers that are authorised for the custody and administrationof crypto-assets on behalf of third parties shall keep a register of positions, opened in
the name of each client, corresponding to each client’s rights to the crypto-assets.
Crypto-asset service providers shall record as soon as possible, in that register any
movements following instructions from their clients. Their internal procedures shallensure that any movement affecting the registration of the crypto-assets is evidenced
by a transaction regularly registered in the client’s position register.

3.

Crypto-asset service providers that are authorised for the custody and administrationof crypto-assets on behalf of third parties shall establish a custody policy withinternal rules and procedures to ensure the safekeeping or the control of such cryptoassets, or the means of access to the crypto-assets, such as cryptographic keys.
Those rules and procedures shall ensure that the crypto-asset service provider cannot
lose clients’ crypto-assets or the rights related to those assets due to frauds, cyberthreats or negligence.

4.

Where applicable, crypto-asset service providers that are authorised for the custody
and administration of crypto-assets on behalf of third parties shall facilitate theexercise of the rights attached to the crypto-assets. Any event likely to create or
modify the client’s rights shall be recorded in the client’s position register as soon as
possible.

5.

Crypto-asset providers that are authorised for the custody and administration of
crypto-assets on behalf of third parties shall provide their clients, at least once every
three months and at each request of the client concerned, with a statement of positionof the crypto-assets recorded in the name of those clients. That statement of position
shall be made in a durable medium. The statement of position shall mention thecrypto-assets concerned, their balance, their value and the transfer of crypto-assets
made during the period concerned.
Crypto-asset service providers that are authorised for the custody and administrationof crypto-assets on behalf of third parties shall provide their clients as soon as
possible with any information about operations on crypto-assets that require a
response from those clients.

EN

6.

Crypto-asset service providers that are authorised for the custody and administrationof crypto-assets on behalf of third parties shall ensure that crypto-assets held on
behalf of their clients or the means of access to those crypto-assets are returned assoon as possible to those clients.

7.

Crypto-asset service providers that are authorised for the custody and administrationof crypto-assets on behalf of third parties shall segregate holdings on behalf of theirclients from their own holdings. They shall ensure that, on the DLT, their clients’
crypto-assets are held on separate addresses from those on which their own cryptoassets are held.

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EN

8.

Crypto-asset service providers that are authorised for the custody and administrationof crypto-assets on behalf of third parties shall be liable to their clients for loss ofcrypto-assets as a resulting from a malfunction or hacks up to the market value of thecrypto-assets lost.
Article 68
Operation of a trading platform for crypto-assets

1.

Crypto-asset service providers that are authorised for the operation of a trading
platform for crypto-assets shall lay down operating rules for the trading platform.
These operating rules shall at least:(a)

set the requirements, due diligence and approval processes that are applied
before admitting crypto-assets to the trading platform;(b)define exclusion categories, if any, which are the types of crypto-assets thatwill not be admitted to trading on the trading platform, if any.

(c)set out the policies, procedures and the level of fees, if any, for the admissionof trading of crypto-assets to the trading platform;(d)set objective and proportionate criteria for participation in the trading activities,
which promote fair and open access to the trading platform for clients willingto trade;(e)

set requirements to ensure fair and orderly trading;(f)

set conditions for crypto-assets to remain accessible for trading, including
liquidity thresholds and periodic disclosure requirements;(g)

set conditions under which trading of crypto-assets can be suspended;(h)set procedures to ensure efficient settlement of both crypto-asset transactions
and fiat currency transactions.

For the purposes of point (a), the operating rules shall clearly state that a crypto-asset
shall not be admitted to trading on the trading platform, where a crypto-asset white
paper has been published, unless such a crypto-asset benefits from the exemption set
out in Articles 4(2).
Before admitting a crypto-asset to trading, crypto-asset service providers that are
authorised for the operation of a trading platform for crypto-assets shall ensure thatthe crypto-asset complies the operating rules of the trading platform and assess thequality of the crypto-asset concerned. When assessing the quality of a crypto-asset,
the trading platform shall take into account the experience, track record andreputation of the issuer and its development team. The trading platform shall also
assess the quality of the crypto-assets benefiting from the exemption set out in
Articles 4(2).

EN

102

EN

The operating rules of the trading platform for crypto-assets shall prevent theadmission to trading of crypto-assets which have inbuilt anonymisation function
unless the holders of the crypto-assets and their transaction history can be identified
by the crypto-asset service providers that are authorised for the operation of a trading
platform for crypto-assets or by competent authorities.

EN

2.

These operating rules referred to in paragraph 1 shall be drafted in one of the official
languages of the home Member States or in another language that is customary in thesphere of finance. Those operating rules shall be made public on the website of thecrypto-asset service provider concerned.

3.

Crypto-asset service providers that are authorised for the operation of a trading
platform for crypto-assets shall not deal on own account on the trading platform for
crypto-assets they operate, even when they are authorised for the exchange of cryptoassets for fiat currency or for the exchange of crypto-assets for other crypto-assets.

4.

Crypto-asset service providers that are authorised for the operation of a trading
platform for crypto-assets shall have in place effective systems, procedures andarrangements to ensure that their trading systems:(a)are resilient;(b)have sufficient capacity to ensure orderly trading under conditions of severemarket stress;(c)are able to reject orders that exceed pre-determined volume and pricethresholds or are clearly erroneous;(d)

are fully tested to ensure that conditions under points (a), (b) and (c) are met;(e)

are subject to effective business continuity arrangements to ensure continuityof their services if there is any failure of the trading system.

5.

Crypto-asset service providers that are authorised for the operation of a trading
platform for crypto-assets shall make public any bid and ask prices and the depth of
trading interests at those prices which are advertised for crypto-assets through thesystems of the trading platform for crypto-assets. The crypto-asset service providers
concerns shall make that information available to the public during the trading hours
on a continuous basis.

6.

Crypto-asset service providers that are authorised for the operation of a trading
platform for crypto-assets shall make public the price, volume and time of thetransactions executed in respect of crypto-assets traded on their trading platforms.
They shall make details of all such transactions public as close to real-time as istechnically possible.

7.

Crypto-asset service providers that are authorised for the operation of a trading
platform for crypto-assets shall make the information published in accordance withparagraphs 5 and 6 available to the public on a reasonable commercial basis andensure non-discriminatory access to that information. That information shall be madeavailable free of charge 15 minutes after publication in a machine readable format
and remain published for at least 2 years.

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8.

Crypto-asset service providers that are authorised for the operation of a trading
platform for crypto-assets shall complete the final settlement of a crypto-asset
transaction on the DLT on the same date as the transactions has been executed on the
trading platform.

9.

Crypto-asset service providers that are authorised for the operation of a trading
platform for crypto-assets shall ensure that their fee structures are transparent, fairand non-discriminatory and that they do not create incentives to place, modify orcancel orders or to execute transactions in a way that contributes to disorderly trading
conditions or market abuse as referred to in Title VI.

10.

Crypto-asset service providers that are authorised for the operation of a trading
platform for crypto-assets shall maintain resources and have back-up facilities inplace to be capable of reporting to their competent authority at all times.

Article 69
Exchange of crypto-assets against fiat currency or exchange of crypto-assets against
other crypto-assets
1.

Crypto-asset providers that are authorised for exchanging crypto-assets against fiat
currency or other crypto-assets shall establish a non-discriminatory commercial
policy that indicates, in particular, the type of clients they accept to transact with andthe conditions that shall be met by clients.

2.

Crypto-asset service providers that are authorised for exchanging crypto-assets
against fiat currency or other crypto-assets shall publish a firm price of the cryptoassets or a method for determining the price of the crypto-assets they propose forexchange against fiat currency or other crypto-assets.

3.

Crypto-asset service providers that are authorised for exchanging crypto-assets
against fiat currency or other crypto-assets shall execute the clients' orders at theprices displayed at the time of their receipt.

4.

Crypto-asset service providers that are authorised for exchanging crypto-assets
against fiat currency or other crypto-assets shall publish the details of the orders andthe transactions concluded by them, including transaction volumes and prices.
Article 70
Execution of orders for crypto-assets on behalf of third parties

1.

EN

Crypto-asset service providers that are authorised to execute orders for crypto-assets
on behalf of third parties shall take all necessary steps to obtain, when executing
orders, the best possible result for their clients taking into account the best execution
factors of price, costs, speed, likelihood of execution and settlement, size, nature or
any other consideration relevant to the execution of the order, unless the crypto-asset
service provider concerned executes orders for crypto-assets following specificinstructions given by its clients.

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2.

To ensure compliance with paragraph 2, a crypto-asset service provider that are
authorised to execute orders for crypto-assets on behalf of third parties shall establish
and implement effective execution arrangements. In particular, they shall establish
and implement an order execution policy to allow them to obtain, for their clients’
orders, the best possible result. In particular, this order execution policy shall provide
for the prompt, fair and expeditious execution of clients’ orders and prevent themisuse by the crypto-asset service providers’ employees of any information relating
to clients’ orders.

3.

Crypto-asset service providers that are authorised to execute orders for crypto-assets
on behalf of third parties shall provide appropriate and clear information to theirclients on their order execution policy and any significant change to it.
Article 71
Placing of crypto-assets

1.

Crypto-asset service providers that are authorised for placing crypto-assets shallcommunicate the following information to the issuer or any third party acting on
their behalf, before concluding a contract with them:(a)the type of placement considered, including whether a minimum amount ofpurchase is guaranteed or not;(b)

an indication of the amount of transaction fees associated with the service forthe proposed operation;(c)the considered timing, process and price for the proposed operation;(d)

information about the targeted purchasers.

Crypto-asset service providers that are authorised for placing crypto-assets shall,
before placing the crypto-assets concerned shall obtain the agreement of the issuersor any third party acting on their behalf as regards points (a) to (d).
2.

EN

The rules on conflicts of interest referred to in Article 65 shall have specific andadequate procedures in place to prevent, monitor, manage and potentially disclose
any conflicts of interest arising from the following situations:(a)the crypto-asset service providers place the crypto-assets with their own
clients;(b)

the proposed price for placing crypto-assets has been overestimated orunderestimated.

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Article 72
Reception and transmission of orders on behalf of third parties
1.

Crypto-asset service providers that are authorised for the provision of the reception
and transmission of orders on behalf of third parties shall establish and implement
procedures and arrangements which provide for the prompt and proper transmissionof client’s orders for execution on a trading platform for crypto-assets or to anothercrypto-asset service provider.

2.

Crypto-asset service providers that are authorised for the provision of the reception
and transmission of orders on behalf of third parties shall not receive any
remuneration, discount or non-monetary benefit for routing clients’ orders received
from clients to a particular trading platform for crypto-assets or to another cryptoasset service provider.

3.

Crypto-asset service providers that are authorised for the provision of the reception
and transmission of orders on behalf of third parties shall not misuse information
relating to pending clients’ orders, and shall take all reasonable steps to prevent themisuse of such information by any of their employees.
Article 73
Advice on crypto-assets

1.

Crypto-asset service providers that are authorised to provide advice on crypto-assets
shall assess the compatibility of such crypto-assets with the needs of the clients andrecommend them only when this is in the interest of the clients.

2.

Crypto-asset service providers that are authorised to provide advice on crypto-assets
shall ensure that natural persons giving advice or information about crypto-assets ora crypto-asset service on their behalf possess the necessary knowledge andexperience to fulfil their obligations.

3.

For the purposes of the assessment referred to in paragraph 1, crypto-asset service
providers that are authorised to provide advice on crypto-assets shall request
information about the client or prospective client’s knowledge of, and experience in
crypto-assets, objectives, financial situation including the ability to bear losses and abasic understanding of risks involved in purchasing crypto-assets.
Crypto-asset service providers that are authorised to provide advice on crypto-assets
shall warn clients that, due to their tradability, the value of crypto-assets may
fluctuate.

4.

EN

Crypto-asset service providers that are authorised to provide advice on crypto-assets
shall establish, maintain and implement policies and procedures to enable them tocollect and assess all information necessary to conduct this assessment for eachclient. They shall take reasonable steps to ensure that the information collected about
their clients or prospective clients is reliable.

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5.

Where clients do not provide the information required pursuant to paragraph 4, or
where crypto-asset service providers that are authorised to provide advice on cryptoassets consider, on the basis of the information received under paragraph 4, that theprospective clients or clients have insufficient knowledge, crypto-asset service
providers that are authorised to provide advice on crypto-assets shall inform thoseclients or prospective clients that the crypto-assets or crypto-asset services may beinappropriate for them and issue them a warning on the risks associated with cryptoassets. That risk warning shall clearly state the risk of losing the entirety of themoney invested or converted into crypto-assets. Clients shall expressly acknowledge
that they have received and understood the warning issued by the crypto-asset
service provider concerned.

6.

Crypto-asset service providers that are authorised to provide advice on crypto-assets
shall for each client review the assessment referred to in paragraph 1 every two years
after the initial assessment made in accordance with that paragraph.

7.

Once the assessment referred to in paragraph 1 has been performed, crypto-asset
service providers that are authorised to provide advice on crypto-assets shall provide
clients with a report summarising the advice given to those clients. That report shallbe made and communicated to the clients in a durable medium. That report shall, as aminimum:(a)specify the clients’ demands and needs;(b)provide an outline of the advice given.

Chapter 4: Acquisition of crypto-asset service providers
Article 74
Assessment of intended acquisitions of crypto-asset service providers

EN1.

Any natural or legal person or such persons acting in concert (the ‘proposed
acquirer’), who have taken a decision either to acquire, directly or indirectly, a
qualifying holding in a crypto-asset service provider or to further increase, directly or
indirectly, such a qualifying holding in a crypto-asset service provider so that the
proportion of the voting rights or of the capital held would reach or exceed 10 %, 20%, 30 % or 50 % or so that the crypto-asset service provider would become its
subsidiary (the ‘proposed acquisition’), shall notify the competent authority of thatcrypto-asset service provider thereof in writing indicating the size of the intended
holding and the information required by the regulatory technical standards adopted
by the Commission in accordance with Article 75(4).

2.

Any natural or legal person who has taken a decision to dispose, directly or
indirectly, of a qualifying holding in a crypto-asset service provider (the ‘proposed
vendor’) shall first notify the competent authority in writing thereof, indicating thesize of such holding. Such a person shall likewise notify the competent authority
where it has taken a decision to reduce a qualifying holding so that the proportion of
the voting rights or of the capital held would fall below 10 %, 20 %, 30 % or 50 % orso that the crypto-asset service provider would cease to be that person’s subsidiary.

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3.

Competent authorities shall, promptly and in any event within two working days
following receipt of the notification required under paragraph 1 acknowledge receipt
thereof in writing to the proposed acquirer.

4.

Competent authorities shall assess the intended acquisition referred to in paragraph 1
and the information required by the regulatory technical standards adopted by theCommission in accordance with Article 75(4), within sixty working days from thedate of the written acknowledgement of receipt referred to in paragraph 3.
When acknowledging receipt of the notification, competent authorities shall informthe persons referred to in paragraph 1 of the date on which the assessment will befinalised.

5.

When performing the assessment referred to in paragraph 4, first subparagraph,competent authorities may request from the persons referred to in paragraph 1 any
additional information that is necessary to complete that assessment. Such request
shall be made before the assessment is finalised, and in any case no later than on the50th working day from the date of the written acknowledgement of receipt referred
to in paragraph 3. Such requests shall be made in writing and shall specify theadditional information needed.
Competent authorities shall halt the assessment referred to in paragraph 4, firstsubparagraph, until they have received the additional information referred to in thefirst subparagraph of this paragraph, but for no longer than 20 working days. Any
further requests by competent authorities for additional information or forclarification of the information received shall not result in an additional interruptionof the assessment.
Competent authority may extend the interruption referred to in the second
subparagraph of this paragraph up to 30 working days where the persons referred toin paragraph 1 are situated or regulated outside the Union.

EN

6.

Competent authorities that, upon completion of the assessment, decide to oppose theintended acquisition referred to in paragraph 1 shall notify the persons referred to inparagraph 1 thereof within two working days, but before the date referred to inparagraph 4, second subparagraph, extended, where applicable, in accordance withparagraph 5, second and third subparagraph. That notification shall provide thereasons for that decision.

7.

Where competent authorities do not oppose the intended acquisition referred to inparagraph 1 before the date referred to in paragraph 4, second subparagraph,extended, where applicable, in accordance with paragraph 5, second and third
subparagraph, the intended acquisition or intended disposal shall be deemed to beapproved.

8.

Competent authority may set a maximum period for concluding the intended
acquisition referred to in paragraph 1, and extend that maximum period whereappropriate.

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Article 75
Content of the assessment of intended acquisitions of crypto-asset service providers
1.

When performing the assessment referred to in Article 74(4), competent authorities
shall appraise the suitability of the persons referred to in Article 74(1) and thefinancial soundness of intended acquisition against all of the following criteria:(a)the reputation of the persons referred to in Article 74(1);(b)

the reputation and experience of any person who will direct the business of thecrypto-asset service provider as a result of the intended acquisition or disposal;(c)the financial soundness of the persons referred to in Article 74(1), in particular
in relation to the type of business pursued and envisaged in the crypto-asset
service provider in which the acquisition is intended;(d)whether the crypto-asset service provider will be able to comply and continue
to comply with the provisions of this Title;(e)whether there are reasonable grounds to suspect that, in connection with theintended acquisition, money laundering or terrorist financing within themeaning of Article 1 of Directive (EU) 2015/849/EC is being or has beencommitted or attempted, or that the intended acquisition could increase the risk
thereof.

2.

Competent authorities may oppose the intended acquisition only where there arereasonable grounds for doing so on the basis of the criteria set out in paragraph 1 orwhere the information provided in accordance with Article 74(4) is incomplete orfalse.

3.

Member States shall not impose any prior conditions in respect of the level ofholding that must be acquired nor allow their competent authorities to examine theproposed acquisition in terms of the economic needs of the market.

4.

ESMA, in close cooperation with the EBA, shall develop draft regulatory technicalstandards to establish an exhaustive list of information that is necessary to carry out
the assessment referred to in Article 74(4), first subparagraph and that shall be
provided to the competent authorities at the time of the notification referred to in
Article 74(1). The information required shall be relevant for a prudential assessment,
be proportionate and be adapted to the nature of the persons and the intended
acquisition referred to in Article 74(1).
ESMA shall submit those draft regulatory technical standards to the Commission by[please insert date 12 months after the entry into force of this Regulation].
Power is delegated to the Commission to adopt the regulatory technical standards
referred to in the first subparagraph in accordance with Articles 10 to 14 ofRegulation (EU) No 1095/2010.

EN

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TITLE VI: Prevention of Market Abuse involving cryptoassets
Article 76
Scope of the rules on market abuse
The prohibitions and requirements laid down in this Title shall apply to acts carried out by
any person and that concern crypto-assets that are admitted to trading on a trading platform
for crypto-assets operated by an authorised crypto-asset service provider, or for which arequest for admission to trading on such a trading platform has been made.
Article 77
Disclosure of inside information
1.

Issuers of crypto-assets shall inform the public as soon as possible of inside
information which concerns them, in a manner that enables the public to access that
information in an easy manner and to assess that information in a complete, correct
and timely manner.

2.

Issuers of crypto-assets may, on their own responsibility, delay disclosure to the
public of inside information provided that all of the following conditions are met:(a)

immediate disclosure is likely to prejudice the legitimate interests of theissuers;(b)

delay of disclosure is not likely to mislead the public;(c)

the issuers are able to ensure the confidentiality of that information.
Article 78
Prohibition of insider dealingEN

1.

No person shall use inside information about crypto-assets to acquire those cryptoassets, or to dispose of those crypto-assets, either directly or indirectly and either for
his or her own account or for the account of a third party.

2.

No person that possesses inside information about crypto-assets shall:(a)recommend, on the basis of that inside information, that another person
acquires those crypto-assets or disposes of those crypto-assets to which that
information relates, or induce that person to make such an acquisition or
disposal;(b)

recommend, on the basis of that inside information, that another person cancels
or amends an order concerning those crypto-assets, or induce that person to
make such a cancellation or amendment.

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Article 79
Prohibition of unlawful disclosure of inside information
No person that possesses inside information shall disclose such information to any otherperson, except where such disclosure is made in the normal exercise of an employment, aprofession or duties.
Article 80
Prohibition of market manipulation1.

No person shall engage into market manipulation which shall include any of thefollowing activities:(a)2.

unless the person entering into a transaction, placing an order to trade orengaging in any other behaviour establishes that such transaction, order or
behaviour has been carried out for legitimate reasons, entering into atransaction, placing an order to trade or any other behaviour which:i)gives, or is likely to give, false or misleading signals as to the supply of,demand for, or price of, a crypto-asset;

ii)

sets, or is likely to set, the price of one or several crypto-assets at anabnormal or artificial level.

(b)entering into a transaction, placing an order to trade or any other activity or
behaviour which affects or is likely to affect the price of one or several cryptoassets, while employing a fictitious device or any other form of deception orcontrivance;(c)disseminating information through the media, including the internet, or by anyother means, which gives, or is likely to give, false or misleading signals as tothe supply of, demand for, or price of a crypto-asset, or is likely to secure, theprice of one or several crypto-assets, at an abnormal or artificial level,
including the dissemination of rumours, where the person who made thedissemination knew, or ought to have known, that the information was false or
misleading.

The following behaviour shall, inter alia, be considered as market manipulation:(a)securing a dominant position over the supply of or demand for a crypto-asset,
which has, or is likely to have, the effect of fixing, directly or indirectly,
purchase or sale prices or creates, or is likely to create, other unfair trading
conditions;(b)the placing of orders to a trading platform for crypto-assets, including any
cancellation or modification thereof, by any available means of trading, andwhich has one of the effects referred to in paragraph 1(a), by:i)EN

disrupting or delaying the functioning of the trading platform for cryptoassets or engaging into any activities that are likely to have that effect;

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(c)

EN

ii)

making it more difficult for other persons to identify genuine orders on
the trading platform for crypto-assets or engaging into any activities thatare likely to have that effect, including by entering orders which result in
the destabilisation of the normal functioning of the trading platform for
crypto-assets;iii)

creating a false or misleading signal about the supply of, or demand for,or price of, a crypto-asset, in particular by entering orders to initiate orexacerbate a trend, or engaging into any activities that are likely to havethat effect;

taking advantage of occasional or regular access to the traditional or electronic
media by voicing an opinion about a crypto-asset, while having previously
taken positions on that crypto-asset, and profiting subsequently from theimpact of the opinions voiced on the price of that crypto-asset, without having
simultaneously disclosed that conflict of interest to the public in a proper andeffective way.

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Title VII: competent Authorities, the EBA and ESMA
Chapter 1: Powers of competent authorities and cooperation
between competent authorities, the EBA and ESMA
Article 81
Competent authorities
1.

Member States shall designate the competent authorities responsible for carrying out
the functions and duties provided for in this Regulation and shall inform the EBA
and ESMA thereof.

2.

Where Member States designate more than one competent authority pursuant toparagraph 1, they shall determine their respective tasks and designate one of them asa single point of contact for cross-border administrative cooperation between
competent authorities as well as with the EBA and ESMA.

3.

ESMA shall publish on its website a list of the competent authorities designated inaccordance with paragraph 1.
Article 82
Powers of competent authorities

1.

EN

In order to fulfil their duties under Titles II, III, IV and V of this Regulation,competent authorities shall have, in accordance with national law, at least thefollowing supervisory and investigative powers:(a)to require crypto-asset service providers and the natural or legal persons that
control them or are controlled by them, to provide information and documents;(b)

to require members of the management body of the crypto-asset service
providers to provide information;(c)to suspend, or to require a crypto-asset service provider to suspend, theprovision of crypto-asset service for a maximum of 10 consecutive working
days on any single occasion where there are reasonable grounds for believingthat this Regulation has been infringed;(d)to prohibit the provision of crypto-asset services where they find that thisRegulation has been infringed;(e)to disclose, or to require a crypto-asset servicer provider to disclose, allmaterial information which may have an effect on the provision of the cryptoasset services in order to ensure consumer protection or the smooth operationof the market;

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(f)

to make public the fact that a crypto-asset service provider is failing to comply
with its obligations;(g)to suspend, or to require a crypto-asset service provider to suspend theprovision of crypto-asset services where the competent authorities consider thatthe crypto-asset service provider’s situation is such that the provision of thecrypto-asset service would be detrimental to consumers’ interests;(h)to transfer existing contracts to another crypto-asset service provider in cases
where a crypto-asset service provider’s authorisation is withdrawn inaccordance with Article 56, subject to the agreement of the clients and thereceiving crypto-asset service provider;(i)where there is a reason to assume that a person is providing a crypto-asset
service without authorisation, to require information and documents from that
person;(j)where there is a reason to assume that a person is issuing asset-referenced
tokens or e-money tokens without authorisation, to require information anddocuments from that person;(k)in urgent cases, where there is a reason to assume that a person is providing
crypto-asset services without authorisation, to order the immediate cessation of
the activity without prior warning or imposition of a deadline;(l)to require issuers of crypto-assets, including asset-referenced tokens and emoney tokens, or persons asking for admission to trading on a trading platform
for crypto-assets, and the persons that control them or are controlled by them,to provide information and documents;(m) to require members of the management body of the issuer of crypto-assets,
including asset-referenced tokens and e-money tokens, or person asking foradmission of such crypto-assets to trading on a trading platform for cryptoassets to provide information;

EN

(n)

to require issuers of crypto-assets, including asset-referenced tokens and emoney tokens, to include additional information in their crypto-asset white
papers, where necessary for consumer protection or financial stability;(o)to suspend an offer to the public of crypto-assets, including asset-referenced
tokens or e-money tokens, or an admission to trading on a trading platform for
crypto-assets for a maximum of 10 consecutive working days on any single
occasion where there are reasonable grounds for suspecting that this Regulation
has been infringed;(p)

to prohibit an offer to the public of crypto-assets, including asset-referenced
tokens or e-money tokens, or an admission to trading on a trading platform for
crypto-assets where they find that this Regulation has been infringed or where
there are reasonable grounds for suspecting that it would be infringed;(q)

to suspend or require a trading platform for crypto-assets to suspend trading of
the crypto-assets, including asset-referenced tokens or e-money tokens, for a

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maximum of 10 consecutive working days on any single occasion where there
are reasonable grounds for believing that this Regulation has been infringed;(r)

to prohibit trading of crypto-assets, including asset-referenced tokens or emoney tokens, on a trading platform for crypto-assets where they find that thisRegulation has been infringed;(s)

to make public the fact that an issuer of crypto-assets, including an issuer ofasset-referenced tokens or e-money tokens, or a person asking for admission to
trading on a trading platform for crypto-assets is failing to comply with its
obligations;(t)to disclose, or to require the issuer of crypto-assets, including an issuer ofasset-referenced tokens or e-money tokens, to disclose, all material information
which may have an effect on the assessment of the crypto-assets offered to the
public or admitted to trading on a trading platform for crypto-assets in order toensure consumer protection or the smooth operation of the market;(u)

to suspend or require the relevant trading platform for crypto-assets to suspend
the crypto-assets, including asset-referenced tokens or e-money tokens, fromtrading where it considers that the issuer’s situation is such that trading would
be detrimental to consumers’ interests;(v)

in urgent cases, where there is a reason to assume that a person is issuing assetreferenced tokens or e-money tokens without authorisation or a person isissuing crypto-assets without a crypto-asset white paper notified in accordancewith Article 7, to order the immediate cessation of the activity without priorwarning or imposition of a deadline;(w) to require the temporary cessation of any practice that the competent authority
considers contrary to this Regulation;(x)

to carry out on-site inspections or investigations at sites other than the private
residences of natural persons, and for that purpose to enter premises in order toaccess documents and other data in any form, where a reasonable suspicion
exists that documents and other data related to the subject-matter of theinspection or investigation may be relevant to prove an infringement of thisRegulation.

Supervisory and investigative powers exercised in relation to e-money token issuers
are without prejudice to powers granted to relevant competent authorities undernational laws transposing Directive 2009/110/EC.
2.

EN

In order to fulfil their duties under Title VI of this Regulation, competent authorities
shall have, in accordance with national law, at least the following supervisory andinvestigatory powers in addition to powers referred to in paragraph 1:(a)to access any document and data in any form, and to receive or take a copy
thereof;(b)

to require or demand information from any person, including those who are
successively involved in the transmission of orders or conduct of the operations

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concerned, as well as their principals, and if necessary, to summon andquestion any such person with a view to obtain information;

EN

(c)

to enter the premises of natural and legal persons in order to seize documents
and data in any form where a reasonable suspicion exists that documents ordata relating to the subject matter of the inspection or investigation may be
relevant to prove a case of insider dealing or market manipulation infringing
this Regulation;(d)to refer matters for criminal investigation;(e)to require, insofar as permitted by national law, existing data traffic records
held by a telecommunications operator, where there is a reasonable suspicionof an infringement and where such records may be relevant to the investigationof an infringement of Articles 77, 78, 79 and 80;(f)

to request the freezing or sequestration of assets, or both;(g)

to impose a temporary prohibition on the exercise of professional activity;(h)to take all necessary measures to ensure that the public is correctly informed,
inter alia, by correcting false or misleading disclosed information, including byrequiring an issuer of crypto-assets or other person who has published ordisseminated false or misleading information to publish a corrective statement.

3.

Where necessary under national law, the competent authority may ask the relevant
judicial authority to decide on the use of the powers referred to in paragraphs 1 and2.

4.

Competent authorities shall exercise their functions and powers referred to inparagraphs 1 and 2 in any of the following ways:(a)directly;(b)in collaboration with other authorities;(c)under their responsibility by delegation to such authorities;(d)by application to the competent judicial authorities.

5.

Member States shall ensure that appropriate measures are in place so that competentauthorities have all the supervisory and investigatory powers that are necessary to
fulfil their duties.

6.

A person making information available to the competent authority in accordancewith this Regulation shall not be considered to be infringing any restriction on
disclosure of information imposed by contract or by any legislative, regulatory or
administrative provision, and shall not be subject to liability of any kind related tosuch notification.

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Article 83
Cooperation between competent authorities
1.

Competent authorities shall cooperate with each other for the purposes of thisRegulation. They shall exchange information without undue delay and cooperate ininvestigation, supervision and enforcement activities.
Where Member States have chosen, in accordance with Article 92(1), to lay down
criminal penalties for an infringement of this Regulation, they shall ensure thatappropriate measures are in place so that competent authorities have all the necessary
powers to liaise with judicial, prosecuting, or criminal justice authorities within theirjurisdiction to receive specific information related to criminal investigations orproceedings commenced for infringements of this Regulation and to provide thesame information to other competent authorities as well as to the EBA and ESMA, inorder to fulfil their obligation to cooperate for the purposes of this Regulation.

2.

A competent authority may refuse to act on a request for information or a request tocooperate with an investigation only in any of the following exceptional
circumstances:(a)where complying with the request is likely to adversely affect its own
investigation, enforcement activities or a criminal investigation;(b)

where judicial proceedings have already been initiated in respect of the sameactions and against the same natural or legal persons before the authorities ofthe Member State addressed;(c)where a final judgment has already been delivered in relation to such natural or
legal persons for the same actions in the Member State addressed.

3.

Competent authorities shall, on request, without undue delay supply any information
required for the purposes of this Regulation.

4.

A competent authority may request assistance from the competent authority of
another Member State with regard to on-site inspections or investigations.
Where a competent authority receives a request from a competent authority of
another Member State to carry out an on-site inspection or an investigation, it may
take any of the following actions:

EN

(a)

carry out the on-site inspection or investigation itself;(b)allow the competent authority which submitted the request to participate in an
on-site inspection or investigation;(c)allow the competent authority which submitted the request to carry out the onsite inspection or investigation itself;(d)share specific tasks related to supervisory activities with the other competentauthorities.

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5.

The competent authorities may refer to ESMA in situations where a request forcooperation, in particular to exchange information, has been rejected or has not been
acted upon within a reasonable time.
Without prejudice to Article 258 TFEU, ESMA may, in such situations, act inaccordance with the power conferred on it under Article 19 of Regulation (EU) No
1095/2010.

6.

By derogation to paragraph 5, the competent authorities may refer to the EBA in
situations where a request for cooperation, in particular to exchange information,
concerning an issuer of asset-referenced tokens or e-money tokens, or crypto-asset
services related to asset-referenced tokens or e-money tokens, has been rejected or
has not been acted upon within a reasonable time.
Without prejudice to Article 258 TFEU, the EBA may, in such situations, act inaccordance with the power conferred on it under Article 19 of Regulation (EU) No
1093/2010.

7.

Competent authorities shall closely coordinate their supervision in order to identify
and remedy infringements of this Regulation, develop and promote best practices,
facilitate collaboration, foster consistency of interpretation, and provide crossjurisdictional assessments in the event of any disagreements.
For the purpose of the first sub-paragraph, the EBA and ESMA shall fulfil acoordination role between competent authorities and across colleges as referred to in
Articles 99 and 101 with a view of building a common supervisory culture andconsistent supervisory practices, ensuring uniform procedures and consistent
approaches, and strengthening consistency in supervisory outcomes, especially withregard to supervisory areas which have a cross-border dimension or a possible crossborder impact.

8.

Where a competent authority finds that any of the requirements under this Regulation
has not been met or has reason to believe that to be the case, it shall inform thecompetent authority of the entity or entities suspected of such infringement of its
findings in a sufficiently detailed manner.

9.

ESMA, after consultation of the EBA, shall develop draft regulatory technicalstandards to specify the information to be exchanged between competent authorities
in accordance with paragraph 1.
Power is delegated to the Commission to adopt the regulatory technical standards
referred to in the first subparagraph of this paragraph in accordance with Articles 10
to 14 of Regulation (EU) No 1095/2010.
ESMA shall submit those draft regulatory technical standards to the Commission by… [please insert date 12 months after entry into force].

10.

EN

ESMA, after consultation of the EBA, shall develop draft implementing technicalstandards to establish standard forms, templates and procedures for the cooperationand exchange of information between competent authorities.

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Power is conferred on the Commission to adopt the implementing technical standards
referred to in the first subparagraph of this paragraph in accordance with Article 15
of Regulation (EU) No 1095/2010.
ESMA shall submit those draft implementing technical standards to the Commission
by … [please insert date 12 months after the date of entry into force].
Article 84
Cooperation with the EBA and ESMA1.

For the purpose of this Regulation, the competent authorities shall cooperate closelywith ESMA in accordance with Regulation (EU) No 1095/2010 and with the EBA in
accordance with Regulation (EU) No 1093/2010. They shall exchange information inorder to carry out their duties under this Chapter and Chapter 2 of this Title.

2.

A requesting competent authority shall inform the EBA and ESMA of any request
referred to in the Article 83(4).
In the case of an on-site inspection or investigation with cross-border effect, ESMA
shall, where requested to do so by one of the competent authorities, coordinate theinspection or investigation. Where the on-site inspection or investigation with crossborder effects concerns an issuer of asset-referenced tokens or e-money tokens, or
crypto-asset services related to asset-referenced tokens or e-money tokens, the EBA
where requested to do so by one of the competent authorities, coordinate theinspection or investigation.

3.

The competent authorities shall without delay provide the EBA and ESMA with all
information necessary to carry out their duties, in accordance with Article 35 ofRegulation (EU) No 1093/2010 and Article 35 of Regulation (EU) No 1095/2010
respectively.

4.

In order to ensure uniform conditions of application of this Article, ESMA, in close
cooperation with the EBA, shall develop draft implementing technical standards toestablish standard forms, templates and procedures for the cooperation and exchange
of information between competent authorities and with the EBA and ESMA.
ESMA shall submit those draft implementing technical standards to the Commission
by ... [please insert date 12 months after the date of entry into force].
Power is conferred on the Commission to adopt the implementing technical standards
referred to in the first subparagraph of this paragraph in accordance with Article 15
of Regulation (EU) No 1095/2010.
Article 85
Cooperation with other authorities

Where an issuer of crypto-assets, including asset-referenced tokens or e-money tokens, or acrypto-asset service provider engages in activities other than those covered by this Regulation,
the competent authorities shall cooperate with the authorities responsible for the supervision

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or oversight of such other activities as provided for in the relevant Union or national law,
including tax authorities.
Article 86
Notification duties
Member States shall notify the laws, regulations and administrative provisions implementing
this Title, including any relevant criminal law provisions, to the Commission, the EBA and
ESMA by… [please insert date 12 months after the date of entry into force]. Member Statesshall notify the Commission and ESMA without undue delay of any subsequent amendments
thereto.
Article 87
Professional secrecy
1.

All information exchanged between the competent authorities under this Regulationthat concerns business or operational conditions and other economic or personalaffairs shall be considered to be confidential and shall be subject to the requirements
of professional secrecy, except where the competent authority states at the time ofcommunication that such information is permitted to be disclosed or such disclosure
is necessary for legal proceedings.

2.

The obligation of professional secrecy shall apply to all natural or legal persons who
work or who have worked for the competent authorities. Information covered byprofessional secrecy may not be disclosed to any other natural or legal person or
authority except by virtue of provisions laid down by Union or national law.
Article 88
Data protection

With regard to the processing of personal data within the scope of this Regulation, competentauthorities shall carry out their tasks for the purposes of this Regulation in accordance with
Regulation (EU) 2016/67968.
With regard to the processing of personal data by the EBA and ESMA within the scope of thisRegulation, it shall comply with Regulation (EU) 2018/172569.
Article 89
Precautionary measures
1.

Where the competent authority of a host Member State has clear and demonstrable
grounds for believing that irregularities have been committed by a crypto-asset

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Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on theprotection of natural persons with regard to the processing of personal data and on the free movement ofsuch data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ L 119, 4.5.2016,p. 1)
Regulation (EU) 2018/1725 of the European Parliament and of the Council of 23 October 2018 on theprotection of natural persons with regard to the processing of personal data by the Union institutions,bodies, offices and agencies and on the free movement of such data, and repealing Regulation (EC) No
45/2001 and Decision No 1247/2002/EC (Text with EEA relevance) OJ L 295, 21.11.2018, p. 39–98

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service provider or by an issuer of crypto-assets, including asset-referenced tokens or
e-money tokens, it shall notify the competent authority of the home Member Stateand ESMA thereof.
Where the irregularities concerns an issuer of asset-referenced tokens or e-money
tokens, or a crypto-asset service related to asset-referenced tokens or e-money
tokens, the competent authorities of the host Member States shall also notify the
EBA.
2.

Where, despite the measures taken by the competent authority of the home Member
State, the crypto-asset service provider or the issuer of crypto-assets persists in
infringing this Regulation, the competent authority of the host Member State, after
informing the competent authority of the home Member State, ESMA and whereappropriate the EBA, shall take all appropriate measures in order to protect
consumers and shall inform the Commission, ESMA and where appropriate the
EBA, thereof without undue delay.

3.

Where a competent authority disagrees with any of the measures taken by anothercompetent authority pursuant to paragraph 2 of this Article, it may bring the matter tothe attention of ESMA. ESMA may act in accordance with the powers conferred on
it under Article 19 of Regulation (EU) No 1095/2010.
By derogation to the first subparagraph, where the measures concerns an issuer ofasset-referenced tokens or e-money tokens, or a crypto-asset service related to assetreferenced tokens or e-money tokens, the competent authority may bring the matterto the attention of the EBA. The EBA may act in accordance with the powers
conferred on it under Article 19 of Regulation (EU) No 1093/2010.
Article 90
Cooperation with third countries

1.

The competent authorities of Member States shall, where necessary, conclude
cooperation arrangements with supervisory authorities of third countries concerning
the exchange of information with supervisory authorities in third countries and theenforcement of obligations arising under this Regulation in third countries. Those
cooperation arrangements shall ensure at least an efficient exchange of informationthat allows the competent authorities to carry out their duties under this Regulation.
A competent authority shall inform the EBA, ESMA and the other competentauthorities where it proposes to enter into such an arrangement.

2.

ESMA, in close cooperation with the EBA, shall, where possible, facilitate andcoordinate the development of cooperation arrangements between the competentauthorities and the relevant supervisory authorities of third countries.
ESMA, in close cooperation with the EBA, shall develop draft regulatory technicalstandards containing a template document for cooperation arrangements that are to
be used by competent authorities of Member States where possible.
ESMA shall submit those draft regulatory technical standards to the Commission by[please insert date 12 months after entry into force].

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Power is delegated to the Commission to adopt the regulatory technical standards
referred to in the second subparagraph in accordance with Articles 10 to 14 ofRegulation (EU) No 1095/2010.
3.

ESMA, in close cooperation with EBA, shall also, where possible, facilitate andcoordinate the exchange between competent authorities of information obtained fromsupervisory authorities of third countries that may be relevant to the taking of
measures under Chapter 2.

4.

The competent authorities shall conclude cooperation arrangements on exchange of
information with the supervisory authorities of third countries only where theinformation disclosed is subject to guarantees of professional secrecy which are atleast equivalent to those set out in Article 87. Such exchange of information shall be
intended for the performance of the tasks of those competent authorities.
Article 91
Complaint handling by competent authorities

1.

Competent authorities shall set up procedures which allow clients and otherinterested parties, including consumer associations, to submit complaints to thecompetent authorities with regard to issuer of crypto-assets, including assetreferenced tokens or e-money tokens, and crypto-asset service providers’ alleged
infringements of this Regulation. In all cases, complaints should be accepted in
written or electronic form and in an official language of the Member State in which
the complaint is submitted or in a language accepted by the competent authorities ofthat Member State.

2.

Information on the complaints procedures referred to in paragraph 1 shall be madeavailable on the website of each competent authority and communicated to the EBA
and ESMA. ESMA shall publish the references to the complaints procedures related
sections of the websites of the competent authorities in its crypto-asset registerreferred to in Article 57.

Chapter 2: administrative measures and sanctions by competentauthorities
Article 92
Administrative sanctions and other administrative measures
1.

EN

Without prejudice to any criminal sanctions and without prejudice to the supervisory
powers of competent authorities under Article 82, Member States shall, in
accordance with national law, provide for competent authorities to have the power totake appropriate administrative sanctions and other administrative measures inrelation to at least the following infringements:(a)infringements of Articles 4 to 14;(b)infringements of Articles 17 and 21, Articles 23 to 36 and Article 42;

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(c)

infringements of Articles 43 to 49, except Article 47;(d)infringements of Article 56 and Articles 58 to 73;(e)infringements of Articles 76 to 80;(f)failure to cooperate or to comply with an investigation, with an inspection orwith a request as referred to in Article 82(2).

Member States may decide not to lay down rules for administrative sanctions as
referred to in the first subparagraph where the infringements referred to in points (a),(b), (c), (d) or (e) of that subparagraph are already subject to criminal sanctions intheir national law by [please insert date 12 months after entry into force]. Where
they so decide, Member States shall notify, in detail, to the Commission, ESMA andto EBA, the relevant parts of their criminal law.
By [please insert date 12 months after entry into force], Member States shall notify,
in detail, the rules referred to in the first and second subparagraph to theCommission, the EBA and ESMA. They shall notify the Commission, ESMA and
EBA without delay of any subsequent amendment thereto.
2.

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EN

Member States shall, in accordance with national law, ensure that competentauthorities have the power to impose at least the following administrative sanctions
and other administrative measures in relation to the infringements listed in point (a)of paragraph 1:(a)a public statement indicating the natural person or the legal entity responsible
and the nature of the infringement in accordance with Article 82;(b)an order requiring the natural person or legal entity responsible to cease theconduct constituting the infringement;(c)maximum administrative pecuniary sanctions of at least twice the amount of
the profits gained or losses avoided because of the infringement where thosecan be determined;(d)in the case of a legal person, maximum administrative pecuniary sanctions of atleast EUR 5 000 000, or, in the Member States whose currency is not the euro,
the corresponding value in the national currency on [please insert date of entry
into force of this Regulation], or 3 % of the total annual turnover of that legal
person according to the last available financial statements approved by the
management body. Where the legal person is a parent undertaking or asubsidiary of a parent undertaking which is required to prepare consolidated
financial accounts in accordance with Directive 2013/34/EU70, the relevant
total annual turnover shall be the total annual turnover or the corresponding
type of income in accordance with the relevant Union law in the area of
accounting according to the last available consolidated accounts approved by
the management body of the ultimate parent undertaking.

Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual
financial statements, consolidated financial statements and related reports of certain types ofundertakings, amending Directive 2006/43/EC of the European Parliament and of the Council andrepealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19).

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(e)

3.

4.

5.

Member States shall, in accordance with national law, ensure that competentauthorities have the power to impose at least the following administrative sanctions
and other administrative measures in relation to the infringements listed in point (b)of paragraph 1:(a)a public statement indicating the natural person or the legal entity responsible
and the nature of the infringement;(b)an order requiring the natural person or legal entity responsible to cease theconduct constituting the infringement;(c)maximum administrative pecuniary sanctions of at least twice the amount of
the profits gained or losses avoided because of the infringement where thosecan be determined;(d)in the case of a legal person, maximum administrative pecuniary sanctions of atleast 15% of the total annual turnover of that legal person according to the lastavailable financial statements approved by the management body.

Member States shall, in accordance with national law, ensure that competentauthorities have the power to impose at least the following administrative sanctions
and other administrative measures in relation to the infringements listed in point (c)of paragraph 1:(a)a public statement indicating the natural person or the legal entity responsible
and the nature of the infringement;(b)an order requiring the natural person or legal entity responsible to cease theconduct constituting the infringement;(c)maximum administrative pecuniary sanctions of at least twice the amount of
the profits gained or losses avoided because of the infringement where thosecan be determined;(d)in the case of a legal person, maximum administrative pecuniary sanctions of atleast 15% of the total annual turnover of that legal person according to the lastavailable financial statements approved by the management body.

Member States shall, in accordance with their national law, ensure that competentauthorities have the power to impose at least the following administrative penalties
and other administrative measures in relation to the infringements listed in point (d)of the first subparagraph of paragraph 1:(a)EN

in the case of a natural person, maximum administrative pecuniary sanctions ofat least EUR 700 000, or, in the Member States whose currency is not the euro,
the corresponding value in the national currency on [please insert date of entry
into force of this Regulation].

a public statement indicating the natural or legal person responsible for, and thenature of, the infringement;

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6.

EN

(b)

an order requiring the natural or legal person to cease the infringing conduct
and to desist from a repetition of that conduct;(c)a ban preventing any member of the management body of the legal person
responsible for the infringement, or any other natural person held responsible
for the infringement, from exercising management functions in such
undertakings;(d)maximum administrative fines of at least twice the amount of the benefit
derived from the infringement where that benefit can be determined, even if it
exceeds the maximum amounts set out in point (e);(e)

in the case of a legal person, maximum administrative fines of at least EUR
500 000, or, in the Member States whose currency is not the euro, thecorresponding value in the national currency on ... [please insert date of entry
into force of this Regulation] or of up to 5% of the total annual turnover of thatlegal person according to the last available financial statements approved by
the management body. Where the legal person is a parent undertaking or asubsidiary of a parent undertaking which is required to prepare consolidated
financial statements in accordance with Directive 2013/34/EU of the European
Parliament and of the Council, the relevant total annual turnover shall be thetotal annual turnover or the corresponding type of income in accordance withthe relevant Union law in the area of accounting according to the last available
consolidated accounts approved by the management body of the ultimate
parent undertaking;(f)in the case of a natural person, maximum administrative fines of at least EUR
500 000, or, in the Member States whose currency is not the euro, thecorresponding value in the national currency on ... [please insert date of entry
into force of this Regulation].

Member States shall, in accordance with national law, ensure that competentauthorities have the power to impose at least the following administrative sanctions
and to take at least the following administrative measures in the event of theinfringements referred to in point (e) of the first subparagraph of paragraph 1:(a)an order requiring the person responsible for the infringement to cease theconduct and to desist from a repetition of that conduct;(b)

the disgorgement of the profits gained or losses avoided due to theinfringement insofar as they can be determined;(c)a public warning which indicates the person responsible for the infringement
and the nature of the infringement;(d)withdrawal or suspension of the authorisation of a crypto-asset service
provider;(e)a temporary ban of any member of the management body of the crypto-asset
service provider or any other natural person, who is held responsible for the
infringement, from exercising management functions in the crypto-asset
service provider;

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7.

(f)

in the event of repeated infringements of Articles 78, 79 or 80, a permanent banof any member of the management body of a crypto-asset service provider or
any other natural person who is held responsible for the infringement, fromexercising management functions in the crypto-asset service provider;(g)a temporary ban of any member of the management body of a crypto-asset
service provider or any other natural person who is held responsible for the
infringement, from dealing on own account;(h)maximum administrative pecuniary sanctions of at least 3 times the amount of
the profits gained or losses avoided because of the infringement, where thosecan be determined;(i)in respect of a natural person, maximum administrative pecuniary sanctions ofat least EUR 5 000 000 or in the Member States whose currency is not theeuro, the corresponding value in the national currency on [please insert date ofentry into force of this Regulation];(j)in respect of legal persons, maximum administrative pecuniary sanctions of atleast EUR 15 000 000 or 15 % of the total annual turnover of the legal person
according to the last available accounts approved by the management body, orin the Member States whose currency is not the euro, the corresponding value
in the national currency on [please insert date of entry into force of thisRegulation]. Where the legal person is a parent undertaking or a subsidiary of aparent undertaking which is required to prepare consolidated financial
statements in accordance with Directive 2013/34/EU of the European
Parliament and of the Council, the relevant total annual turnover shall be thetotal annual turnover or the corresponding type of income in accordance withthe relevant Union law in the area of accounting according to the last available
consolidated accounts approved by the management body of the ultimate
parent undertaking.

Member States may provide that competent authorities have powers in addition to
those referred to in paragraphs 2 to 6 and may provide for higher levels of sanctions
than those established in those paragraphs, in respect of both natural and legal
persons responsible for the infringement.
Article 93
Exercise of supervisory powers and powers to impose penalties

1.

EN

Competent authorities, when determining the type and level of an administrative
penalty or other administrative measures to be imposed in accordance with Article
92, shall take into account the extent to which the infringement is intentional or
results from negligence and all other relevant circumstances, including, whereappropriate:(a)the gravity and the duration of the infringement;(b)the degree of responsibility of the natural or legal person responsible for the
infringement;

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2.

(c)

the financial strength of the natural or legal person responsible for the
infringement, as indicated by the total turnover of the responsible legal personor the annual income and net assets of the responsible natural person;(d)the importance of profits gained or losses avoided by the natural or legal
person responsible for the infringement, insofar as those can be determined;(e)the losses for third parties caused by the infringement, insofar as those can be
determined;(f)the level of cooperation of the natural or legal person responsible for the
infringement with the competent authority, without prejudice to the need toensure disgorgement of profits gained or losses avoided by that person;(g)

previous infringements by the natural or legal person responsible for the
infringement;(h)measures taken by the person responsible for the infringement to prevent its
repetition;(i)

the impact of the infringement on consumers or investors’ interests.

In the exercise of their powers to impose administrative penalties and otheradministrative measures under Article 92, competent authorities shall cooperate
closely to ensure that the exercise of their supervisory and investigative powers, andthe administrative penalties and other administrative measures that they impose, areeffective and appropriate under this Regulation. They shall coordinate their action inorder to avoid duplication and overlaps when exercising their supervisory andinvestigative powers and when imposing administrative penalties and otheradministrative measures in cross-border cases.
Article 94
Right of appeal

Member States shall ensure that any decision taken under this Regulation is properly reasoned
and is subject to the right of appeal before a tribunal. The right of appeal before a tribunal
shall also apply where, in respect of an application for authorisation as a crypto-asset service
provider which provides all the information required, no decision is taken within six monthsof its submission.
Article 95
Publication of decisions
1.

EN

A decision imposing administrative penalties and other administrative measures forinfringement of this Regulation shall be published by competent authorities on theirofficial websites immediately after the natural or legal person subject to that decision
has been informed of that decision. The publication shall include at least informationon the type and nature of the infringement and the identity of the natural or legal
persons responsible. That obligation does not apply to decisions imposing measuresthat are of an investigatory nature.

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2.

Where the publication of the identity of the legal entities, or identity or personal dataof natural persons, is considered by the competent authority to be disproportionate
following a case-by-case assessment conducted on the proportionality of the
publication of such data, or where such publication would jeopardise an ongoinginvestigation, competent authorities shall take one of the following actions:(a)defer the publication of the decision to impose a penalty or a measure until the
moment where the reasons for non-publication cease to exist;(b)

publish the decision to impose a penalty or a measure on an anonymous basis
in a manner which is in conformity with national law, where such anonymous
publication ensures an effective protection of the personal data concerned;(c)

not publish the decision to impose a penalty or measure in the event that theoptions laid down in points (a) and (b) are considered to be insufficient toensure:i)that the stability of financial markets is not jeopardised;ii)

the proportionality of the publication of such a decision with regard tomeasures which are deemed to be of a minor nature.

In the case of a decision to publish a penalty or measure on an anonymous basis, as
referred to in point (b) of the first subparagraph, the publication of the relevant data
may be deferred for a reasonable period where it is foreseen that within that period
the reasons for anonymous publication shall cease to exist.
3.

Where the decision to impose a penalty or measure is subject to appeal before therelevant judicial or other authorities, competent authorities shall publish,
immediately, on their official website such information and any subsequent
information on the outcome of such appeal. Moreover, any decision annulling aprevious decision to impose a penalty or a measure shall also be published.

4.

Competent authorities shall ensure that any publication in accordance with this
Article remains on their official website for a period of at least five years after its
publication. Personal data contained in the publication shall be kept on the official
website of the competent authority only for the period which is necessary inaccordance with the applicable data protection rules.
Article 96
Reporting of penalties and administrative measures to ESMA and EBA

1.

The competent authority shall, on an annual basis, provide ESMA and EBA withaggregate information regarding all administrative penalties and other administrative
measures imposed in accordance with Article 92. ESMA shall publish that
information in an annual report.
Where Member States have chosen, in accordance with Article 92(1), to lay down
criminal penalties for the infringements of the provisions referred to in thatparagraph, their competent authorities shall provide the EBA and ESMA annuallywith anonymised and aggregated data regarding all criminal investigations

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undertaken and criminal penalties imposed. ESMA shall publish data on criminal
penalties imposed in an annual report.
2.

Where the competent authority has disclosed administrative penalties, otheradministrative measures or criminal penalties to the public, it shall simultaneously
report them to ESMA.

3.

Competent authorities shall inform the EBA and ESMA of all administrative
penalties or other administrative measures imposed but not published, including any
appeal in relation thereto and the outcome thereof. Member States shall ensure thatcompetent authorities receive information and the final judgment in relation to any
criminal penalty imposed and submit it to the EBA and ESMA. ESMA shallmaintain a central database of penalties and administrative measures communicatedto it solely for the purposes of exchanging information between competentauthorities. That database shall be only accessible to the EBA and ESMA, and thecompetent authorities and it shall be updated on the basis of the information provided
by the competent authorities.

Article 97
Reporting of breaches and protection of reporting persons
Directive (EU) 2019/193771 shall apply to the reporting of breaches of this Regulation and theprotection of persons reporting such breaches.

Chapter 3: Supervisory responsibilities of EBA on issuers ofsignificant asset-referenced tokens and significant e-money tokens
and colleges of supervisors
Article 98
Supervisory responsibilities of EBA on issuers of significant asset-referenced tokens andissuers of significant e-money tokens
1.

Where an asset-referenced token has been classified as significant in accordance with
Article 39 or Article 40, the issuer of such asset-referenced tokens shall carry out
their activities under the supervision of the EBA.
The EBA shall exercise the powers of competent authorities conferred by Articles
21, 37 and 38 as regards issuers of significant asset-referenced tokens.

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Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on theprotection of persons who report breaches of Union law OJ L 305, 26.11.2019, p. 17.

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2.

Where an issuer of significant asset-referenced tokens provide crypto-asset services
or issue crypto-assets that are not significant asset-referenced tokens, such services
and activities shall remain supervised by the competent authority of the home
Member State.

3.

Where an asset-referenced token has been classified as significant in accordance with
Article 39, the EBA shall conduct a supervisory reassessment to ensure that issuersof significant asset-referenced tokens comply with the requirements under Title III.

4.

Where an e-money token has been classified as significant in accordance with
Articles 50 or 51, the EBA shall be responsible of the compliance of the issuer ofsuch asset-significant e-money tokens with the requirements laid down in Article 52.
Article 99
Colleges for issuers of significant asset-referenced tokens

EN

1.

Within 30 calendar days of a decision to classify an asset-referenced token as
significant, the EBA shall establish, manage and chair a consultative supervisory
college for each issuer of significant asset-referenced tokens to facilitate the exercise
of its supervisory tasks under this Regulation.

2.

The college shall consist of:(a)the EBA, as the chair of the college;

(b)

ESMA;

(c)

the competent authority of the home Member State where the issuer ofsignificant asset-referenced tokens is established;(d)the competent authorities of the most relevant credit institutions or cryptoasset service providers ensuring the custody of the reserve assets in accordancewith Article 33;(e)where applicable, the competent authorities of the most relevant trading
platforms for crypto-assets where the significant asset-referenced tokens areadmitted to trading;(f)where applicable, the competent authorities of the most relevant crypto-asset
service providers in charge of ensuring the liquidity of the significant assetreferenced tokens in accordance with the first paragraph of Article 35(4);(g)

where applicable, the competent authorities of the entities ensuring thefunctions as referred to in Article 30(5), point (h);(h)

where applicable, the competent authorities of the most relevant crypto-asset
service providers providing the crypto-asset service referred to in Article 3(1)point (10) in relation with the significant asset-referenced tokens;(i)the ECB;

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(j)

where the issuer of significant asset-referenced tokens is established in a
Member State the currency of which is not euro, or where a currency that is not
euro is included in the reserve assets, the national central bank of that Member
State;(k)relevant supervisory authorities of third countries with which the EBA has
concluded an administrative agreement in accordance with Article 108.

3.

The competent authority of a Member State which is not a member of the college
may request from the college any information relevant for the performance of its
supervisory duties.

4.

The college shall, without prejudice to the responsibilities of competent authorities
under this Regulation, ensure:(a)the preparation of the non-binding opinion referred to in Article 100;(b)

the exchange of information in accordance with Article 107;(c)agreement on the voluntary entrustment of tasks among its members, including
delegation of tasks under Article 120;(d)the coordination of supervisory examination programmes based on the risk
assessment carried out by the issuer of significant asset-referenced tokens inaccordance with Article 30(9).

In order to facilitate the performance of the tasks assigned to colleges pursuant to thefirst subparagraph, members of the college referred to in paragraph 2 shall be entitled
to contribute to the setting of the agenda of the college meetings, in particular byadding points to the agenda of a meeting.
5.

The establishment and functioning of the college shall be based on a writtenagreement between all its members.
The agreement shall determine the practical arrangements for the functioning of thecollege, including detailed rules on:

EN

(a)

voting procedures as referred in Article 100(4);(b)

the procedures for setting the agenda of college meetings;(c)the frequency of the college meetings;(d)the format and scope of the information to be provided by the EBA to thecollege members, especially with regard to the information to the risk
assessment as referred to in Article 30(9);(e)

the appropriate minimum timeframes for the assessment of the relevant
documentation by the college members;(f)

the modalities of communication between college members.

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The agreement may also determine tasks to be entrusted to the EBA or anothermember of the college.
6.

In order to ensure the consistent and coherent functioning of colleges, the EBA shall,in cooperation with ESMA and the European System of Central Banks, develop draft
regulatory standards specifying the conditions under which the entities referred to inpoints (d) to (h) of paragraph 2 are to be considered as the most relevant and thedetails of the practical arrangements referred to in paragraph 5.
The EBA shall submit those draft regulatory standards to the Commission by [please
insert date 12 months after the entry into force].
Power is delegated to the Commission to adopt the regulatory technical standards
referred to in the first subparagraph in accordance with Article 10 to 14 ofRegulation (EU) No 1093/2010.
Article 100
Non-binding opinions of the colleges for issuers of significant asset-referenced tokens

1.

2.

EN

The college for issuers of significant asset-referenced tokens may issue a nonbinding opinion on the following:(a)the supervisory reassessment as referred to in Article 98(3);(b)

any decision to require an issuer of significant asset-referenced tokens to hold ahigher amount of own funds or to permit such an issuer to hold a lower amountof own funds in accordance with Article 41(4);(c)

any update of the orderly wind-down plan of an issuer of significant assetreferenced tokens pursuant to Article 42;(d)any change to the issuer of significant asset-referenced tokens’ business modelpursuant to Article 21(1);(e)

a draft amended crypto-asset white paper in accordance with Article 21(2);(f)

any measures envisaged in accordance with Article 21(3);(g)

any envisaged supervisory measures pursuant to Article 112;(h)any envisaged agreement of exchange of information with a third-country
supervisory authority with Article 108;(i)

any delegation of supervisory tasks from the EBA to a competent authority
pursuant to Article 120;(j)

any envisaged change in the authorisation of, or any envisaged supervisory
measure on, the entities and crypto-asset service providers referred to in Article
99(2), points (d) to (h).

Where the college issues an opinion accordance with paragraph 1, at the request of
any member of the college and upon adoption by a majority of the college in

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accordance with paragraph 4, the opinion may include any recommendations aimed
at addressing shortcomings of the envisaged action or measure envisaged by the
EBA or the competent authorities.
3.

The EBA shall facilitate the adoption of the opinion in accordance with its generalcoordination function under Article 31 of Regulation (EU) No 1093/2010.

4.

A majority opinion of the college shall be based on the basis of a simple majority ofits members.
For colleges up to and including 12 members, a maximum of two college members
belonging to the same Member State shall have a vote and each voting member, shallhave one vote. For colleges with more than 12 members, a maximum of threemembers belonging to the same Member State shall have a vote and each voting
member shall have one vote.
Where the ECB is a member of the college pursuant to Article 99(2), point (i), it
shall have two votes.
Supervisory authorities of third countries referred to in Article 99(2), point (k), shallhave no voting right on the opinion of the college.

5.

The EBA and competent authorities shall duly consider the opinion of the college
reached in accordance with paragraph 1, including any recommendations aimed ataddressing shortcomings of the envisaged action or supervisory measure envisaged
on an issuer of significant asset-referenced tokens or on the entities and crypto-asset
service providers referred to in points (d) to (h) of Article 99(2). Where the EBA or acompetent authority does not agree with an opinion of the college, including any
recommendations aimed at addressing shortcomings of the envisaged action or
supervisory measure envisaged, its decision shall contain full reasons and an
explanation of any significant deviation from that opinion or recommendations.
Article 101
College for issuers of significant electronic money tokens

EN

1.

Within 30 calendar days of a decision to classify an e-money token as significant, the
EBA shall establish, manage and chair a consultative supervisory college for eachissuer of significant e-money tokens to facilitate the exercise of supervisory tasks
under this Regulation.

2.

The college shall consist of:(a)the EBA, as the Chair;(b)the competent authority of the home Member State where the issuer of emoney token has been authorised either as a credit institution or as anelectronic money institution;

(c)

ESMA;

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(d)

the competent authorities of the most relevant credit institutions ensuring thecustody of the funds received in exchange of the significant e-money tokens;(e)the competent authorities of the most relevant payment institutions authorisedin accordance with Article 11 of Directive (EU) 2015/2366 and providing
payment services in relation to the significant e-money tokens;(f)where applicable, the competent authorities of the most relevant trading
platforms for crypto-assets where the significant e-money tokens are admitted
to trading;(g)where applicable, the competent authorities of the most relevant crypto-asset
service providers providing the crypto-asset service referred to in Article 3(1)point (10) in relation to significant e-money tokens;(h)where the issuer of significant e-money tokens is established in a Member Statethe currency of which is euro, or where the significant e-money token isreferencing euro, the ECB;(i)where the issuer of significant e-money tokens is established in a Member Statethe currency of which is not euro, or where the significant e-money token isreferencing a currency which is not the euro, the national central bank of that
Member State;(j)relevant supervisory authorities of third countries with which the EBA has
concluded an administrative agreement in accordance with Article 108.

3.

The competent authority of a Member State which is not a member of the college
may request from the college any information relevant for the performance of its
supervisory duties.

4.

The college shall, without prejudice to the responsibilities of competent authorities
under this Regulation, ensure:(a)the preparation of the non-binding opinion referred to in Article 102;(b)

the exchange of information in accordance with this Regulation;(c)agreement on the voluntary entrustment of tasks among its members, including
delegation of tasks under Article 120.

In order to facilitate the performance of the tasks assigned to colleges pursuant to thefirst subparagraph, members of the college referred to in paragraph 2 shall be entitled
to contribute to the setting of the agenda of the college meetings, in particular byadding points to the agenda of a meeting.
5.

The establishment and functioning of the college shall be based on a writtenagreement between all its members.
The agreement shall determine the practical arrangements for the functioning of thecollege, including detailed rules on:

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(a)

voting procedures as referred to in Article 102;(b)

the procedures for setting the agenda of college meetings;(c)the frequency of the college meetings;(d)the format and scope of the information to be provided by the competentauthority of the issuer of significant e-money tokens to the college members;(e)the appropriate minimum timeframes for the assessment of the relevant
documentation by the college members;(f)

the modalities of communication between college members.

The agreement may also determine tasks to be entrusted to the competent authorityof the issuer of significant e-money tokens or another member of the college.
6.

In order to ensure the consistent and coherent functioning of colleges, the EBA shall,in cooperation with ESMA and the European System of Central Banks, develop draft
regulatory standards specifying the conditions under which the entities referred to inpoints (d) to (g) of paragraph 2 are to be considered as the most relevant and thedetails of the practical arrangements referred to in paragraph 5.
The EBA shall submit those draft regulatory standards to the Commission by [please
insert date 12 months after the entry into force].
Power is delegated to the Commission to adopt the regulatory technical standards
referred to in the first subparagraph in accordance with Article 10 to 14 ofRegulation (EU) No 1093/2010.
Article 102
Non-binding opinions of the college for issuers of significant electronic money tokens

1.

EN

The college for issuers of significant e-money tokens may issue a non-binding
opinion on the following:(a)any decision to require an issuer of significant e-money tokens to hold a higher
amount of own funds or to permit such an issuer to hold a lower amount ofown funds in accordance with Articles 31 and 41(4);(b)

any update of the orderly wind-down plan of an issuer of significant e-money
tokens pursuant to Article 42;(c)a draft amended crypto-asset white paper in accordance with Article 46(10);(d)

any envisaged withdrawal of authorisation for an issuer of significant e-money
tokens as a credit institution or pursuant to Directive 2009/110/EC;(e)

any envisaged supervisory measures pursuant to Article 112;(f)

any envisaged agreement of exchange of information with a third-country
supervisory authority;

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(g)

any delegation of supervisory tasks from the competent authority of the issuerof significant e-money tokens to the EBA or another competent authority, orfrom the EBA to the competent authority in accordance with Article 120;(h)any envisaged change in the authorisation of, or any envisaged supervisory
measure on, the entities and crypto-asset service providers referred to in points(d) to (g) of Article 101(2).

2.

Where the college issues an opinion in accordance with paragraph 1, at the request of
any member of the college and upon adoption by a majority of the college inaccordance with paragraph 4, the opinion may include any recommendations aimed
at addressing shortcomings of the envisaged action or measure envisaged by thecompetent authorities or by the EBA.

3.

The EBA shall facilitate the adoption of the opinion in accordance with its generalcoordination function under Article 31 of Regulation (EU) No 1093/2010.

4.

A majority opinion of the college shall be based on the basis of a simple majority ofits members.
For colleges up to and including 12 members, a maximum of two college members
belonging to the same Member State shall have a vote and each voting member, shallhave one vote. For colleges with more than 12 members, a maximum of threemembers belonging to the same Member State shall have a vote and each voting
member shall have one vote.
Where the ECB is a member of the college pursuant to point (h) of Article 101(2), it
shall have 2 votes.
Supervisory authorities of third countries referred to in Article 101(2) point (j) shallhave no voting right on the opinion of the college.

5.

EN

The competent authority of the issuer of significant e-money tokens, EBA or any
competent authority for the entities and crypto-asset service providers referred to inpoints (d) to (g) of Article 101(2) shall duly consider the opinion of the college
reached in accordance with paragraph 1, including any recommendations aimed ataddressing shortcomings of any envisaged action or supervisory measure. Where the
EBA or a competent authority do not agree with an opinion of the college, including
any recommendations aimed at addressing shortcomings of the envisaged action or
supervisory measure, its decision shall contain full reasons and an explanation of any
significant deviation from that opinion or recommendations.

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Chapter 4: the EBA’s powers and competences on issuers ofsignificant asset-referenced tokens and issuers of significant emoney tokens
Article 103
Exercise of powers referred to in Articles 104 to 107
The powers conferred on the EBA by Articles 104 to 107, or on any official or other person
authorised by the EBA, shall not be used to require the disclosure of information which is
subject to legal privilege.
Article 104
Request for information
1.

EN

In order to carry out its duties under Article 98, the EBA may by simple request or
by decision require the following persons to provide all information necessary toenable the EBA to carry out its duties under this Regulation:(a)an issuer of significant asset-referenced tokens or a person controlling or being
directly or indirectly controlled by an issuer of significant asset-referenced
tokens;(b)

any third parties as referred to in Article 30(5), point (h) with which the issuersof significant asset-referenced tokens has a contractual arrangement;(c)

any crypto-assets service provider as referred to in Article 35(4) which provide
liquidity for significant asset-referenced tokens;(d)credit institutions or crypto-asset service providers ensuring the custody of thereserve assets in accordance with Article 33;(e)an issuer of significant e-money tokens or a person controlling or being directly
or indirectly controlled by an issuer of significant e-money tokens;(f)any payment institutions authorised in accordance with Article 11 of Directive(EU) 2015/2366 and providing payment services in relation to significant emoney tokens;(g)

any natural or legal persons in charge of distributing significant e-money
tokens on behalf of the issuer of significant e-money tokens;(h)any crypto-asset service provider providing the crypto-asset service referred toin Article 3(1) point (10) in relation with significant asset-referenced tokens or
significant e-money tokens;(i)any trading platform for crypto-assets that has admitted a significant assetreferenced token or a significant e-money token to trading;(j)the management body of the persons referred to in points (a) to (i).

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2.

3.

Any simple request for information as referred to in paragraph 1 shall:(a)refer to this Article as the legal basis of that request;(b)

state the purpose of the request;(c)specify the information required;(d)include a time limit within which the information is to be provided;(e)indicate the amount of the fine to be issued in accordance with Article 113
where the information provided is incorrect or misleading.

When requiring to supply information under paragraph 1 by decision, the EBA shall:(a)refer to this Article as the legal basis of that request;(b)

state the purpose of the request;(c)specify the information required;(d)

set a time limit within which the information is to be provided;(e)indicate the periodic penalty payments provided for in Article 114 where theproduction of information is required.

(f)indicate the fine provided for in Article 113, where the answers to questions
asked are incorrect or misleading;(g)

indicate the right to appeal the decision before the EBA’s Board of Appeal andto have the decision reviewed by the Court of Justice of the European Union(‘Court of Justice’) in accordance with Articles 60 and 61 of Regulation (EU)No 1093/2010.

4.

The persons referred to in paragraph 1 or their representatives and, in the case oflegal persons or associations having no legal personality, the persons authorised torepresent them by law or by their constitution shall supply the information requested.
Lawyers duly authorised to act may supply the information on behalf of their clients.
The latter shall remain fully responsible if the information supplied is incomplete,
incorrect or misleading.

5.

The EBA shall without delay send a copy of the simple request or of its decision to
the competent authority of the Member State where the persons referred to inparagraph 1 concerned by the request for information are domiciled or established.
Article 105
General investigative powers

1.

EN

In order to carry out its duties under Article 98 of this Regulation, EBA may conduct
investigations on issuers of significant asset-referenced tokens and issuers ofsignificant e-money tokens. To that end, the officials and other persons authorised by
the EBA shall be empowered to:

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(a)

examine any records, data, procedures and any other material relevant to the
execution of its tasks irrespective of the medium on which they are stored;(b)take or obtain certified copies of or extracts from such records, data,procedures and other material;(c)summon and ask any issuer of significant asset-referenced tokens or issuer ofsignificant of e-money tokens, or their management body or staff for oral or
written explanations on facts or documents relating to the subject matter andpurpose of the inspection and to record the answers;(d)interview any other natural or legal person who consents to be interviewed forthe purpose of collecting information relating to the subject matter of aninvestigation;(e)request records of telephone and data traffic.

The college for issuers of significant asset-referenced tokens as referred to in Article
99 or the college for issuers of significant e-money tokens as referred to in Article
101 shall be informed without undue delay of any findings that may be relevant for
the execution of its tasks.

EN

2.

The officials and other persons authorised by the EBA for the purposes of theinvestigations referred to in paragraph 1 shall exercise their powers upon productionof a written authorisation specifying the subject matter and purpose of theinvestigation. That authorisation shall also indicate the periodic penalty payments
provided for in Article 114 where the production of the required records, data,procedures or any other material, or the answers to questions asked to issuers ofsignificant asset-referenced tokens or issuers of significant e-money tokens are notprovided or are incomplete, and the fines provided for in Article 113, where theanswers to questions asked to issuers of significant asset-referenced tokens or issuersof significant e-money tokens are incorrect or misleading.

3.

The issuers of significant asset-referenced tokens and issuers of significant e-money
tokens are required to submit to investigations launched on the basis of a decision of
the EBA. The decision shall specify the subject matter and purpose of theinvestigation, the periodic penalty payments provided for in Article 114, the legal
remedies available under Regulation (EU) No 1093/2010 and the right to have thedecision reviewed by the Court of Justice.

4.

In due time before an investigation referred to in paragraph 1, the EBA shall informthe competent authority of the Member State where the investigation is to be carriedout of the investigation and of the identity of the authorised persons. Officials of thecompetent authority concerned shall, upon the request of the EBA, assist thoseauthorised persons in carrying out their duties. Officials of the competent authority
concerned may also attend the investigations upon request.

5.

If a request for records of telephone or data traffic referred to in point (e) of
paragraph 1 requires authorisation from a judicial authority according to applicablenational law, such authorisation shall be applied for. Such authorisation may also be
applied for as a precautionary measure.

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6.

7.

Where a national judicial authority receives an application for the authorisation of arequest for records of telephone or data traffic referred to in point (e) of paragraph 1,
that authority shall verify the following:(a)the decision adopted by the EBA referred to in paragraph 3 is authentic;(b)

any measures to be taken are proportionate and not arbitrary or excessive.

For the purposes of point (b) paragraph 6, the national judicial authority may ask the
EBA for detailed explanations, in particular relating to the grounds the EBA has for
suspecting that an infringement of this Regulation has taken place and theseriousness of the suspected infringement and the nature of the involvement of theperson subject to the coercive measures. However, the national judicial authority
shall not review the necessity for the investigation or demand that it be provided with
the information on the EBA’s file. The lawfulness of the EBA’s decision shall be
subject to review only by the Court of Justice following the procedure set out inRegulation (EU) No 1093/2010.
Article 106
On-site inspections

1.

In order to carry out its duties under Article 98 of this Regulation, the EBA may
conduct all necessary on-site inspections at any business premises of the issuers ofsignificant asset-referenced tokens and issuers of significant e-money tokens.
The college for issuers of significant asset-referenced tokens as referred to in Article
99 or the college for issuers of significant e-money tokens as referred to in Article
101 shall be informed without undue delay of any findings that may be relevant for
the execution of its tasks.

EN

2.

The officials and other persons authorised by the EBA to conduct an on-site
inspection may enter any business premises of the persons subject to an investigation
decision adopted by the EBA and shall have all the powers stipulated in Article
105(1). They shall also have the power to seal any business premises and books orrecords for the period of, and to the extent necessary for, the inspection.

3.

In due time before the inspection, the EBA shall give notice of the inspection to thecompetent authority of the Member State where the inspection is to be conducted.
Where the proper conduct and efficiency of the inspection so require, the EBA, after
informing the relevant competent authority, may carry out the on-site inspection
without prior notice to the issuer of significant asset-referenced tokens or the issuerof significant e-money tokens.

4.

The officials and other persons authorised by the EBA to conduct an on-site
inspection shall exercise their powers upon production of a written authorisation
specifying the subject matter and purpose of the inspection and the periodic penalty
payments provided for in Article 114 where the persons concerned do not submit to
the inspection.

5.

The issuer of significant asset-referenced tokens or the issuer of significant e-money
tokens shall submit to on-site inspections ordered by decision of the EBA. The

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decision shall specify the subject matter and purpose of the inspection, appoint thedate on which it is to begin and indicate the periodic penalty payments provided forin Article 114, the legal remedies available under Regulation (EU) No 1093/2010 aswell as the right to have the decision reviewed by the Court of Justice.
6.

Officials of, as well as those authorised or appointed by, the competent authority of
the Member State where the inspection is to be conducted shall, at the request of the
EBA, actively assist the officials and other persons authorised by the EBA. Officialsof the competent authority of the Member State concerned may also attend the onsite
inspections.

7.

The EBA may also require competent authorities to carry out specific investigatory
tasks and on-site inspections as provided for in this Article and in Article 105(1) on
its behalf.

8.

Where the officials and other accompanying persons authorised by the EBA find thata person opposes an inspection ordered pursuant to this Article, the competentauthority of the Member State concerned shall afford them the necessary assistance,
requesting, where appropriate, the assistance of the police or of an equivalent
enforcement authority, so as to enable them to conduct their on-site inspection.

9.

If the on-site inspection provided for in paragraph 1 or the assistance provided for inparagraph 7 requires authorisation by a judicial authority according to national law,such authorisation shall be applied for. Such authorisation may also be applied for asa precautionary measure.

10.

Where a national judicial authority receives an application for the authorisation of an
on-site inspection provided for in paragraph 1 or the assistance provided for inparagraph 7, that authority shall verify the following:

11.

(a)

the decision adopted by the EBA referred to in paragraph 4 is authentic;(b)

any measures to be taken are proportionate and not arbitrary or excessive.

For the purposes of paragraph 10, point (b), the national judicial authority may ask
the EBA for detailed explanations, in particular relating to the grounds the EBA has
for suspecting that an infringement of this Regulation has taken place and theseriousness of the suspected infringement and the nature of the involvement of theperson subject to the coercive measures. However, the national judicial authority
shall not review the necessity for the investigation or demand that it be provided with
the information on the EBA’s file. The lawfulness of the EBA’s decision shall be
subject to review only by the Court of Justice following the procedure set out inRegulation (EU) No 1093/2010.
Article 107
Exchange of information

In order to carry out its duties under Article 98 and without prejudice to Article 84, the EBA
and the competent authorities shall provide each other with the information required for the
purposes of carrying out their duties under this Regulation without undue delay. For that
purpose, competent authorities shall exchange with the EBA any information related to:

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(a)

an issuer of significant asset-referenced tokens or a person controlling or being
directly or indirectly controlled by an issuer of significant asset-referenced tokens;(b)

any third parties as referred to in Article 30(5), point (h) with which the issuers ofsignificant asset-referenced tokens has a contractual arrangement;(c)

any crypto-assets service provider as referred to in Article 35(4) which provide
liquidity for significant asset-referenced tokens;(d)credit institutions or crypto-asset service providers ensuring the custody of thereserve assets in accordance with Article 33;(e)an issuer of significant e-money tokens or a person controlling or being directly or
indirectly controlled by an issuer of significant e-money tokens;(f)any payment institutions authorised in accordance with Article 11 of Directive (EU)2015/2366 and providing payment services in relation to significant e-money tokens;(g)

any natural or legal persons in charge of distributing significant e-money tokens onbehalf of the issuer of significant e-money tokens;(h)any crypto-asset service provider providing the crypto-asset service referred to in
Article 3(1), point (10), in relation with significant asset-referenced tokens or
significant e-money tokens;(i)any trading platform for crypto-assets that has admitted a significant asset-referenced
token or a significant e-money token to trading;(j)the management body of the persons referred to in point (a) to (i).
Article 108
Administrative agreements on exchange of information between the EBA and third
countries

1.

In order to carry out its duties under Article 98, the EBA may conclude
administrative agreements on exchange of information with the supervisory
authorities of third countries only if the information disclosed is subject to guarantees
of professional secrecy which are at least equivalent to those set out in Article 111.

2.

Exchange of information referred to in paragraph 1 shall be intended for the
performance of the tasks of the EBA or those supervisory authorities.

3.

With regard to transfer of personal data to a third country, the EBA shall apply
Regulation (EU) No 2018/1725.
Article 109
Disclosure of information from third countries

The EBA may disclose the information received from supervisory authorities of third
countries only where the EBA or a competent authority has obtained the express agreement of
the supervisory authority that has transmitted the information and, where applicable, theinformation is disclosed only for the purposes for which that supervisory authority gave its
agreement or where such disclosure is necessary for legal proceedings.

EN

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Article 110
Cooperation with other authorities
Where an issuer of significant asset-referenced tokens or an issuer of significant e-money
tokens engages in activities other than those covered by this Regulation, the EBA shallcooperate with the authorities responsible for the supervision or oversight of such otheractivities as provided for in the relevant Union or national law, including tax authorities.
Article 111
Professional secrecy
The obligation of professional secrecy shall apply to the EBA and all persons who work or
who have worked for the EBA or for any other person to whom the EBA has delegated tasks,
including auditors and experts contracted by the EBA.
Article 112
Supervisory measures by the EBA
1.

EN

Where the EBA finds that an issuer of a significant asset-referenced tokens has
committed one of the infringements listed in Annex V, it may take one or more of thefollowing actions:(a)adopt a decision requiring the issuer of significant asset-referenced tokens tobring the infringement to an end;(b)

adopt a decision imposing fines or periodic penalty payments pursuant to
Articles 113 and 114;(c)adopt a decision requiring the issuer of significant asset-referenced tokens
supplementary information, where necessary for consumer protection;(d)adopt a decision requiring the issuer of significant asset-referenced tokens tosuspend an offer to the public of crypto-assets for a maximum period of 10
consecutive working days on any single occasion where there are reasonablegrounds for suspecting that this Regulation has been infringed;(e)adopt a decision prohibiting an offer to the public of significant assetreferenced tokens where they find that this Regulation has been infringed orwhere there are reasonable grounds for suspecting that it would be infringed;(f)adopt a decision requiring the relevant trading platform for crypto-assets thathas admitted to trading significant asset-referenced tokens, for a maximum of
10 consecutive working days on any single occasion where there arereasonable grounds for believing that this Regulation has been infringed;(g)adopt a decision prohibiting trading of significant asset-referenced tokens, on a
trading platform for crypto-assets where they find that this Regulation has been
infringed;

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2.

3.

EN

(h)

adopt a decision requiring the issuer of significant asset-referenced tokens todisclose, all material information which may have an effect on the assessmentof the significant asset-referenced tokens offered to the public or admitted to
trading on a trading platform for crypto-assets in order to ensure consumer
protection or the smooth operation of the market;(i)issue warnings on the fact that an issuer of significant asset-referenced tokens
is failing to comply with its obligations;(j)withdraw the authorisation of the issuer of significant asset-referenced tokens.

Where the EBA finds that an issuer of a significant e-money tokens has committed
one of the infringements listed in Annex VI, it may take one or more of the following
actions:(a)adopt a decision requiring the issuer of significant e-money tokens to bring theinfringement to an end;(b)

adopt a decision imposing fines or periodic penalty payments pursuant to
Articles 113 and 114;(c)issue warnings on the fact that an issuer of significant e-money tokens is failingto comply with its obligations.

When taking the actions referred to in paragraphs 1 and 2, the EBA shall take into
account the nature and seriousness of the infringement, having regard to thefollowing criteria:(a)the duration and frequency of the infringement;(b)whether financial crime has been occasioned, facilitated or otherwise
attributable to the infringement;(c)whether the infringement has revealed serious or systemic weaknesses in theissuer of significant asset-referenced tokens' or in the issuer of significant emoney tokens’ procedures, policies and risk management measures;(d)whether the infringement has been committed intentionally or negligently;(e)the degree of responsibility of the issuer of significant asset-referenced tokens
or the issuer of significant e-money tokens responsible for the infringement;(f)

the financial strength of the issuer of significant asset-referenced tokens, or of
the issuer of significant e-money tokens, responsible for the infringement, as
indicated by the total turnover of the responsible legal person or the annual
income and net assets of the responsible natural person;(g)

the impact of the infringement on the interests of holders of significant assetreferenced tokens or significant e-money tokens;(h)the importance of the profits gained, losses avoided by the issuer of significant
asset-referenced tokens or significant e-money tokens responsible for the

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infringement or the losses for third parties derived from the infringement,
insofar as they can be determined;(i)the level of cooperation of the issuer of significant asset-referenced tokens, orfor the issuer of significant e-money tokens responsible for the infringementwith the EBA, without prejudice to the need to ensure disgorgement of profits
gained or losses avoided by that person;(j)previous infringements by the issuer of significant asset-referenced tokens orby the issuer of e-money tokens responsible for the infringement;(k)measures taken after the infringement by the issuer of significant assetreferenced tokens or by the issuer of significant e-money tokens to prevent therepetition of such an infringement.

4.

Before taking the actions referred in points (d) to (g) and point (j) of paragraph 1, the
EBA shall inform ESMA and, where the significant asset-referenced tokens refers
Union currencies, the central banks of issues of those currencies.

5.

Before taking the actions referred in points (a) to (c) of paragraph 2, the EBA shallinform the competent authority of the issuer of significant e-money tokens and thecentral bank of issue of the currency that the significant e-money token isreferencing.

6.

The EBA shall notify any action taken pursuant to paragraph 1 and 2 to the issuer ofsignificant asset-referenced tokens or the issuer of significant e-money tokens
responsible for the infringement without undue delay and shall communicate that
action to the competent authorities of the Member States concerned and theCommission. The EBA shall publicly disclose any such decision on its website
within 10 working days from the date when that decision was adopted.

7.

The disclosure to the public referred to in paragraph 6 shall include the following:(a)a statement affirming the right of the person responsible for the infringement toappeal the decision before the Court of Justice;(b)where relevant, a statement affirming that an appeal has been lodged andspecifying that such an appeal does not have suspensive effect;(c)

a statement asserting that it is possible for EBA’s Board of Appeal to suspend
the application of the contested decision in accordance with Article 60(3) ofRegulation (EU) No 1093/2010.
Article 113
Fines

1.

The EBA shall adopt a decision imposing a fine in accordance with paragraph 3 or 4,
where in accordance with Article 116(8), it finds that:(a)EN

an issuer of significant asset-referenced tokens has, intentionally or
negligently, committed one of the infringements listed in Annex V;

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(b)

an issuer of significant e-money tokens has, intentionally or negligently,
committed one of the infringements listed in Annex VI.

An infringement shall be considered to have been committed intentionally if the
EBA finds objective factors which demonstrate that such an issuer or its management
body acted deliberately to commit the infringement.
2.

3.

EN

When taking the actions referred to in paragraph 1, the EBA shall take into accountthe nature and seriousness of the infringement, having regard to the following
criteria:(a)the duration and frequency of the infringement;(b)whether financial crime has been occasioned, facilitated or otherwise
attributable to the infringement;(c)whether the infringement has revealed serious or systemic weaknesses in theissuer of significant asset-referenced tokens' or in the issuer of significant emoney tokens’ procedures, policies and risk management measures;(d)whether the infringement has been committed intentionally or negligently;(e)the degree of responsibility of the issuer of significant asset-referenced tokens
or the issuer of significant e-money tokens responsible for the infringement;(f)

the financial strength of the issuer of significant asset-referenced tokens, or of
the issuer of significant e-money tokens, responsible for the infringement, as
indicated by the total turnover of the responsible legal person or the annual
income and net assets of the responsible natural person;(g)

the impact of the infringement on the interests of holders of significant assetreferenced tokens or significant e-money tokens;(h)the importance of the profits gained, losses avoided by the issuer of significant
asset-referenced tokens responsible for the infringement or the losses for third
parties derived from the infringement, insofar as they can be determined;(i)the level of cooperation of the issuer of significant asset-referenced tokens, orfor the issuer of significant e-money tokens, for the infringement with the
EBA, without prejudice to the need to ensure disgorgement of profits gained orlosses avoided by that person;(j)previous infringements by the issuer of significant asset-referenced tokens orby the issuer of significant e-money tokens responsible for the infringement;(k)measures taken after the infringement by the issuer of significant assetreferenced tokens or by the issuer of significant e-money tokens to prevent therepetition of such an infringement.

For issuers of significant asset-referenced tokens, the maximum amount of the finereferred to in paragraph 1 shall up to 15% of the annual turnover as defined under

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relevant Union law, in the preceding business year, or twice the amount or profits
gained or losses avoided because of the infringement where those can be determined.
4.

For issuers of significant e-money tokens, the maximum amount of the fine referred
to in paragraph 1 shall up to 5% of the annual turnover, as defined under relevant
Union law, in the preceding business year, or twice the amount or profits gained orlosses avoided because of the infringement where those can be determined.
Article 114
Periodic penalty payments

1.

The EBA shall, by decision, impose periodic penalty payments in order to compel:(a)a person to put an end to an infringement in accordance with a decision taken
pursuant to Article 112;(b)a person referred to in Article 104(1):i)

to supply complete information which has been requested by a decision
pursuant to Article 104;ii)

to submit to an investigation and in particular to produce complete
records, data, procedures or any other material required and to complete
and correct other information provided in an investigation launched by adecision pursuant to Article 105;iii)

to submit to an on-site inspection ordered by a decision taken pursuant to
Article 106.

2.

A periodic penalty payment shall be effective and proportionate. The periodic
penalty payment shall be imposed for each day of delay.

3.

Notwithstanding paragraph 2, the amount of the periodic penalty payments shall be
3 % of the average daily turnover in the preceding business year, or, in the case ofnatural persons, 2 % of the average daily income in the preceding calendar year. It
shall be calculated from the date stipulated in the decision imposing the periodic
penalty payment.

4.

A periodic penalty payment shall be imposed for a maximum period of six months
following the notification of the EBA’s decision. Following the end of the period, the
EBA shall review the measure.

Article 115
Disclosure, nature, enforcement and allocation of fines and periodic penalty payments
1.

EN

The EBA shall disclose to the public every fine and periodic penalty payment thathas been imposed pursuant to Articles 113 and 114 unless such disclosure to the
public would seriously jeopardise the financial stability or cause disproportionate

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damage to the parties involved. Such disclosure shall not contain personal data
within the meaning of Regulation (EU) 2016/679172.
2.

Fines and periodic penalty payments imposed pursuant to Articles 113 and 114 shallbe of an administrative nature.

3.

Where the EBA decides to impose no fines or penalty payments, it shall inform theEuropean Parliament, the Council, the Commission, and the competent authorities ofthe Member State concerned accordingly and shall set out the reasons for its
decision.

4.

Fines and periodic penalty payments imposed pursuant to Articles 113 and 114 shallbe enforceable.

5.

Enforcement shall be governed by the rules of civil procedure in force in the State in
the territory of which it is carried out.

6.

The amounts of the fines and periodic penalty payments shall be allocated to thegeneral budget of the European Union.
Article 116
Procedural rules for taking supervisory measures and imposing fines

EN

1.

Where, in carrying out its duties under Articles 98, the EBA finds that there areserious indications of the possible existence of facts liable to constitute one or moreof the infringements listed in Annexes V or VI, the EBA shall appoint an
independent investigation officer within the EBA to investigate the matter. The
appointed officer shall not be involved or have been directly or indirectly involved in
the supervision of the issuers of significant asset-referenced tokens or issuers ofsignificant e-money tokens and shall perform its functions independently from the
EBA.

2.

The investigation officer referred to in paragraph 1 shall investigate the alleged
infringements, taking into account any comments submitted by the persons who aresubject to the investigations, and shall submit a complete file with his findings to
EBA.

3.

In order to carry out its tasks, the investigation officer may exercise the power torequest information in accordance with Article 104 and to conduct investigations andon-site inspections in accordance with Articles 105 and 106. When using thosepowers, the investigation officer shall comply with Article 103.

4.

Where carrying out his tasks, the investigation officer shall have access to all
documents and information gathered by the EBA in its supervisory activities.

5.

Upon completion of his or her investigation and before submitting the file with hisfindings to the EBA, the investigation officer shall give the persons subject to the72

Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on theprotection of natural persons with regard to the processing of personal data and on the free movement ofsuch data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ L 119, 4.5.2016,p. 1).

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investigations the opportunity to be heard on the matters being investigated. The
investigation officer shall base his or her findings only on facts on which the persons
concerned have had the opportunity to comment.
6.

The rights of the defence of the persons concerned shall be fully respected during
investigations under this Article.

7.

When submitting the file with his findings to the EBA, the investigation officer shallnotify the persons who are subject to the investigations. The persons subject to theinvestigations shall be entitled to have access to the file, subject to the legitimate
interest of other persons in the protection of their business secrets. The right ofaccess to the file shall not extend to confidential information affecting third parties orthe EBA’s internal preparatory documents.

8.

On the basis of the file containing the investigation officer’s findings and, whenrequested by the persons subject to the investigations, after having heard those
persons in accordance with Article 117, the EBA shall decide if one or more of theinfringements of provisions listed in Annex V or VI have been committed by theissuer of significant asset-referenced tokens or the issuer of significant e-money
tokens subject to the investigations and, in such a case, shall take a supervisory
measure in accordance with Article 112 and/or impose a fine in accordance with
Article 113.

9.

The investigation officer shall not participate in EBA’s deliberations or in any otherway intervene in EBA’s decision-making process.

10.

The Commission shall adopt delegated acts in accordance with Article 121 by[please insert date 12 months after entry into force] specifying further the rules ofprocedure for the exercise of the power to impose fines or periodic penalty payments,
including provisions on the rights of the defence, temporal provisions, and thecollection of fines or periodic penalty payments, and the limitation periods for theimposition and enforcement of fines and periodic penalty payments.

11.

The EBA shall refer matters to the appropriate national authorities for investigationand possible criminal prosecution where, in carrying out its duties under thisRegulation, it finds that there are serious indications of the possible existence of facts
liable to constitute criminal offences. In addition, the EBA shall refrain from
imposing fines or periodic penalty payments where a prior acquittal or conviction
arising from identical fact or facts which are substantially the same has alreadyacquired the force of res judicata as the result of criminal proceedings under nationallaw.
Article 117
Hearing of persons concerned

1.

EN

Before taking any decision pursuant to Articles 112, 113 and 114, the EBA shall givethe persons subject to the proceedings the opportunity to be heard on its findings.
The EBA shall base its decisions only on findings on which the persons subject to theproceedings have had an opportunity to comment.

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2.

Paragraph 1 shall not apply if urgent action is needed in order to prevent significant
and imminent damage to the financial stability or consumer protection. In such a case
the EBA may adopt an interim decision and shall give the persons concerned theopportunity to be heard as soon as possible after taking its decision.

3.

The rights of the defence of the persons subject to investigations shall be fully
respected in the proceedings. They shall be entitled to have access to the EBA’s file,
subject to the legitimate interest of other persons in the protection of their businesssecrets. The right of access to the file shall not extend to confidential information or
the EBA’s internal preparatory documents.
Article 118
Review by the Court of Justice

The Court of Justice shall have unlimited jurisdiction to review decisions whereby the EBA
has imposed a fine or a periodic penalty payment or imposed any other sanction oradministrative measure in accordance with this Regulation. It may annul, reduce or increase
the fine or periodic penalty payment imposed.
Article 119
Supervisory fees
1.

The EBA shall charge fees to the issuers of significant asset-referenced tokens andthe issuers of significant e-money tokens in accordance with this Regulation and inaccordance with the delegated acts adopted pursuant to paragraph 3. Those fees shallcover the EBA’s expenditure relating to the supervision of issuers of significant
asset-referenced tokens and the supervision of issuers of significant e-money token
issuers in accordance with Article 98, as well as the reimbursement of costs that thecompetent authorities may incur carrying out work pursuant to this Regulation, inparticular as a result of any delegation of tasks in accordance with Article 120.

2.

The amount of the fee charged to an individual issuer of significant asset-referenced
tokens shall be proportionate to the size of its reserve assets and shall cover all costs
incurred by the EBA for the performance of its supervisory tasks in accordance withthis Regulation.
The amount of the fee charged to an individual issuer of significant e-money tokens
shall be proportionate to the size of the e-money issued in exchanged of funds andshall cover all costs incurred by the EBA for the performance of its supervisory tasks
in accordance with this Regulation.

3.

EN

The Commission shall adopt a delegated act in accordance with Article 121 by[please insert date 12 months after entry into force] to specify the type of fees, thematters for which fees are due, the amount of the fees and the manner in which they
are to be paid and the methodology to calculate the maximum amount per entity
under paragraph 2 that can be charged by the EBA.

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Article 120
Delegation of tasks by the EBA to competent authorities

EN

1.

Where necessary for the proper performance of a supervisory task for issuers ofsignificant asset-referenced tokens or significant e-money tokens, the EBA may
delegate specific supervisory tasks to the competent authority of a Member State.
Such specific supervisory tasks may, in particular, include the power to carry out
requests for information in accordance with Article 104 and to conduct investigations
and on-site inspections in accordance with Article 105 and Article 106.

2.

Prior to delegation of a task, the EBA shall consult the relevant competent authority
about:(a)the scope of the task to be delegated;(b)

the timetable for the performance of the task; and(c)the transmission of necessary information by and to the EBA.

3.

In accordance with the regulation on fees adopted by the Commission pursuant to
Article 119(3), the EBA shall reimburse a competent authority for costs incurred as aresult of carrying out delegated tasks.

4.

The EBA shall review the decision referred to in paragraph 1 at appropriate intervals.
A delegation may be revoked at any time.

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Title VIII: Delegated acts and implementing acts
Article 121
Exercise of the delegation

EN

1.

The power to adopt delegated acts is conferred on the Commission subject to theconditions laid down in this Article.

2.

The power to adopt delegated acts referred to in Articles 3(2), 39(6), 116(10) and119(3) shall be conferred on the Commission for a period of 36 months from …
[please insert date of entry into force of this Regulation].

3.

The delegation of powers referred to in Articles 3(2), 39(6), 116(10) and 119(3) may
be revoked at any time by the European Parliament or by the Council. A decision to
revoke shall put an end to the delegation of the power specified in that decision. It
shall take effect the day following the publication of the decision in the Official
Journal of the European Union or at a later date specified therein. It shall not affectthe validity of any delegated acts already in force.

4.

Before adopting a delegated act, the Commission shall consult experts designated byeach Member State in accordance with the principles laid down in theInterinstitutional Agreement of 13 April 2016 on Better Law-Making.

5.

As soon as it adopts a delegated act, the Commission shall notify it simultaneously to
the European Parliament and to the Council.

6.

A delegated act adopted pursuant to Articles 3(2), 39(6), 116(10) and 119(3) shallenter into force only if no objection has been expressed either by the European
Parliament or by the Council within a period of three months of notification of that
act to the European Parliament and to the Council or if, before the expiry of that
period, the European Parliament and the Council have both informed theCommission that they will not object. That period shall be extended by three months
at the initiative of the European Parliament or of the Council.

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Title IX Transitional and final provisions
Article 122
ReportEN

1.

By … [36 months after the date of entry into force of this Regulation] after
consulting the EBA and ESMA, the Commission shall present a report to theEuropean Parliament and the Council on the application of this Regulation, whereappropriate accompanied by a legislative proposal.

2.

The report shall contain the following:(a)the number of issuances of crypto-assets in the EU, the number of crypto-asset
white papers registered with the competent authorities, the type of cryptoassets issued and their market capitalisation, the number of crypto-assets
admitted to trading on a trading platform for crypto-assets;(b)

an estimation of the number of EU residents using or investing in crypto-assets
issued in the EU;(c)the number and value of fraud, hacks and thefts of crypto-assets reported in theEU, types of fraudulent behaviour, the number of complaints received by
crypto-asset service providers and issuers of asset-referenced tokens, thenumber of complaints received by competent authorities and the subjects of thecomplaints received;(d)the number of issuers of asset-referenced tokens authorised under thisRegulation, and an analysis of the categories of assets included in the reserves,the size of the reserves and the volume of payments in asset-referenced tokens;(e)

the number of issuers of significant asset-referenced tokens authorised under
this Regulation, and an analysis of the categories of assets included in thereserves, the size of the reserves and the volume of payments in significant
asset-referenced tokens;(f)the number of issuers of e-money tokens authorised under this Regulation andunder Directive 2009/110/EC, and an analysis of the currencies backing the emoney tokens, the size of the reserves and the volume of payments in e-money
tokens;(g)

the number of issuers of significant e-money tokens authorised under thisRegulation and under Directive 2009/110/EC, and an analysis of the currencies
backing the significant e-money tokens, the size of the reserves and the volumeof payments in significant e-money tokens;(h)an assessment of the functioning of the market for crypto-asset services in theUnion, including of market development and trends, taking into account theexperience of the supervisory authorities, the number of crypto-asset service
providers authorised and their respective average market share;

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(i)

an assessment of the level of consumer protection, including from the point ofview of the operational resilience of issuers of crypto-assets and crypto-asset
service providers, market integrity and financial stability provided by thisRegulation;(j)

an assessment of whether the scope of crypto-asset services covered by thisRegulation is appropriate and whether any adjustment to the definitions set out
in this Regulation is needed;(k)

an assessment of whether an equivalence regime should be established forthird-country crypto-asset service providers, issuers of asset-referenced tokens
or issuers of e-money tokens under this Regulation;(l)an assessment of whether the exemptions under Articles 4 and 15 areappropriate;(m) an assessment of the impact of this Regulation on the proper functioning of theinternal market for crypto-assets, including any impact on the access to financefor small and medium-sized enterprises and on the development of new meansof payment instruments;

EN

(n)

a description of developments in business models and technologies in thecrypto-asset market;(o)an appraisal of whether any changes are needed to the measures set out in thisRegulation to ensure consumer protection, market integrity and financial
stability;(p)the application of administrative penalties and other administrative measures;(q)

an evaluation of the cooperation between the competent authorities, the EBA
and ESMA, and an assessment of advantages and disadvantages of thecompetent authorities and the EBA being responsible for supervision under thisRegulation;(r)

the costs of complying with this Regulation for issuers of crypto-assets, otherthan asset-referenced tokens and e-money tokens as a percentage of the amountraised through crypto-asset issuances;(s)the costs for crypto-asset service providers to comply with this Regulation as apercentage of their operational costs;(t)

the costs for issuers of issuers of asset-referenced tokens and issuers of emoney tokens to comply with this Regulation as a percentage of theiroperational costs;(u)the number and amount of administrative fines and criminal penalties imposed
for infringements of this Regulation by competent authorities and the EBA.

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Article 123
Transitional measures
1.

Articles 4 to 14 shall not apply to crypto-assets, other than asset-referenced tokens
and e-money tokens, which were offered to the public in the Union or admitted to
trading on a trading platform for crypto-assets before [please insert date of entry into
application].

2.

By way of derogation from this Regulation, crypto-asset service providers which
provided their services in accordance with applicable law before [please insert thedate of entry into application], may continue to do so until [please insert the date 18
months after the date of application] or until they are granted an authorisation
pursuant to Article 55, whichever is sooner.

3.

By way of derogation from Articles 54 and 55, Member States may apply asimplified procedure for applications for an authorisation which are submitted
between the [please insert the date of application of this Regulation] and [please
insert the date 18 months after the date of application] by entities that, at the time ofentry into force of this Regulation, were authorised under national law to provide
crypto-asset services. The competent authorities shall ensure that the requirements
laid down in Chapters 2 and 3 of Title IV are complied with before granting
authorisation pursuant to such simplified procedures.

4.

The EBA shall exercise its supervisory responsibilities pursuant to Article 98 fromthe date of the entry into application of the delegated acts referred to in Article 39(6).
Article 124
Amendment of Directive (EU) 2019/1937

In Part I.B of the Annex to Directive (EU) 2019/1937, the following point is added:"(xxi) Regulation (EU) …./… of the European Parliament and of the Council of …
on Markets in Crypto-Assets (EU) 2021/XXX, and amending Directive (EU)2019/37 (OJ L …)73."
Article 125
Transposition of amendment of Directive (EU) 2019/1937
1.

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EN

Member States shall adopt, publish and apply, by … [12 months after the date ofentry into force of this Regulation], the laws, regulations and administrative
provisions necessary to comply with Article 97. However, if that date precedes thedate of transposition referred to in Article 26(1) of Directive (EU) 2019/1937, theapplication of such laws, regulations and administrative provisions shall be
postponed until the date of transposition referred to in Article 26(1) of Directive(EU) 2019/1937.

OJ: Please insert in the text the number, date and OJ reference of this Regulation.

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EN

2.

Member States shall communicate to the Commission, the EBA and ESMA the textof the main provisions of national law which they adopt in the field covered by
Article 97.
Article 126
Entry into force and application

1.

This Regulation shall enter into force on the twentieth day following that of its
publication in the Official Journal of the European Union.

2.

This Regulation shall apply from [please insert date 18 months after the date of entry
into force].

3.

However, the provisions laid down in Title III and Title IV shall apply from [please
insert the date of the entry into force].

4.

This Regulation shall be binding in its entirety and directly applicable in all Member
States.

Done at Brussels,

For the European Parliament
The President

EN

For the Council
The President

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LEGISLATIVE FINANCIAL STATEMENT
Contents

EN

1.

FRAMEWORK OF THE PROPOSAL/INITIATIVE ............................................. 145

1.1.

Title of the proposal/initiative .................................................................................. 145

1.2.

Policy area(s) concerned .......................................................................................... 145

1.3.

The proposal relates to ............................................................................................. 145

1.4.

Objective(s) .............................................................................................................. 145

1.4.1.

General objective(s) ................................................................................................. 145

1.4.2.

Specific objective(s) ................................................................................................. 145

1.4.3.

Expected result(s) and impact .................................................................................. 146

1.4.4.

Indicators of performance ........................................................................................ 146

1.5.

Grounds for the proposal/initiative .......................................................................... 147

1.5.1.

Requirement(s) to be met in the short or long term including a detailed timeline for roll-out of
the implementation of the initiative ......................................................................... 147

1.5.2.

Added value of Union involvement (it may result from different factors, e.g. coordination
gains, legal certainty, greater effectiveness or complementarities). For the purposes of thispoint 'added value of Union involvement' is the value resulting from Union intervention whichis additional to the value that would have been otherwise created by Member States alone.
.................................................................................................................................. 147

1.5.3.

Lessons learned from similar experiences in the past .............................................. 148

1.5.4.

Compatibility with the Multiannual Financial Framework and possible synergies with otherappropriate instruments ............................................................................................ 148

1.5.5.

Assessment of the different available financing options, including scope for redeployment.................................................................................................................................. 149

1.6.

Duration and financial impact of the proposal/initiative ......................................... 150

1.7.

Management mode(s) planned ................................................................................. 150

2.

MANAGEMENT MEASURES .............................................................................. 151

2.1.

Monitoring and reporting rules ................................................................................ 151

2.2.

Management and control system(s) ......................................................................... 151

2.2.1.

Justification of the management mode(s), the funding implementation mechanism(s), thepayment modalities and the control strategy proposed ............................................ 151

2.2.2.

Information concerning the risks identified and the internal control system(s) set up to mitigate
them .......................................................................................................................... 151

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EN

2.2.3.

Estimation and justification of the cost-effectiveness of the controls (ratio of "control costs ÷value of the related funds managed"), and assessment of the expected levels of risk of error (atpayment & at closure) .............................................................................................. 151

2.3.

Measures to prevent fraud and irregularities............................................................ 153

3.

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE .......... 153

3.1.

Heading(s) of the multiannual financial framework and expenditure budget line(s) affected.................................................................................................................................. 153

3.2.

Estimated impact on expenditure ............................................................................. 154

3.2.1.

Summary of estimated impact on expenditure ......................................................... 154

3.2.2.

Estimated impact on [body]'s appropriations ........................................................... 156

3.2.3.

Estimated impact on EBA and ESMA's human resources ....................................... 157

3.2.4.

Compatibility with the current multiannual financial framework ........................... 161

3.2.5.

Third-party contributions ......................................................................................... 161

3.3.

Estimated impact on revenue ................................................................................... 163

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1.

FRAMEWORK OF THE PROPOSAL/INITIATIVE

1.1.

Title of the proposal/initiative
EU Framework for crypto-assets

1.2.

Policy area(s) concerned
Policy area: Internal Market
Activity: Financial markets

1.3.

The proposal relates to a new action
 a new action following a pilot project/preparatory action74
 the extension of an existing action
 a merger of one or more actions towards another/a new action

1.4.

Objective(s)1.4.1.

General objective(s)This initiative has four general objectives. The first is to provide legal clarity and certainty topromote the safe development of crypto-assets and use of DLT in financial services. Secondly,
the initiative should support innovation and fair competition by creating an enabling
framework for the issuance and provision of services related to crypto-assets. The third
objective is to ensure a high level of consumer and investor protection and market integrity,and the fourth is to address potential financial stability and monetary policy risks that could
arise from an increased use of crypto-assets and DLT.

1.4.2.

Specific objective(s)The specific objectives of this initiative are as follows:
Removing regulatory obstacles to the issuance, trading and post-trading of crypto-assets that
qualify as financial instruments, while respecting the principle of technological neutrality;
Increasing the sources of funding for companies through increased Initial Coin Offerings andSecurities Token Offerings;

74

EN

As referred to in Article 58(2)(a) or (b) of the Financial Regulation.

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EN

Limiting the risks of fraud and illicit practices in the crypto-asset markets;
Allowing EU consumers and investors to access new investment opportunities or new types of
payment instruments in particular for cross-border situations.

EN

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EN

1.4.3.

Expected result(s) and impact
Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted.

The proposals are expected to provide a fully harmonised framework for crypto-assets thatcurrently fall outside existing financial services legislation and allow for experimentation withthe use of DLT and financial instruments in crypto-asset form.
The bespoke regime for crypto-assets will ensure a high level of consumer and investor
protection and market integrity, by regulating the main activities related to crypto-assets (suchas crypto-assets issuance, wallet provision, exchange and trading platforms). By imposing
requirements (such as governance, operational requirements) on the main crypto-asset service
providers and issuers operating in the EU, the proposal is likely to reduce the amounts of fraud
and theft of crypto-assets.
In addition, the bespoke regime will introduce specific requirements on e-money tokens,significant e-money tokens, asset-referenced tokens and significant asset-referenced tokens inorder to address the potential risks to financial stability and monetary policy transmission
these can present. Finally, it will address market fragmentation issues arising from thedifferent national approaches across the EU.
The accompanying proposal for a regulation on a pilot regime on DLT market infrastructures
will allow for experimentation. It will enable the development of a secondary market for
financial instruments in crypto-asset form, further reaping the potential benefits offered by thetechnology. Additionally, this experimentation will generate further experience and evidence
necessary to assess whether and how to amend existing financial services legislation to ensure
it is technology neutral.
1.4.4.

Indicators of performance
Specify the indicators for monitoring progress and achievements.

Non-exhaustive list of potential indicators:EN

Number and volumes of crypto-asset issuances in the EU

Number of entities authorised in the EU as crypto-asset services providers



Number of entities authorised in the EU as asset backed-crypto-asset or significant assetreferenced token issuers



Number and value of fraud and thefts of crypto-assets in the EU

Number of entities authorised by a NCA as a DLT market infrastructure under the pilot/
regimeVolume of transactions traded and settled by DLT market infrastructure

Number of market abuse cases involving crypto-assets reported to NCAs andinvestigated by NCAs

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

Market capitalisation of asset backed crypto-assets and significant asset-referenced
tokens

Volume of payments through the use of asset-referenced tokens and significant assetreferenced tokens

Assessment if other crypto-assets/infrastructures or market participants using DLT
and/or dealing with crypto-assets have reached a systemically relevant level

Number and volume of financial instruments issued as crypto-assets in the EU

Number of prospectuses of financial instruments as crypto-assets approved by NCAs

Number of entities authorised by NCAs to provide services under existing EU
legislation (e.g. MiFID II/MiFIR, CSDR, SFD) and using a DLT/financial instruments incrypto-asset form

Volume of transactions traded and settled by service providers authorised under existing
EU legislation (e.g. MiFID II/MiFIR, CSDR, SFD) and using a DLT/financial
instruments in crypto-asset form

1.5.

Grounds for the proposal/initiative

1.5.1.

Requirement(s) to be met in the short or long term including a detailed timeline for roll-out of
the implementation of the initiative
These proposals should address the following challenges:
1) Consumer protection and removing obstacles to innovation: Crypto-assets are one of
the major applications of blockchain technology in finance. Since the publication of theCommission’s FinTech Action Plan, in March 2018, the Commission has been examining theopportunities and challenges raised by crypto-assets.
On 9 January 2019, the EBA and ESMA published reports with advice to the European
Commission on the applicability and suitability of the EU financial services regulatory
framework on crypto-assets. These reports were based on the mandate given to them under theCommission’s FinTech action plan, published in March 2018.
Both the EBA and ESMA argues that while some crypto-assets could fall within the scope ofEU financial services legislation, most of them, do not. Further, even where crypto-assets arewithin the scope of financial services legislation, effectively applying the legislation to theseassets is not always straightforward, and some provisions may inhibit the use of DLT.
2) Fragmentation: Several Member States are considering or have already implemented
bespoke measures related to crypto-assets, leading to fragmentation across the Union.
3) Financial stability: The emerging category of so-called ‘stablecoins’ have attracted muchattention, due to their potential to achieve widespread adoption. Like other crypto-assets, thesecome in many forms, some of which may fall outside the current regulatory framework.

EN

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EN

1.5.2.

Added value of Union involvement (it may result from different factors, e.g. coordination
gains, legal certainty, greater effectiveness or complementarities). For the purposes of thispoint 'added value of Union involvement' is the value resulting from Union intervention whichis additional to the value that would have been otherwise created by Member States alone.
Reasons for action at European level (ex-ante):
Lack of certainty as to whether and how existing EU rules apply (for crypto-assets that arecovered by EU rules and obstacles to applying DLT in market infrastructures)
Where a crypto-asset qualify as a MiFID II financial there is a lack of clarity on how theexisting regulatory framework for financial services applies to such assets and services related
to them. As the existing regulatory framework was not designed with crypto-assets and DLTin mind, NCAs face challenges in interpreting and applying the various requirements under
EU law, which can hamper innovation. Those NCAs may therefore diverge in their approach
to interpreting and applying existing EU rules. This diverging approach by NCAs createsfragmentation of the market.
Absence of rules at EU level and diverging national rules for crypto-assets that are notcovered by EU rules
For crypto-assets that are not covered by EU financial services legislation, the absence of rules
exposes consumers and investors to substantial risks. In the absence of rules at EU level, threeMember States (France, Germany and Malta) have already put in place national regimes that
regulate certain aspects of crypto-assets that neither qualify as financial instruments under
MIFID II nor as electronic money under EMD2. These regimes differ: (i) rules are optional inFrance while they are mandatory in Malta and Germany; (ii) the scope of crypto-assets andactivities covered differ; (iii) the requirements imposed on issuers or services providers are not
the same; and (iv) the measures to ensure market integrity are not equivalent.
Other Member States are also considering legislating on crypto-assets and related activities.
Expected generated Union added value (ex-post):
Action at EU level would present more advantages compared to actions at national level.
For crypto-assets that are covered by EU regulation (i.e. those that could qualify as ‘financial
instruments’ under MiFID II), regulatory action at EU level in the form of a pilot regime thatwould allow market infrastructures to test out the application of DLT in the issuance, trading
and settlement of financial instruments, could facilitate the take-up of primary and secondary
markets for crypto-assets that qualify as financial instruments across the single market, while
ensuring financial stability and a high level of investor protection.
For crypto-assets that are not currently covered by EU legislation, an action at EU level, suchas the creation of an EU regulatory framework, would set the ground on which a larger crossborder market for crypto-assets and crypto-asset service providers could develop, thereby
reaping the full benefits of the single market. An EU regime would significantly reduce thecomplexity as well as the financial and administrative burdens for all stakeholders, such as the

EN

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service providers, issuers and investors/users. Harmonising operational requirements onservice providers as well as the disclosure requirements imposed on issuers could also bringclear benefits in terms of investor protection and financial stability.

1.5.3.

Lessons learned from similar experiences in the past
N/A

1.5.4.

Compatibility with the Multiannual Financial Framework and possible synergies with otherappropriate instruments
The objectives of the initiative are consistent with a number of other EU policies and ongoing
initiatives.
As set out in the Communication ‘Shaping Europe’s digital future’, it is crucial for Europe toreap all the benefits of the digital age and to strengthen its industrial and innovation capacity
within safe and ethical boundaries.
President Ursula von der Leyen has stressed the need for “a common approach with Member
States on cryptocurrencies to ensure we understand how to make the most of the opportunities
they create and address the new risks they may pose”. Executive Vice-President Valdis
Dombrovskis has also indicated his intention to propose new legislation for a common EU
approach on crypto-assets, including ‘stablecoins’. While acknowledging the risks they may
present, the Commission and the Council also jointly declared in December 2019 that they“are committed to put in place a framework that will harness the potential opportunities thatsome crypto-assets may offer” .
This initiative is closely linked with wider Commission policies on blockchain technology,
since crypto-assets, as the main application of blockchain technologies, are inextricably linked
to the promotion of blockchain technology throughout Europe. This proposal supports aholistic approach to blockchain and DLT, which aims at positioning Europe at the forefront ofblockchain innovation and uptake. Policy work in this area has included the creation of theEuropean Blockchain Observatory and Forum, and the European Blockchain Partnership,
which unites all Member States at political level, as well as the public-private partnerships
envisaged with the International Association for Trusted Blockchain Applications.
It is also consistent with the Union policies aimed at creating a Capital Markets Union (CMU).
It notably responds to the High-level Forum’s final report, which stressed the underused
potential of crypto-assets and called on the Commission to bring legal certainty and establish
clear rules for the use of crypto-assets. Lastly, this initiative is consistent with the SME
strategy adopted on 10 March 2020, which also highlights DLT and crypto-assets as
innovations that can enable SMEs to engage directly with investors.
The legislative proposal would have a very limited impact on the MFF, as it foresees
additional Union contribution to ESMA stemming from the additional 2 FTEs that the
Authority would receive to implement the additional tasks conferred by the legislators. The
new activities to be undertaken by the EBA would be fully fee funded.

EN

164

EN

This will translate into a proposal to increase the authorised staff of the agency during thefuture annual budgetary procedure. The agency will continue to work towards maximisingsynergies and efficiency gains (inter alia via IT systems), and closely monitor the additional
workload associated with this proposal, which would be reflected in the level of authorised
staff requested by the agency in the annual budgetary procedure.
1.5.5.

EN

Assessment of the different available financing options, including scope for redeployment

165

EN

1.6.

Duration and financial impact of the proposal/initiative
 limited duration–  Proposal/initiative in effect from [DD/MM]YYYY to [DD/MM]YYYY–  Financial impact from YYYY to YYYY unlimited duration– Implementation with a start-up period from YYYY to YYYY,– followed by full-scale operation.

1.7.

Management mode(s) planned75
 Direct management by the Commission through–  executive agencies
 Shared management with the Member States Indirect management by entrusting budget implementation tasks to: international organisations and their agencies (to be specified);the EIB and the European Investment Fund; bodies referred to in Articles 70 and 71;
 public law bodies; bodies governed by private law with a public service mission to the extent that they provide
adequate financial guarantees; bodies governed by the private law of a Member State that are entrusted with theimplementation of a public-private partnership and that provide adequate financial guarantees; persons entrusted with the implementation of specific actions in the CFSP pursuant toTitle V of the TEU, and identified in the relevant basic act.

Comments

75

EN

Details of management modes and references to the Financial Regulation may be found on the BudgWeb site:
https://myintracomm.ec.europa.eu/budgweb/EN/man/budgmanag/Pages/budgmanag.aspx.

166

EN

2.

MANAGEMENT MEASURES

2.1.

Monitoring and reporting rules
Specify frequency and conditions.

Providing for a robust monitoring and evaluation mechanism is crucial to ensure that theregulatory actions undertaken are effective in achieving their respective objectives. The
Commission would establish a detailed programme for monitoring the outputs and impacts ofthis initiative. The Commission will be in charge of monitoring the effects of the newrequirements. Beyond those indicators, the Commission would have to produce a report, incooperation with ESMA, on the pilot programme for DLT market infrastructures, after a threeyear period. On the basis of this report, the Commission would inform the Parliament andCouncil on the appropriate way forward (e.g. continuing the experimentation, extending its
scope, modifying existing legislation…).
2.2.

Management and control system(s)2.2.1.

Justification of the management mode(s), the funding implementation mechanism(s), thepayment modalities and the control strategy proposed
Management will take place through the three European Supervisory Authorities (ESAs).
As regards the control strategy, the three ESAs work closely with the Commission’s Internal
Audit Service to ensure that appropriate standards are met in all areas of internal control
framework. Those arrangements will also apply to the role of the Agencies in respect of thecurrent proposal.
In addition, every financial year, the European parliament, following a recommendation fromthe Council, and taking into account the findings of the European Court of Auditors, considers
whether to grant discharge to the Agencies for their implementation of the budget.

2.2.2.

Information concerning the risks identified and the internal control system(s) set up to
mitigate them
In relation to the legal, economic, efficient and effective use of appropriations resulting fromthe actions to be carried out by the ESAs in the context of this proposal, this initiative does notbring about new significant risks that would not be covered by an existing internal control
framework. The actions to be carried out in the context of this proposal will start in 2022, andwill further continue.

2.2.3.

Estimation and justification of the cost-effectiveness of the controls (ratio of "control costs ÷value of the related funds managed"), and assessment of the expected levels of risk of error (atpayment & at closure)Management and control systems are provided in the Regulations currently governing thefunctioning of the ESAs. These bodies work closely together with the Internal Audit Service

EN

167

EN

of the Commission to ensure that the appropriate standards are observed in all areas of theinternal control framework.
Every year, the European Parliament, following a recommendation from the Council, grants
discharge to each ESA for the implementation of their budget
Costs of controls - Supervision of ESAs
For the EBA, we estimate a need for 18 FTEs (currently there are 24 asset-referenced tokens
in operation, but only few of them would be covered by the category of significant assetreferenced tokens or e-money tokens that are subject to the EBA supervision). These staff
resources will be built up over time.
All of these costs would be covered by fees levied from issuers of significant asset-referenced
or e-money tokens. The EBA will need to prepare for taking on these responsibilities.
On the ESMA role for the pilot regime for DLT market infrastructures. ESMA will have toprovide an initial opinion on the permission given by an NCA and then monitor on an ongoingbasis, however national supervisors would do the direct supervision. These activities will becovered fully by their operating budget, which will be increased accordingly.

EN

168

EN

2.3.

Measures to prevent fraud and irregularities
Specify existing or envisaged prevention and protection measures, e.g. from the Anti-Fraud Strategy.

For the purposes of combating fraud, corruption and any other illegal activity, the provisionsof Regulation (EC) No 1073/1999 of the European Parliament and of the Council of 25 May
1999 concerning investigations conducted by the European Anti-Fraud Office (OLAF) shallapply to ESMA without any restrictions.
ESMA shall accede to the Interinstitutional Agreement of 25 May 1999 between the European
Parliament, the Council of the European Union and the Commission of the European
Communities concerning internal investigations by the European Anti-Fraud Office (OLAF)
and shall immediately adopt appropriate provisions for all ESMA staff.
The funding decisions and the agreements and the implementing instruments resulting fromthem shall explicitely stipulate that the Court of Auditors and OLAF may, if need be, carry out
on the spot checks on the beneficiaries of monies disbursed by ESMA as well as on the staff
responsible for allocating these monies.
3.

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE

3.1.

Heading(s) of the multiannual financial framework and expenditure budget line(s)affected Existing budget lines
In order of multiannual financial framework headings and budget lines.
Type ofexpenditure

Budget line
Heading ofmultiannual
financial
framework

NumberDiff./Nondiff.76

Contribution
from
EFTA
countries
77

1

from
candidatecountries78

from third
countries

within the meaningof Article 21(2)(b)of the Financial
Regulation

NO

NO

NO

ESMA: <03.10.04>
Diff.

NO

 New budget lines requested
In order of multiannual financial framework headings and budget lines.
Heading ofmultiannual

76
77
78

EN

Type ofexpenditure

Budget line

Contribution

Diff. = Differentiated appropriations / Non-diff. = Non-differentiated appropriations.
EFTA: European Free Trade Association.
Candidate countries and, where applicable, potential candidates from the Western Balkans.

169

EN

financial
framework

NumberDiff./nondiff.

from
EFTA
countries

fromcandidatecountries

from third
countries

within the meaningof Article 21(2)(b)of the Financial
Regulation

YES/NO

YES/NO

YES/NO

YES/NO[XX.YY.YY.YY]

EN

170

EN

3.2.

Estimated impact on expenditure

3.2.1.

Summary of estimated impact on expenditure
EUR million (to three decimal places)

Heading of multiannual financial
framework

NumberHeading 1 : Single Market, Innovation & Digital

ESMA: <03.10.04>

Title 1:
Title 2:
Title 3:TOTAL appropriations
for ESMA: <03.10.04>

Commitments(1)

Payments(2)

Commitments(1a)Payments(2a)

Commitments(3a)Payments(3b)

Commitments

=1+1a
+3a
=2+2a

202279

2023

2024

2025

2026

2027

0,059
0,059
0,010
0,010

0,118
0,118
0,020
0,020

0,118
0,118
0,020
0,020

0,118
0,118
0,020
0,020

0,118
0,118
0,020
0,020

0,118
0,118
0,020
0,020

0,649
0,649
0,110
0,110

0,069

0,138

0,138

0,138

0,138

0,138

0,759

0,069

0,138

0,138

0,138

0,138

0,138

0,759

TOTAL

Payments+3b

79

Year N is the year in which implementation of the proposal/initiative starts. Please replace "N" by the expected first year of implementation (for instance: 2021). The
same for the following years.

EN

171

E

Heading of multiannual financial
framework

7‘European public administartion’
EUR million (to three decimal places)
Year
N

Year
N+1

Year
N+2

Year
N+3

Enter as many years asnecessary to show the durationof the impact (see point 1.6)

TOTAL

DG: <…….>
 Human Resources Other administrative expenditure
TOTAL DG <…….>TOTAL appropriations
under HEADING 7of the multiannual financial framework

Appropriations(Total commitments =Total payments)

EUR million (to three decimal places)
Year
N80

TOTAL appropriations
under HEADINGS 1 to 7of the multiannual financial framework

80

Year
N+1

Year
N+2

Year
N+3

Enter as many years asnecessary to show the durationof the impact (see point 1.6)

TOTAL

Commitments
Payments

Year N is the year in which implementation of the proposal/initiative starts. Please replace "N" by the expected first year of implementation (for instance: 2021). The
same for the following years.

EN

172

E

3.2.2.

Estimated impact on [body]'s appropriations–  The proposal/initiative does not require the use of operational appropriations–  The proposal/initiative requires the use of operational appropriations, as explained below:
Commitment appropriations in EUR million (to three decimal places)
Year
N

Indicate
objectives andoutputs

Year
N+2

Year
N+3

Enter as many years as necessary to show theduration of the impact (see point 1.6)

TOTAL

Cost

Cost

No

Cost

No

Cost

No

No

Cost

No

Cost

No

Avera
ge
cost

No

OUTPUTS

Type81



Year
N+1

Cost

Total
No

Total
cost

SPECIFIC OBJECTIVE No 182…
- Output- Output- Output
Subtotal for specific objective No 1
SPECIFIC OBJECTIVE No 2 ...
- Output
Subtotal for specific objective No 2
TOTAL COST

81
82

EN

Outputs are products and services to be supplied (e.g.: number of student exchanges financed, number of km of roads built, etc.).
As described in point 1.4.2. ‘Specific objective(s)…’

173

EN

3.2.3.

Estimated impact on EBA and ESMA's human resources

3.2.3.1. Summary–  The proposal/initiative does not require the use of appropriations of an
administrative nature–  The proposal/initiative requires the use of appropriations of an administrative
nature, as explained below:
EUR million (to three decimal places)

Temporary agents (ADGrades) EBA and
ESMA83

2022

2023

2024

2025

2026

2027

TOTAL

1,404

3,061

3,309

3,309

3,309

3,309

17,701

1,404

3,061

3,309

3,309

3,309

3,309

17,701

2023

2024

2025

2026

2027

TOTAL

Temporary agents(AST grades)
Contract staff
Seconded National
Experts

TOTAL

Staff requirements (FTE):
2022

Temporary agents (ADGrades) EBA=15 for2022 and 18 as of 2023,
ESMA=2

17

20

20

20

20

20

20

17

20

20

20

20

20

20

Temporary agents(AST grades)
Contract staff
Seconded National
Experts

TOTAL

83

EN

The costs for EBA include 100% employer’s pension contribution and the costs for ESMA include thepension contribution corresponding to the 60% National Competent Authorities share.

174

EN

It is forecast that:

EN

Approximatively 50% of the required staff required for 2022 will be recruited in thatyear, approximatively 50% of the additional 3 posts required for 2023 will be
recruited in that year and full staffing will be achieved in 2024.

175

EN

3.2.3.2. Estimated requirements of human resources for the parent DG–  The proposal/initiative does not require the use of human resources.
–  The proposal/initiative requires the use of human resources, as explained
below:
Estimate to be expressed in full amounts (or at most to one decimal place)
Year
N

Year
N+1

Year
N+2

Year
N+3

Enter as many years asnecessary to show theduration of the impact (seepoint 1.6)

 Establishment plan posts (officials andtemporary staff)
XX 01 01 01 (Headquarters andCommission’s Representation
Offices)
XX 01 01 02 (Delegations)
XX 01 05 01 (Indirect research)
10 01 05 01 (Direct research) External staff (in Full Time Equivalent
unit: FTE)84
XX 01 02 01 (AC, END, INT fromthe ‘global envelope’)XX 01 02 02 (AC, AL, END, INT
and JPD in the Delegations)

XX 01 04
yy85

- at
Headquarters86- in
Delegations

XX 01 05 02 (AC, END, INT –Indirect research)
10 01 05 02 (AC, END, INT –Direct research)
Other budget lines (specify)
TOTAL

XX is the policy area or budget title concerned.

84
85
86

EN

AC = Contract Staff; AL = Local Staff; END = Seconded National Expert; INT = agency staff; JPD =Junior Professionals in Delegations .
Sub-ceiling for external staff covered by operational appropriations (former ‘BA’ lines).
Mainly for the Structural Funds, the European Agricultural Fund for Rural Development (EAFRD) andthe European Fisheries Fund (EFF).

176

EN

The human resources required will be met by staff from the DG who are already assigned to
management of the action and/or have been redeployed within the DG, together if necessary
with any additional allocation which may be granted to the managing DG under the annual
allocation procedure and in the light of budgetary constraints.
Description of tasks to be carried out:
Officials and temporary staff
External staff

Description of the calculation of cost for FTE units should be included in the Annex V,
section 3.

EN

177

EN

3.2.4.

Compatibility with the current multiannual financial framework–  The proposal/initiative is compatible the current multiannual financial framework.
–  The proposal/initiative will entail reprogramming of the relevant heading in the multiannual financial framework.
Explain what reprogramming is required, specifying the budget lines concerned and the corresponding amounts.

–  The proposal/initiative requires application of the flexibility instrument or revision of the multiannual financial framework 87.
Explain what is required, specifying the headings and budget lines concerned and the corresponding amounts.

3.2.5.

Third-party contributions– The proposal/initiative does not provide for co-financing by third parties.
– The proposal/initiative provides for the co-financing estimated below:
EUR million (to three decimal places)
2022

2023

2024

2025

2026

2027

Total

Industry fees88 EBA

2,234

3,957

4,042

4,042

4,042

4,042

22,359TOTAL
appropriations
co-financed

2,234

3,957

4,042

4,042

4,042

4,042

22,359EUR million (to three decimal places)
87
88

EN

See Articles and of Council Regulation (EU, Euratom) No /2020 laying down the multiannual financial framework for the years 2021-2027.
100% of the cost of implementing the proposal will be covered by fees.

178

EN

2022

2023

2024

2025

2026

2027

Total

Competent
contribution

0,115

0,230

0,230

0,230

0,230

0,230

1,265

TOTAL
appropriations
co-financed

0,115

0,230

0,230

0,230

0,230

0,230

1,265

National
Authorities
to ESMA89

89

EN

60% of the total estimated cost (the EU contribution having been estimated at 40%) plus a 60% share of the employer’s pension contributions

179

EN

3.3.

Estimated impact on revenue–  The proposal/initiative has no financial impact on revenue.
–  The proposal/initiative has the following financial impact:–  on own resources–  on other revenue–  please indicate, if the revenue is assigned to expenditure lines
EUR million (to three decimal places)

Budget revenue line:

Appropriations available forthe current
financial year

Impact of the proposal/initiative90
Year
N

Year
N+1

Year
N+2

Year
N+3

Enter as many years as necessary to show
the duration of the impact (see point 1.6)

Article ………….

For miscellaneous ‘assigned’ revenue, specify the budget expenditure line(s) affected.

Specify the method for calculating the impact on revenue.

90

EN

As regards traditional own resources (customs duties, sugar levies), the amounts indicated must be net amounts, i.e. gross amounts after deduction of 20 % forcollection costs.

180

EN

ANNEX
General Assumptions

Title I – Staff Expenditure

The following specific assumptions have been applied in the calculation of the staff expenditure based upon the identified staffing needs explained
below:

EN



Additional staff hired in 2022 are costed for 6 months given the assumed time needed to recruit the additional staff. The 3 additional
staff required for 2023 (over and above the staff required for 2022) are costed for 6 months given the assumed time needed to recruit
the additional staff. Full staffing will be achieved in 2024.

The average annual cost of a Temporary Agent is EUR 150 000, of a Contract Agent is EUR 85 000 and for a seconded national
expert is EUR 80 000, all of which including EUR 25 000 of ‘habillage’ costs (Buildings, IT, etc.);

The correction coefficients applicable to staff salaries in Paris (EBA and ESMA) is 117.7;

Employer’s pension contributions for Temporary Agents have been based upon the standard basic salaries included in the standard
average annual costs, i.e. EUR 95 660;

All additional Temporary Agents are AD5s.

181

EN

Title II – Infrastructure and operating expenditure

Costs are based upon multiplying the number of staff by the proportion of the year employed by the standard cost for ‘habillage’, i.e. EUR 25 000.

Title III – Operational expenditure

Costs are estimated subject to the following assumptions:Translation cost are set at EUR 350 000 per year for the EBA.

The one-off IT costs of EUR 500 000 for the EBA are assumed to be implemented over the two years 2022 and 2023 on the basis ofa 50% - 50% split. Yearly maintenance costs for the EBA are estimated at EUR 50 000.

On-site yearly supervision costs for the EBA are estimated at EUR 200.000.

The estimations presented here above result in the following costs per year:
Heading of multiannual financial
framework

EN

Number

182

ENEBA: <>
Title 1:
Title 2:

Title 3:

2023

2024

2025

2026

2027

TOTAL

2,744
2,744
0,413

2,992
2,992
0,450

2,992
2,992
0,450

2,992
2,992
0,450

2,992
2,992
0,450

15,958Commitments(1)

Payments(2)

Commitments

(1a)

1,246
1,246
0,188

Payments

(2a)

0,188

0,413

0,450

0,450

0,450

0,450

2,401

Commitments

(3a)

0,800

0,800

0,600

0,600

0,600

0,600

4,000

Payments

(3b)

0,800

0,800

0,600

0,600

0,600

0,600

4,000

=1+1a +3a

2,234

3,957

4,042

4,042

4,042

4,042

22,359

=2+2a

2,234

3,957

4,042

4,042

4,042

4,042

22,359Commitments

TOTAL appropriations
for EBA

2022

Payments

Constant
Prices15,9582,401+3b

The proposal requires the use of operational appropriations, as explained below:
Commitment appropriations in EUR million (to three decimal places) in constant prices

EBA
Indicate
objectives
and

EN

2022

2023

2024

2025

2026

2027

OUTPUTS

183

EN



Cost

No

Cost

No

Cost

No

Cost

No

Cost

No

No

Average cost

Type91

outputs

Cost

Total
No

Total
cost

SPECIFIC OBJECTIVE92
No 1 Direct supervisionof significant asset-backet
crypto-asset issuers- Output

0,800

0,800

0,600

0,600

0,600

0,600

4,000

0,800

0,800

0,600

0,600

0,600

0,600

4,000

Subtotal for specificobjective No 1
SPECIFIC OBJECTIVE
No 2 approval of amended
crypto-asset white paper
submitted by issuer ofsignificant asset-referenced
token- Output
Subtotal for specificobjective No 2
TOTAL COST

The direct supervisory activities of the EBA shall be fully funded by fees levied from the supervised entities as follows:

91
92

EN

Outputs are products and services to be supplied (e.g.: number of student exchanges financed, number of km of roads built, etc.).
As described in point 1.4.2. ‘Specific objective(s)…’

184

EN

EBA
2022

2023

2024

2025

2026

2027

Total

The costs shall be covered
100% by fees levied fromthe supervised entities

2,234

3,957

4,042

4,042

4,042

4,042

22,359TOTAL
appropriations
co-financed

2,234

3,957

4,042

4,042

4,042

4,042

22,359The coordination activities of ESMA under the DLT pilot regime set out in the related Proposal for a Regulation on DLT market infrastructures
shall be funded by their operating budget with EU contributions corresponding to 40% (amounts indicated in table 3.2.1 Summary of estimatedimpact on expenditure) and National Competent Authorities corresponding to 60% (amounts indicated in table 3.2.5 Third countries contribution)of the total cost.

SPECIFIC INFORMATION
Direct Supervisory powers
The European Banking Authority (EBA) is a special Union body, which was established to protect the public interest by contributing to the short,medium and long-term stability and effectiveness of the financial system for the Union economy, its citizens and businesses.
While the EBA will need to recruit specialist personnel, the duties and functions to be undertaken to implement the proposed legislation are in linewith the remit and tasks of the EBA.
Specifically, the EBA will need to train and hire specialist to fulfil the duties of the direct supervision as envisaged in this proposal for thesupervision of issuers of significant asset-referenced tokens.
Other proposals covered under this Legislative Financial Statement
This Legislative Financial Statement also covers the financial impact stemming from the Proposal for a Regulation on DLT market infrastructures,
which accounts for the increase in the funding for ESMA.

EN

185

EN