### the amount of credit or refund in respect of a refundable tax credit that is not a qualified refundable tax credit that was not accrued as a reduction to the tax expense; ### the amount of credit or refund in respect of a refundable tax credit that was not accrued as a reduction to the tax expense;


### the amount of covered taxes refunded or credited to a constituent entity that was not treated as an adjustment to tax expense , unless it relates to a qualified refundable tax credit; ### the amount of covered taxes refunded or credited to a constituent entity that was not treated as an adjustment to tax expense ;


### research and development expenses; ### deleted


### fair value accounting on unrealized net gains; ### deleted


### the qualifying income of the constituent entities is the sum of the qualifying income of all constituent entities located in the jurisdiction determined in accordance with chapter iii , taking into account , where applicable , the international shipping income exclusion in accordance with article 16; ### the qualifying income of the constituent entities is the sum of the qualifying income of all constituent entities located in the jurisdiction determined in accordance with chapter iii , taking into account;


### 3. the jurisdictional top-up tax for a fiscal year shall be computed in accordance with the following formula: ### 3. the jurisdictional top-up tax for a fiscal year shall be computed in accordance with the following formula:


### the domestic top-up tax is the amount of tax as determined in accordance with article 10. ### deleted


### ‘eligible employees’ means full-time or part-time employees of a constituent entity and independent contractors participating in the ordinary operating activities of the mne group under the direction and control of the mne group; ### ‘eligible employees’ means full-time or part-time employees of a constituent entity;


### 2. unless a filing entity of an mne group elects not to apply the substance-based income exclusion , the net qualifying income for a jurisdiction shall be reduced , for the purpose of calculating the top-up tax , by an amount equal to the sum of the payroll carve-out and the tangible asset carve-out for each constituent entity located in the jurisdiction. ### 2. unless a non-european filing entity of an mne group elects not to apply the substance-based income exclusion , the net qualifying income for a jurisdiction shall be reduced , for the purpose of calculating the top-up tax , by an amount equal to the sum of the payroll carve-out and the tangible asset carve-out for each constituent entity located in the jurisdiction.


### 3. the payroll carve-out of a constituent entity located in a jurisdiction shall be equal to 5 % of its eligible payroll costs of eligible employees who perform activities for the mne group in such jurisdiction , with the exception of eligible payroll costs that are: ### 3. the payroll carve-out of a constituent entity located in a jurisdiction outside of the european union shall be equal to 5 % of its eligible payroll costs of eligible employees who perform activities for the mne group in such jurisdiction , with the exception of eligible payroll costs that are:


### capitalised and included in the eligible tangible asset carve-out base; and ### capitalised and included in the eligible tangible asset carve-out base;


### attributable to income that is excluded in accordance with article 16. ### deleted


### the carrying value of tangible assets used to derive income that is excluded in accordance with article 16. ### deleted


### 1. by way of derogation from articles 25 to 28 , at the election of the filing constituent entity , the top-up tax due for the constituent entities located in a jurisdiction shall be equal to zero for a fiscal year if , for such fiscal year: ### 1. by way of derogation from articles 25 to 28 , at the election of the filing constituent entity , the top-up tax due for the constituent entities located in a jurisdiction outside of the european union shall be equal to zero for a fiscal year if , for such fiscal year:


### 4. where a single mne group demerges into two or more groups (each a “demerged group”) , the consolidated revenue threshold shall be deemed to be met by each demerged group if it reports: ### 4. where a single mne group demerges into two or more groups (each a “demerged group”) , the consolidated revenue threshold shall be deemed to be met by each demerged group under all circumstances for at least six years following the demerger and if it reports:


### ‘dual-listed arrangement’ means an arrangement entered into by two or more ultimate parent entities of separate groups under which: ### 'dual-listed arrangement’ means an arrangement entered into by two or more ultimate parent entities of separate groups for which any one or more of the following apply :


### 5. the outstanding balance , if any , of the deemed distribution tax recapture account at the end of the fourth fiscal year after such account was established , shall be treated as a reduction to the adjusted covered taxes in accordance with article 28(1) for the fiscal year in which such account was established. ### 5. the outstanding balance , if any , of the deemed distribution tax recapture account at the end of the third fiscal year after such account was established , shall be treated as a reduction to the adjusted covered taxes in accordance with article 28(1) for the fiscal year in which such account was established.


### 1. the election referred to in articles 2(3) , 15(3) , 15(6) , 15(9) , 40(4) and 41(5) shall be valid for a period of five years , starting from the year in which the election is made. the election shall be renewed automatically unless the filing constituent entity revokes the election at the end of the five-year period. a revocation of the election shall be valid for a period of five years , starting from the year in which the revocation is made. ### 1. the election referred to in articles 2(3) , 15(6) , 15(9) , 40(4) and 41(5) shall be permanent , starting from the year in which the election is made.


### 1. member states shall lay down rules on penalties applicable to breaches of national rules adopted pursuant to this directive , and shall take all necessary measures to ensure that they are effectively applied. the penalties provided for shall be effective , proportionate and dissuasive. ### 1. member states shall lay down rules on penalties applicable to breaches of national rules adopted pursuant to this directive , and shall take all necessary measures to ensure that they are effectively applied. the penalties provided for shall be effective and dissuasive.


### 2. a constituent entity that does not comply with the requirement to file a top-up tax information return pursuant to article 42 for a tax year within the prescribed deadline or makes a false declaration shall be charged an administrative pecuniary penalty amounting to 5 % of its turnover in the relevant fiscal year. this penalty shall only apply after the constituent entity has not provided the top-up tax information return pursuant to article 42 , following any reminder issued , within a period of 6 months. ### 2. a constituent entity that does not comply with the requirement to file a top-up tax information return pursuant to article 42 for a tax year within the prescribed deadline or makes a false declaration shall be charged an administrative pecuniary penalty amounting to 10 % of its turnover in the relevant fiscal year. this penalty shall only apply after the constituent entity has not provided the top-up tax information return pursuant to article 42 , following any reminder issued , within a period of 6 months.


### article 46 ### deleted


### article 47 ### deleted


### article 50 ### deleted


### it establishes a minimum effective tax rate of at least 15 % below which a constituent entity is considered as low-taxed; ### it establishes a minimum effective tax rate of at least 21 % below which a constituent entity is considered as low-taxed;


### 2. the power to adopt delegated acts referred to in article 51(3) shall be conferred on the commission for an indeterminate period of time from the date of entry into force of this directive. ### 2. the power to adopt delegated acts referred to in articles 51(3) , 4a(4) , 13(8b) ,15(11a) , 21(8a) , and 42(7b) shall be conferred on the commission for an indeterminate period of time from the date of entry into force of this directive.


### 5. a delegated act adopted pursuant to article 51(3) shall enter into force only if no objection has been expressed by the council within a period of two months of notification of that act to the council or if , before the expiry of that period , the council has informed the commission that it will not object. that period shall be extended by two months at the initiative of the council. ### 5. a delegated act adopted pursuant to paragraph 2 shall enter into force only if no objection has been expressed by the council within a period of two months of notification of that act to the council or if , before the expiry of that period , the council has informed the commission that it will not object. that period shall be extended by two months at the initiative of the council.


### the following third country jurisdictions have been assessed to accommodate a legal framework which can be considered as equivalent to a qualified income inclusion rule: ### deleted


### a stand-alone institution in the eu and , for the purposes of complying with the obligations of this regulation on the basis of its consolidated situation in accordance with part one , title ii , chapter 2 , an eu parent institution , an eu parent financial holding company and an eu parent mixed financial holding company shall calculate the total risk exposure amount as follows: ### institutions shall calculate the total risk exposure amount as follows:


### for the purposes set out in points (i) and (ii) , the total risk exposure amount shall be calculated in accordance with paragraph 6: ### by way of derogation of paragraph a) , competent authorities may authorise institutions in their jurisdiction that are part of a group with the parent institution also located in this member state to use for their total risk exposure amount the un-floored total risk amount , provided that the parent institution calculates its total risk exposure amount in accordance with paragraph a) on a consolidated basis.


### for the purposes of complying with the obligations of this regulation on an individual basis , the total risk exposure amount of an institution which is neither a stand-alone institution in the eu nor a stand-alone subsidiary institution in a member state shall be the un-floored total risk exposure amount calculated in accordance with paragraph 4. ### deleted


### 6. the total risk exposure amount of an entity ‘i’ for the purposes set out in paragraph 3 , point (b) , shall be calculated as follows: ### deleted


### 3. subject to the conditions set out in paragraph 4 , retail loans may be regarded as exposures secured by a mortgage on residential property , instead of being treated as guaranteed exposures , for the purposes of part three , title ii , chapters 2 , 3 and 4 as applicable , where in a member state the following conditions for those retail loans have been fulfilled: ### 3. subject to the conditions set out in paragraph 4 , loans to natural persons may be regarded as exposures secured by a mortgage on residential property , instead of being treated as guaranteed exposures , for the purposes of part three , title ii , chapters 2 , 3 and 4 as applicable , where in a member state the following conditions for those loans have been fulfilled:


### the majority of loans to individuals for the purchase of residential properties in that member state are guaranteed by a guarantor with a credit assessment by an nominated ecai corresponding to a credit quality step of 1 or 2 , that is required to repay the institution in full where the original borrower defaults; ### the majority of loans to natural persons for the purchase of residential properties in that member state are guaranteed by a guarantor with a credit assessment by an nominated ecai corresponding to a credit quality step of 1 or 2 , that is required to repay the institution in full where the original borrower defaults;


### the institution that decides to exercise the option provided for in paragraph 3 for a given eligible guarantor under the mechanism referred to in paragraph 3 , shall do so for all its retail exposures guaranteed by that guarantor under that mechanism.; ### the institution that decides to exercise the option provided for in paragraph 3 for a given eligible guarantor under the mechanism referred to in paragraph 3 , shall do so for all its natural persons exposures guaranteed by that guarantor under that mechanism.;


### table 5 ### table 5


### exposures for which such a credit assessment is not available shall be assigned a risk weight of 100 %.; ### exposures for which such a credit assessment is not available shall be assigned a risk weight of 100 % except for exposures to smes as defined in article 5 point (8) which shall be assigned a risk weight of 85% ;


### table 6aa ### table 6aa


### where the purpose of a specialised lending exposure is to finance the acquisition of physical assets , including ships , aircraft , satellites , railcars , and fleets , and the income to be generated by those assets comes in the form of cash flows generated by the specific physical assets that have been financed and pledged or assigned to the lender by one or several third parties (‘object finance exposures’) , institutions shall apply the following risk weights: ### where the purpose of a specialised lending exposure is to finance the acquisition of physical assets , including ships , aircraft , satellites , railcars , and fleets , and the income to be generated by those assets comes in the form of cash flows generated by the specific physical assets that have been financed and pledged or assigned to the lender (‘object finance exposures’) , institutions shall apply a risk weight of 100%.


### 80 % where the exposure is deemed to be high quality when taking into account all of the following criteria: ### deleted


### (ii) 100 % where the exposure is not deemed to be high quality as referred to in point (i); ### deleted


### where the purpose of a specialised lending exposure is to finance a project for the development or acquisition of large , complex and expensive installations , including power plants , chemical processing plants , mines , transportation infrastructure , environment , and telecommunications infrastructure , and the income to be generated by the project is the money generated by the contracts for the output of the installation obtained from one or several parties which are not under management control of the sponsor (‘project finance exposures’) , institutions shall apply the following risk weights: ### where the purpose of a specialised lending exposure is to finance a single project , either in the form of construction of a new capital installation or refinancing of an existing installation , with or without improvements , in particular projects for the development or acquisition of large , complex and expensive installations , including power plants , chemical processing plants , mines , transportation infrastructure , environment , and telecommunications infrastructure , and the income to be generated by the project is the money generated by the contracts for the output of the installation obtained from one or several parties which are not under management control of the sponsor (‘project finance exposures’) , institutions shall apply the following risk weights:


### (ii) provided that the adjustment to own funds requirements for credit risk referred to in article 501a is not applied , 80 % where the project to which the exposure is related is in the operational phase and the exposure meets all of the following criteria: ### (ii) 80 % where the project to which the exposure is related is in the operational phase and the exposure meets all of the following criteria:


### — the obligor has sufficient reserve funds fully funded in cash , or other financial arrangements , with highly rated guarantors to cover the contingency funding and working capital requirements over the lifetime of the project being financed; ### — the obligor has sufficient reserve funds fully funded in cash , or other financial arrangements to cover the contingency funding and working capital requirements over the lifetime of the project being financed;


### — the obligor generates cash flows that are predictable and cover all future loan repayments; ### — the financed project generates cash flows that are predictable and cover all future loan repayments;


### — the contractual arrangements effectively protect the lending institution against losses resulting from the termination of the project; ### — the main counterparty or other counterparties which meet the eligibility criteria for the main counterparty effectively protect the lending institution against losses resulting from the termination of the project;


### — equity is pledged to the lending institution such that they are able to take control of the obligor entity upon default; ### — the lending institution is able to take control of the obligor entity upon default;


### the exposure is either of the following: ### the exposure is an exposure to one or more natural persons or an exposure to an sme within the meaning of article 5 , point (8)


### an exposure to one or more natural persons; ### deleted


### (ii) an exposure to an sme within the meaning of article 5 , point (8) , where the total amount owed to the institution , its parent undertakings and its subsidiaries , by the obligor or group of connected clients , including any exposure in default but excluding exposures secured by residential property up to the property value shall not , to the knowledge of the institution , which shall take reasonable steps to confirm the situation , exceed eur 1 million; ### deleted


### 3. retail exposures as referred to in paragraph 1 shall be assigned a risk weight of 75 % , with the exception of transactor exposures , which shall be assigned a risk weight of 45 %. ### 3. retail exposures as referred to in paragraph 1 shall be assigned a risk weight of 75 % , with the exception of transactor exposures , which shall be assigned a risk weight of 45 %. where any of the criteria laid down in paragraph 1 are not met for an exposure to one or more natural persons , the risk weight shall be 100%.


### 1. exposures to natural persons assigned to any of the exposures classes laid down in point (h) or (i) of article 112 , the risk weight assigned in accordance with chapter 2 shall be multiplied by a factor of 1 ,5 , whereby the resulting risk weight shall not be higher than 150 % , where the following conditions are met. ### 1. where the following conditions are met for an exposure to a natural person or natural persons assigned to the exposures classes laid down in point (h) or , if it is secured by residential immovable property , which is assigned to the exposure class laid down in (i) of article 112 , the risk weight assigned to that exposure in accordance with chapter 2 shall be multiplied by a factor of 1 ,5 , whereby the resulting risk weight shall not be higher than 150 %:


### the exposure is due to a loan denominated in a currency which is different from the currency of the obligor's source of income; ### the exposure is a loan denominated in a currency which is different from the currency of the obligor's source of income;


### 2. a non-adc exposure secured by an immovable property , where all the conditions laid down in paragraph 3 are met and , shall be treated as follows: ### 2. a non-adc exposure secured by an immovable property , where all the conditions laid down in paragraph 3 are met , shall be treated as follows:


### where the exposure is secured by a residential property , the exposure shall not qualify as an ipre exposure and shall be treated in accordance with article 125(1) where the exposure meets any of the following conditions: ### where the exposure is secured by a residential property , it shall be treated in accordance with article 125(1) where the exposure meets any of the following conditions:


### (ii) the exposure is to an individual and is secured by an income-producing residential housing unit , either where the immovable property as a whole constitutes a single housing unit or where the housing unit is a separated part within the immovable property , and total exposures of the institution to that individual are not secured by more than four immovable properties , including those which are not residential properties or which do not meet any of the criteria in this point , or separate housing units within immovable properties; ### (ii) the exposure is to a natural person and is secured by an income-producing residential housing unit , either where the immovable property as a whole constitutes a single housing unit or where the housing unit is a separated part within the immovable property , and total exposures of the institution to that natural person are not secured by more than four immovable properties , including those which are not residential properties or which do not meet any of the criteria in this point , or separate housing units within immovable properties;


### (iii) the exposure secured by residential property is to associations or cooperatives of individuals that are regulated by law and solely exist to grant their members the use of a primary residence in the property securing the loans; ### (iii) the exposure secured by residential property is to associations or cooperatives of natural persons that are regulated by law and solely exist to grant their members the use of a primary residence in the property securing the loans;


### — the property does not have more than four residential housing units and will be the primary residence of the obligor and the lending to the individual is not indirectly financing adc exposures; ### — the property does not have more than four residential housing units and will be the primary residence of the obligor and the lending to the natural person is not indirectly financing adc exposures;


### where , on the basis of the assessment referred to in the first subparagraph , the authority designated in accordance with paragraph 6 of this article concludes that the risk weights set out in article 125 or 126 do not adequately reflect the actual risks related to exposures to one or more property segments secured by mortgages on residential property or on commercial immovable property located in one or more parts of the territory of the member state of the relevant authority , and if it considers that the inadequacy of the risk weights could adversely affect current or future financial stability in its member state , it may increase the risk weights applicable to those exposures within the ranges determined in the fourth subparagraph of this paragraph or impose stricter criteria than those set out in paragraph 3 of this article. ### where , on the basis of the assessment referred to in the first subparagraph , the authority designated in accordance with paragraph 6 of this article concludes that the risk weights set out in article 125 or 126 do not adequately reflect the actual risks related to exposures to one or more property segments secured by mortgages on residential property or on commercial immovable property located in one or more parts of the territory of the member state of the relevant authority , it may increase the risk weights applicable to those exposures within the ranges determined in the fourth subparagraph of this paragraph or impose stricter criteria than those set out in paragraph 3 of this article.


### the authority designated in accordance with paragraph 6 of this article shall notify eba and the esrb of any adjustments to risk weights and criteria applied pursuant to this paragraph. within one month of receipt of that notification , eba and the esrb shall provide their opinion to the member state concerned. eba and the esrb shall publish the risk weights and criteria for exposures referred to in articles 125 , 126 and article 199(1) , point (a) , as implemented by the relevant authority. ### the authority designated in accordance with paragraph 6 of this article shall notify eba and the esrb of any adjustments to risk weights and criteria applied pursuant to this paragraph. within one month of receipt of that notification , eba and the esrb shall provide their opinion to the member state concerned and indicate whether they consider that the adjustments to risk weights and criteria are also recommended to other member states. eba and the esrb shall publish the risk weights and criteria for exposures referred to in articles 125 , 126 and article 199(1) , point (a) , as implemented by the relevant authority.


### for the purposes of the second subparagraph of this paragraph , the authority designated in accordance with paragraph 6 may increase the risk weights laid down in article 125(1) , point (a) , or article 126(1) , point (a). the authority shall not increase those to more than 150 %. ### for the purposes of the second subparagraph of this paragraph , the authority designated in accordance with paragraph 6 may increase the risk weights laid down in article 125(1) , point (a) , or article 126(1) , point (a).


### 10. the esrb may , by means of recommendations in accordance with article 16 of regulation (eu) no 1092/2010 , and in close cooperation with eba , give guidance to authorities designated in accordance with paragraph 6 of this article on both of the following: ### 10. the esrb shall , by means of recommendations in accordance with article 16 of regulation (eu) no 1092/2010 , and in close cooperation with eba , give guidance to authorities designated in accordance with paragraph 6 of this article on both of the following:


### remuneration policies and practices that are consistent with and promote sound and effective risk management. ### remuneration policies and practices that are consistent with and promote sound and effective risk management , including by taking into account environmental , social and governance performance .


### member states shall ensure that the management body develops specific plans and quantifiable targets to monitor and address the risks arising in the short , medium and long-term from the misalignment of the business model and strategy of the institutions , with the relevant union policy objectives or broader transition trends towards a sustainable economy in relation to environmental , social and governance factors.; ### member states shall ensure that the management body develops specific plans and science-based quantifiable targets to monitor and address the risks arising in the short , medium and long-term from the misalignment of the business model , strategy and activities of the institutions , with the relevant union policy objectives , including:


### 5. member states shall , in accordance with the proportionality requirement laid down in article 7(2) of commission directive 2006/73/ec*11 , ensure that institutions have internal control functions independent from the operational functions and which shall have sufficient authority , stature , resources and access to the management body. ### 5. member states shall , in accordance with the proportionality requirement laid down in article 7(2) of commission directive 2006/73/ec*11 , ensure that institutions have internal control functions independent from the operational functions and which shall have sufficient authority , stature , resources and direct access to the management body.


### 2. the strategies , policies , processes and systems referred to in paragraph 1 shall be proportionate to the scale , nature and complexity of the environmental , social and governance risks of the business model and scope of the institution’s activities , and consider short , medium and a long-term horizon of at least 10 years. ### 2. the strategies , policies , processes and systems referred to in paragraph 1 shall consider short , medium and a long-term horizon of at least 10 years.


### 3. competent authorities shall ensure that institutions test their resilience to long-term negative impacts of environmental , social and governance factors , both under baseline and adverse scenarios within a given timeframe , starting with climate-related factors. for the testing , competent authorities shall ensure that institutions include a number of environmental , and social and governance scenarios reflecting potential impacts of environmental and social changes and associated public policies on the long-term business environment. ### 3. competent authorities shall ensure that institutions test their resilience to long-term negative impacts of environmental , social and governance factors , both under baseline and adverse scenarios within a given timeframe , starting with climate-related factors. for the testing , competent authorities shall ensure that institutions include a number of environmental , and social and governance scenarios reflecting potential impacts of environmental and social changes and associated public policies on the long-term business environment. competent authorities shall ensure that for the testing , institutions use credible scenarios , based on the scenarios elaborated by international organisations.


### 4. competent authorities shall assess and monitor developments of institutions’ practices concerning their environmental , social and governance strategy and risk management , including the plans to be prepared in accordance with article 76 , as well as the progress made and the risks to adapt their business models to the relevant policy objectives of the union or broader transition trends towards a sustainable economy , taking into account sustainability related product offering , transition finance policies , related loan origination policies , and environmental , social and governance related targets and limits. ### 4. competent authorities shall assess and monitor developments of institutions’ practices concerning their environmental , social and governance strategy and risk management , including the plans to be prepared in accordance with article 76 , as well as the progress made towards achieving the targets set in accordance with the transition plans referred to in that article in order to adapt their business models to the relevant policy objectives of the union or broader transition trends towards a sustainable economy , taking into account sustainability related product offering , transition finance policies , related loan origination policies , and environmental , social and governance related targets and limits.


### the content of plans to be prepared in accordance with article 76 , which shall include specific timelines and intermediate quantifiable targets and milestones , in order to address the risks from misalignment of the business model and strategy of institutions with the relevant policy objectives of the union , or broader transition trends towards a sustainable economy in relation to environmental , social and governance factors; ### deleted


### 4. the management body shall possess collective knowledge , skills and experience to be able to adequately understand the institution's activities , as well as the associated risks it is exposed to , in the short , medium and long term , taking into account the environmental , social and governance factors. the overall composition of the management body shall reflect an adequately broad range of experience. ### 4. the management body shall possess collective knowledge , skills and experience to be able to adequately understand the institution's activities , as well as the associated risks it is exposed to , in the short , medium and long term , taking into account the environmental , social and governance factors. the overall composition of the management body shall be sufficiently diversified to reflect an adequately broad range of experience and perspectives.


### 9. the entities shall devote adequate human and financial resources to the induction and training of members of the management body. ### 9. the entities shall devote adequate human and financial resources to the induction and training of members of the management body , including on environmental , social and governance risks and on emerging risks such as cyber-security.


### 10. member states or competent authorities shall require entities and their respective nomination committees , where established , to engage a broad set of qualities and competences when recruiting members to the management body and for that purpose to put in place a policy promoting diversity in the management body. ### 10. member states or competent authorities shall require entities and their respective nomination committees , where established , to promote diversity and gender-balance in the management body. to that purpose , institutions shall put in place a policy promoting diversity in the management body , including setting a target for the minimum representation of the underrepresented gender. this policy shall also include concrete measures to balance genders


### however , where it is strictly necessary to replace a member of the management body immediately , the entities may assess the suitability of such replacement members after they have taken up their positions. the entities shall be able to duly justify such immediate replacement. ### however , where it is strictly necessary to replace a member of the management body immediately , the entities may conduct a lighter suitability assessment of such replacement members before they have taken up their positions. a complete assessment shall be performed once the replacement members have taken up their positions. eba shall issue guidelines specifying the minimum elements to be included in the lighter assessment and providing guidance under which circumstances a replacement could be considered as necessary and urgent. the entities shall be able to duly justify such immediate replacement.


### 3. competent authorities shall acknowledge in writing the receipt of the application and the documentation required in accordance with paragraph 2 within two working days. ### 3. competent authorities shall acknowledge in writing the receipt of the application and the documentation required in accordance with paragraph 2.


### competent authorities shall complete the assessment referred to in paragraph 1 within 80 working days (‘assessment period’) as from the date of the written acknowledgement referred to in the first subparagraph of this paragraph. ### competent authorities shall complete the assessment referred to in paragraph 1 within 60 working days (‘assessment period’) as from the date of the written acknowledgement referred to in the first subparagraph of this paragraph.


### 4. competent authorities that request from the entities additional information or documentation , including interviews or hearings , may extend the assessment period for a maximum of 40 working days. however , the assessment period shall not exceed 120 working days. request for additional information or documentation shall be made in writing and shall be specific. the entities shall acknowledge receipt of request for additional information or documentation within two working days and provide the requested additional information or documentation within 10 working days as of the date of the written acknowledgement of the request from competent authorities. ### 4. competent authorities that request from the entities additional information or documentation , including interviews or hearings , may extend the assessment period for a maximum of 20 working days. however , the assessment period shall not exceed 80 working days. request for additional information or documentation shall be made in writing and shall be specific. the entities shall acknowledge receipt of request for additional information or documentation within two working days and provide the requested additional information or documentation within 10 working days as of the date of the written acknowledgement of the request from competent authorities. failure by entities to provide requested information within this deadline result in the procedure being closed without any further assessment by the competent authority. the closure of the procedure shall be without prejudice to the possibility for the entity to submit a new application.


### 6. competent authorities shall not reassess the suitability of members of the management body when their mandate is renewed , unless relevant information that is known to competent authorities has changed and such change may affect the suitability of the member concerned. ### deleted


### 2. where the entities conclude , based on the assessment referred to in paragraph 1 , that the person does not fulfil the requirements set out in that paragraph , they shall not appoint that person as a key function holder. the entities shall take all measures necessary to ensure the appropriate functioning of that position. ### 2. where the entities conclude , based on the assessment referred to in paragraph 1 , that the person does not fulfil the requirements set out in that paragraph , they shall not appoint that person as a key function holder. the entities shall take all measures necessary to ensure the appropriate functioning of that position , including removing the key function holder if that person ceases to comply with the suitability criteria.


### competent authorities shall assess the suitability of the heads of internal control functions and chief financial officer within 80 working days (‘assessment period’) as from the date of the written acknowledgement referred to in the first subparagraph. ### competent authorities shall assess the suitability of the heads of internal control functions and chief financial officer within 60 working days (‘assessment period’) as from the date of the written acknowledgement referred to in the first subparagraph.


### 4. competent authorities that request from the entities referred to paragraph 1 additional information or documentation , including interviews or hearings , may extend the assessment period for maximum 40 working days. however , the assessment period shall not exceed 120 working days. request for additional information or documentation shall be made in writing and shall be specific. the entities referred to paragraph 1 shall acknowledge receipt of request for additional information or documentation within two working days and provide the requested additional information or documentation within 10 working days as of the date of the written acknowledgement of the request from competent authorities. ### 4. competent authorities that request from the entities referred to paragraph 1 additional information or documentation , including interviews or hearings , may extend the assessment period for maximum 20 working days. however , the assessment period shall not exceed 80 working days. request for additional information or documentation shall be made in writing and shall be specific. the entities referred to paragraph 1 shall acknowledge receipt of request for additional information or documentation within two working days and provide the requested additional information or documentation within 10 working days as of the date of the written acknowledgement of the request from competent authorities. failure by entities to provide requested information within this deadline results in the procedure being closed without any further assessment by the competent authority. the closure of the procedure shall be without prejudice to the possibility for the entity to submit a new application.


### the following paragraphs 6 and 7 are added: ### deleted


### in paragraph 5 , the following subparagraph is added: ### deleted


### in paragraph 15 , the first subparagraph is replaced by the following: ### deleted


### 1. each member state shall ensure that it is possible to set a systemic risk buffer of common equity tier 1 capital for the financial sector or one or more subsets of that sector on all or a subset of exposures as referred to in paragraph 5 of this article , in order to prevent and mitigate macroprudential or systemic risks not covered by regulation (eu) no 575/2013 and by articles 130 and 131 of this directive , in the meaning of a risk of disruption in the financial system with the potential to have serious negative consequences to the financial system and the real economy in a specific member state.; ### 1. each member state shall ensure that it is possible to set a systemic risk buffer of common equity tier 1 capital for the financial sector or one or more subsets of that sector on all or a subset of exposures as referred to in paragraph 5 of this article , in order to prevent and mitigate macroprudential or systemic risks not covered by regulation (eu) no 575/2013 and by articles 130 and 131 of this directive , including the risks emanating from climate change and biodiversity loss in the meaning of a risk of disruption in the financial system with the potential to have serious negative consequences to the financial system and the real economy in a specific member state.;


### the following paragraph 2a is inserted: ### deleted


### 2a. where an institution is bound by the output floor , both of the following shall apply: ### deleted


### in paragraph 8 , point (c) is replaced by the following: ### deleted


### in paragraph 9 , the following point (g) is added: ### deleted


### (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 crypto-assets. the lack of such rules leaves holders of crypto-assets exposed to risks , in particular 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 crypto-assets , 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 to legislate in this area. ### (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 currently 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 crypto-assets. the lack of such rules leaves holders of crypto-assets exposed to risks , in particular 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 crypto-assets , including market manipulation and financial crime. 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 to legislate in this area.


### (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 the general existing union legislation , including directive 2014/65/eu , regardless of the technology used for their issuance or their transfer. ### (6) union legislation on financial services should based on the principle ‘same business , same risks , same rules’ and follow a technologically neutral approach. 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 the general existing union legislation , including directive 2014/65/eu , regardless of the technology used for their issuance or their transfer. moreover , crypto-assets that have the same or highly similar features to financial instruments should be treated as equivalent to financial instruments , insofar they provide profit or governance rights or a claim on a future cash flow , and should therefore be subject to the union financial sector legislation and not to this regulation. in order to achieve legal clarity with regard to which crypto-assets fall under the scope of this regulation and which crypto-assets are excluded , the esma should specify the conditions under which a crypto-asset should be treated as a financial instrument because of its substance and regardless of its form.


### (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 a third-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 the union 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 the client. in such a case , the third-country firm should be authorised as a crypto-asset service provider. ### (51) due to the inherently digital nature of crypto-asset services , third-country firms are often able to offer their services to customers in the union without any physical or legal presence in the union. this poses significant risks of circumvention of the standards of this regulation and of putting crypto-asset service providers authorised in the union at a competitive disadvantage vis-a-vis third-country competitors. no legal or natural person shall therefore be allowed to provide crypto-asset services to union citizens on a non-occasional basis without having a legal representative in the union and being authorised under this regulation , even if services are provided solely at the own initiative of eu clients. esma should monitor and report annually on the scale and severity of circumvention of this regulation by third-country actors , as well as propose possible countermeasures. the european commission should , in its final report , analyse the scale and severity of circumvention of this regulation by third-country actors and propose concrete and effective dissuasive sanctions to such entities to end or significantly reduce such circumvention.


### (65) competent authorities should be conferred with sufficient powers to supervise the issuance of crypto-assets , including asset-referenced tokens or e-money tokens , as well as crypto-asset service providers , including the power to suspend or prohibit an issuance 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 crypto-asset markets , competent authorities should cooperate with each other to detect and deter 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. ### (65) esma should be conferred with sufficient powers to supervise the issuance of crypto-assets , including asset-referenced tokens , as well as crypto-asset service providers , including the power to suspend or prohibit an issuance 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 crypto-asset markets , there should be a european single supervisor responsible for the supervision of those crypto-assets and crypto-asset service providers with the view of ensuring consistency and effectiveness in the supervision. esma should cooperate with the relevant authorities in member states to detect and deter 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 ore-money tokens and crypto-asset service providers.


### 1. issuers of asset-references tokens shall at all times constitute and maintain a reserve of assets. ### 1. issuers of asset-references tokens shall at all times constitute and maintain a reserve of assets to cover the claims from holders in respect to the asset referenced tokens in circulation. the aggregate value of reserve assets shall always be at least equal to the aggregate face value of the claims on the issuer from holders of asset-referenced tokens in circulation. for the purpose of calculating the aggregate face value of token holders’ claims , and for any valuation of the reserve assets under paragraph 5 of this article , article 30(11) , point (c) of article 35(2) , article 41 and article 42 , the face value of claims , and the value of funds and other reserve assets , including other crypto-assets , shall be expressed in the same official currency


### the reserve assets are segregated from the issuers’ own assets; ### the reserve assets are legally and operationally segregated from the issuers’ own assets and insulated in the interest of the holders of asset-referenced tokens , in particular in the event of insolvency;


### 1. issuers of asset-referenced tokens shall establish , maintain and implement clear and detailed 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 asset-referenced tokens or on the reserve assets. ### 1. issuers of asset-referenced tokens shall establish , maintain and implement clear and detailed policies and procedures on the rights granted to holders of asset-referenced tokens to ensure a direct claim or redemption rights on the issuer of those asset-referenced tokens or on the reserve assets.


### 2. where holders of asset-referenced tokens are granted rights as referred to in paragraph 1 , issuers of asset-referenced tokens shall establish a policy setting out: ### 2. issuers of asset-referenced tokens shall establish a policy setting out


### the valuation , or the principles of valuation , of the asset-referenced tokens and of the reserve assets when those rights are exercised by the holder of asset-referenced tokens; ### methodology and criteria to ensure a fair , reliable and transparent valuation of the asset-referenced tokens and of the reserve assets when the issuer offers the right to redeem the asset referenced tokens at market value , and its verification by an independent auditor;


### the fees applied by the issuers of asset-referenced tokens when the holders exercise those rights. ### deleted


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


### 3. where issuers of asset-referenced tokens do not grant rights as referred to in paragraph 1 to all the holders of asset-referenced tokens , the detailed policies and procedures shall specify the natural or legal persons that are provided with such rights. the detailed policies and procedures shall also specify the conditions for exercising such rights and the obligations imposed on those persons. ### deleted


### 4. issuers of asset-referenced tokens that do not grant rights as referred to in paragraph 1 to all the holders of such asset-referenced tokens shall put in place mechanisms to ensure the liquidity of the asset-referenced tokens. for that purpose , they shall establish 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 regular and predictable basis. ### deleted


### 5. the eba shall , in close cooperation with esma , develop draft regulatory technical standards specifying: ### 5. the eba shall , in close cooperation with esma and the escb , develop draft regulatory technical standards specifying:


### 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 and where at least three of the following criteria are met: ### 1. a issuer of asset-referenced tokens shall be designated asset-referenced tokens as significant asset-referenced tokens where at least two of the following criteria are met:


### 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 third-party entities referred to in article 30(5) , point (h); ### 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 third-party entities referred to in article 30(5) , point (h) is at least 5 million;


### the value of the asset-referenced tokens issued or , where applicable , their market capitalisation; ### the value of the asset-referenced tokens issued or , where applicable , their market capitalisation is at least eur 5 billion in the last financial year;


### the number and value of transactions in those asset-referenced tokens; ### the number and value of transactions in those asset-referenced tokens is at least [xxx] transactions per day or eur 300 million per day respectively;


### 2. paragraph 1 shall not apply to: ### deleted


### 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 incurred by issuers of e-money tokens. ### deleted


### 46 content and form of the crypto-asset white paper for electronic money tokens ### 46 content and form of the crypto-asset key information sheet for electronic money tokens


### 1. before offering e-money tokens to the public in the eu or seeking an admission of such 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. ### 1. before offering e-money tokens to the public in the eu or seeking an admission of such e-money tokens to trading on a trading platform , the issuer of e-money tokens shall obtain approval for its a crypto-asset key information sheet and , once approved , it shall publish it on its website.


### 9. the issuer of e-money tokens shall notify its draft crypto-asset white paper , and where applicable their marketing communications , to the relevant competent authority as referred to in article 3(1) point (24)(b) at least 20 working days before its date of its publication. ### 9. the issuer of e-money tokens shall notify its draft crypto-asset key information sheet , and where applicable their marketing communications , to the relevant competent authority as referred to in article3(1) point (24)(b). the relevant authority shall notify the issuer of its decision regarding the approval within 20 working days of the submission of the draft key information sheet.


### 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. ### 1. the issuer of e-money tokens or its management body is solely responsible for the information provided in its crypto-asset key information sheet or in a in a modified crypto-asset key information sheet and shall be held legally liable to pay compensation for any claim , loss or damage resulting from providing information which is not complete , fair or clear or by providing information which is misleading , in infringement of article 46. 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 , in accordance with the applicable national law as determined by the relevant rules of private international law.


### crypto-asset service providers shall , at all times , meet the conditions for their authorisation. ### crypto-asset service providers shall , at all times , meet the conditions for their initial authorisation and shall notify esma without undue delay , of any material changes to the conditions for their authorisation.


### crypto-asset service providers that provide crypto-asset services on a cross-border basis shall not be required to have a physical presence in the territory of a host member state. ### crypto-asset service providers shall be required to appoint a resident director and to have substantive management presence in the union.


### 1. legal persons that intend to provide crypto-asset services shall apply for authorisation as a crypto-asset service provider to the competent authority of the member state where they have their registered office. ### 1. legal persons that intend to provide crypto-asset services shall apply for authorisation as a crypto-asset service provider to esma.


### 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 the absence of a criminal record in respect of infringements of national rules in the fields of commercial law , insolvency law , financial services law , anti-money laundering law , counter-terrorism legislation , and professional liability obligations; ### 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 10% or more of the share capital or voting rights , or ownership interest in the crypto-asset service provider , including through bearer shareholdings , or through control via other means , information on their identities , proof of the absence of a criminal record in respect of infringements of national rules in the fields of commercial law , insolvency law , financial services law , anti-money laundering law , counter-terrorism legislation , and professional liability obligations;


### proof that the natural persons involved in the management body of the applicant crypto-asset service provider collectively possess sufficient knowledge , skills and experience to manage that provider and that those natural persons are required to commit sufficient time to the performance of their duties; ### proof that the natural persons involved in the management body of the applicant crypto-asset service provider possess sufficient knowledge , skills and experience to manage that provider and that those natural persons are required to commit sufficient time to the performance of their duties;


### 1. members of the management body of crypto-asset service providers shall have the necessary good repute and competence , in terms of qualifications , experience and skills to perform their duties. they shall demonstrate that they are capable of committing sufficient time to effectively carry out their functions. ### 1. members of the management body of crypto-asset service providers shall have the necessary good repute and competence , in terms of qualifications , experience and skills to perform their duties and be fit and proper for the purpose of anti-money laundering and combatting the financing of terrorism. they shall demonstrate that they are capable of committing sufficient time to effectively carry out their functions.


### 2. natural persons who either own , directly or indirectly , more than 20% of the crypto-asset service provider's share capital or voting rights , or who exercise , by any other means , a power of control over the said crypto-asset service provider shall provide evidence that they have the necessary good repute and competence. ### 2. natural persons who either own , directly or indirectly , more than 10% of the crypto-asset service provider's share capital or voting rights , or who exercise , by any other means , a power of control over the said crypto-asset service provider shall provide evidence that they have the necessary good repute and competence and be fit and proper for the purpose of anti-money laundering and combatting the financing of terrorism.


### 3. none of the persons referred to in paragraphs 1 or 2 shall have been convicted of offences relating to money laundering or terrorist financing or other financial crimes. ### 3. none of the persons referred to in paragraphs 1 or 2 shall have been convicted of offences relating to money laundering or terrorist financing or other financial crimes or for misconduct or fraud in the management of a business..


### 1. crypto-asset service providers shall maintain and operate an effective policy to prevent , identify , manage and disclose conflicts of interest between themselves and: ### 1. crypto-asset service providers shall maintain and operate an effective policy to prevent , identify or manage conflicts of interest between themselves and:


### 2. crypto-asset service providers shall disclose to their clients and potential clients the general nature and sources of conflicts of interest and the steps taken to mitigate them. ### 2. crypto-asset service providers shall clearly disclose to their clients and potential clients the general nature and sources of conflicts of interest as well as the risks to the client that arise as a result of the conflicts of interest and the steps taken to mitigate them before undertaking business on their behalf.


### 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. ### 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. over-reliance on disclosure of conflicts of interest shall be considered a deficiency in the crypto-asset service provider’s conflicts of interest policy.


### 8. crypto-asset service providers that are authorised for the custody and administration of crypto-assets on behalf of third parties shall be liable to their clients for loss of crypto-assets as a resulting from a malfunction or hacks up to the market value of the crypto-assets lost. ### 8. crypto-asset service providers that are authorised for the custody and administration of crypto-assets on behalf of third parties shall be liable to their clients for loss of crypto-assets or of the means of access to the crypto-assets as a resulting from an operational incident associate with the provision of the service or the operation of the service provider , including a malfunction or hacks , up to the market value of the crypto-assets lost.


### 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 their clients on their order execution policy and any significant change to it. ### 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 their clients on their order execution policy and any significant change to it.


### advice on crypto-assets ### advice on crypto-assets and portfolio management


### 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 and recommend them only when this is in the interest of the clients. ### 1. crypto-asset service providers that are authorised to provide advice on crypto-assets or portfolio management of crypto-assets shall assess the suitability and appropriateness of such crypto-assets and services with the needs and specific situation of the clients and provide them only when this is in the interest of the clients.


### 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 a basic understanding of risks involved in purchasing crypto-assets. ### 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 or portfolio management of crypto-assets shall obtain from the client or prospective client the information referred to in article 73a (2) , so as to enable the crypto-asset service provider to provide to the client or prospective client the services and crypto-assets that are suitable for him or her and , in particular , are in accordance with his risk tolerance and ability to bear losses.


### 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 crypto-assets consider , on the basis of the information received under paragraph 4 , that the prospective clients or clients have insufficient knowledge , crypto-asset service providers that are authorised to provide advice on crypto-assets shall inform those clients or prospective clients that the crypto-assets or crypto-asset services may be inappropriate for them and issue them a warning on the risks associated with crypto-assets. that risk warning shall clearly state the risk of losing the entirety of the money 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. ### 5. where crypto-asset service providers that are authorised to provide advice on crypto-assets consider , on the basis of the information received under paragraph 3 , that the crypto-assets services or crypto-assets are not suitable nor appropriate for the investment profile of the client , the crypto-asset service providers that are authorised to provide advice on crypto-assets shall inform those clients or prospective clients that the crypto-assets or crypto-asset services are inappropriate for them and shall not recommend or shall not decide to trade where the services or crypto-assets are not suitable for the client clearly state the risk of losing the entirety of the money 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.


### 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: ### deleted


### 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. ### 1. esma shall be the single direct supervisor of all crypto-assets and asset-referenced tokens , except for e-money tokens , and all crypto-asset service providers in the union. esma shall be responsible for carrying out the supervisory functions and duties provided for in this regulation and ensuring compliance with the requirements and obligations laid down in this regulation , in close cooperation with the eba.


### 1. 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 the following supervisory and investigative powers: ### 1. in order to fulfil their duties under titles ii , iii , iv and v of this regulation , esma , eba and the national competent authorities shall have , in accordance with national law , at least the following supervisory and investigative powers:


### report ### evaluation report and review


### 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 the european parliament and the council on the application of this regulation , where appropriate accompanied by a legislative proposal. ### 1. by … [36 months after the date of entry into force of this regulation] after consulting the eba and esma and taking into account the findings of their annual reports , the commission shall present a report to the european parliament and the council on the application and implementation of this regulation and on the compliance with its obligations and requirements. the report shall where appropriate be accompanied by a legislative proposal.


### the number and value of fraud , hacks and thefts of crypto-assets reported in the eu , types of fraudulent behaviour , the number of complaints received by crypto-asset service providers and issuers of asset-referenced tokens , the number of complaints received by competent authorities and the subjects of the complaints received; ### the number and value of fraud , scams , hacks , ransomwares and thefts of crypto-assets reported in the eu , types of fraudulent behaviour , the number of complaints received by crypto-asset service providers and issuers of asset-referenced tokens , the number of complaints received by competent authorities and the subjects of the complaints received;


### 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]. ### 1. 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] shall comply with articles 4 to 14 if they want to continue to be admitted to trading.


### (1) ‘distributed ledger technology’ or ‘dlt’ means a type of technology that support the distributed recording of encrypted data; ### (1) ‘distributed ledger technology’ or ‘dlt’ means a technology that enables to store and share records of data and transactions in a synchronized manner across network nodes , using a consensus mechanism;


### (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; ### (7) ‘offer to the public’ means a communication to persons in any form and by any means , presenting sufficient information on the terms of the offer and the crypto-assets to be offered , so as to enable a person to decide to purchase those crypto-assets. this definition also applies to the placing of crypto-assets through crypto-assets service providers;


### the exchange of crypto-assets for fiat currency that is legal tender; ### the exchange of crypto-assets for funds;


### 1. 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 of such crypto-assets to trading on a trading platform for crypto-assets , unless that issuer: ### 1. no person shall offer crypto-assets , other than asset-referenced tokens or e-money tokens , in the union , to the public , or seek an admission of such crypto-assets to trading on a trading platform for crypto-assets , unless that person:


### has notified that crypto-asset white paper in accordance with article 7; ### has notified and obtained the approval by esma of the crypto-asset key information sheet in accordance with article 7;


### the crypto-assets are unique and not fungible with other crypto-assets; ### deleted


### 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. ### deleted


### 5 content and form of the crypto-asset white paper ### 5 content and form of the key information sheet


### 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; ### a detailed description of the crypto-asset 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;


### information on the underlying technology and standards applied by the issuer of the crypto-assets allowing for the holding , storing and transfer of those crypto-assets; ### information on the underlying technology , protocols , and standards applied by the issuer of the crypto-assets allowing for the holding , storing and transfer of those crypto-assets;


### notification of the crypto-asset white paper , and , where applicable , of the marketing communications ### scrutiny and approval of the crypto-asset key information sheet , and , where applicable , of the marketing communications


### 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. ### 1. a crypto-asset key information sheet shall not be published unless it has been approved by esma.


### 2. issuers of crypto-assets , other than asset-referenced tokens or e-money tokens , shall notify their crypto-asset white paper , and , in case of marketing communications as referred to in article 6 , such marketing communications , to the competent authority of their home member state at least 20 working days before publication of the crypto-asset white paper. that competent authority may exercise the powers laid down in article 82(1). ### 2. issuers , offerors or persons seeking admission to trading of crypto-assets , other than asset-referenced tokens or e-money tokens , or the operator of a trading platform , where applicable , shall notify their crypto-asset white paper , and , in case of marketing communications as referred to in article 6 , such marketing communications , to esma. esma may exercise the powers laid down in article 82(1).


### a financial instrument as defined in article 4(1) , point (15) , of directive 2014/65/eu; ### a financial instrument as defined in article 4(1) , point (15) , of directive 2014/65/eu or a crypto-asset which is deemed to be equivalent to a financial instrument in accordance with the criteria to be specified by esma in accordance with article 2a;


### 4. 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 the competent authority of their home member state with a list of host member states , if any , 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 inform their 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. ### 4. issuers , offerors or persons seeking admission to trading of crypto-assets , other than asset-referenced tokens or e-money tokens , shall , together with the notification referred to in paragraphs 2 and 3 , inform esma of the starting date of the intended offer to the public or intended admission to trading on such a trading platform for crypto-assets. esma shall notify the issuer , the offeror or the person asking for admission to trading of its decision regarding the approval of the crypto-asset key information sheet within 10 working days of the submission of the draft crypto-asset key information sheet. where esma fails to take a decision within such time limit , such failure shall not be deemed to constitute approval of the application.


### 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 make the notified crypto-asset white papers available in the register referred to in article 57. ### 5. esma shall make the notified crypto-asset white papers available in the register referred to in article 57.


### 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 admission of those crypto-assets to trading on a trading platform for crypto-assets. the crypto-asset white paper , and , where applicable , the marketing communications , shall remain available on the issuer’s website for as long as the crypto-assets are held by the public. ### 1. issuers offerors or persons seeking admission to trading 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 admission of those crypto-assets to trading on a trading platform for crypto-assets. the crypto-asset white paper , and , where applicable , the marketing communications , shall remain 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 competent authority in accordance with article 7 , or , where applicable , modified in accordance with article 11. ### 2. the published crypto-asset white paper , and , where applicable , the marketing communications , shall be identical to the version approved by esma in accordance with article 7 , or , where applicable , modified in accordance with article 11.


### 2. the issuer shall immediately inform the public on its website of the notification of a modified 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. ### 2. once , approved , the issuer or offeror or person seeking admission to trading , shall immediately inform the public on its website of the notification to esma of a modified crypto-asset key information sheet and shall provide a summary of the reasons for which it has notified a modified crypto-asset white paper.


### 3. where an offer to the public of crypto-assets , other than asset-referenced tokens or e-money tokens , is cancelled for any reason , issuers of such crypto-assets shall ensure that any funds collected from purchasers or potential purchasers are duly returned to them as soon as possible. ### 3. where an offer to the public of crypto-assets , other than asset-referenced tokens or e-money tokens , is cancelled for any reason , issuers of such crypto-assets shall ensure that any funds collected from purchasers or potential purchasers are duly returned to them as soon as possible and within 14 days at the latest.


### 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 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 crypto-assets may claim damages from that issuer of crypto-assets , other than asset-referenced tokens or e-money tokens , or its management body for damage caused to her or him due to that infringement. ### 1. where an issuer of crypto-assets , other than asset-referenced tokens or e-money tokens , or its management body or the operator of an exchange that has admitted the crypto-assets to trading at its own initiative has infringed article 5 , 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 crypto-assets may claim damages from that issuer of crypto-assets , other than asset-referenced tokens or e-money tokens , or its management body or the operator of an exchange that has admitted the crypto-assets to trading at its own initiative for damage caused to her or him due to that infringement.


### 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 e-money 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. ### deleted


### 1. 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. ### 1. 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 esma.


### the offer to the public of the asset-referenced tokens is solely addressed to qualified investors and the asset-referenced tokens can only be held by such qualified investors. ### deleted


### 5. 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 asset-referenced tokens to trading on a trading platform for crypto-assets. ### 5. the authorisation granted by esma 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 asset-referenced tokens to trading on a trading platform for crypto-assets.


### 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. ### 1. issuers of asset-referenced tokens shall submit their application for an authorisation as referred to in article 15 to esma.


### a legal opinion that the asset-referenced tokens do not qualify as financial instruments , electronic money , deposits or structured deposits; ### an independent and reasoned legal opinion that the asset-referenced tokens do not qualify as financial instruments , electronic money , deposits or structured deposits;


### 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 the reserve assets or against the issuer , including how such rights may be treated in insolvency procedures. ### detailed information on the nature and enforceability of rights , including:


### 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 , they shall set a deadline by which the applicant issuer is to provide any missing information. ### 1. esma shall , within 20 working days of receipt of an application for authorisation as referred to in article 16 , assess whether that application , including the crypto-asset key information sheet 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 key information sheet , is complete. where the application , including the crypto-asset key information sheet , is not complete , it shall 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 the applicant issuer any information on the application , including on the crypto-asset white paper referred in article 16(2) , point (i). ### 2. esma 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 the applicant issuer any information on the application , including on the crypto-asset key information sheet 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 the application file to the eba , esma and the ecb. where the applicant issuer is established in a member state the currency of which is not the euro , or where a currency 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 the right to provide their competent authority with observations and comments on their draft decisions. ### 3. esma shall , after the three months referred to in paragraph 2 , transmit its draft decision to the applicant issuer , and its draft decision and the application file to the eba and the ecb. where the applicant issuer intends to make an offer of crypto-assets to the public or is seeking admission to trading in a member state the currency of which is not the euro , or where a currency that is not the euro is included in the reserve assets , the esma shall consult the central bank of that member state. applicant issuers shall have the right to provide esma with observations and comments on their draft decisions.


### 4. the eba , esma , the ecb and , where applicable , a central bank as referred to in paragraph 3 shall , within 2 months after having received the draft decision and the application file , issue a non-binding opinion on the application and transmit their non-binding opinions to the competent authority concerned. that competent authority shall duly consider those non-binding opinions and the observations and comments of the applicant issuer. ### 4. the eba , the ecb and , where applicable , a central bank as referred to in paragraph 3 shall , within 2 months after having received the draft decision and the application file , issue an opinion on the application and transmit their opinions to the esma. esma shall duly consider those opinions and the observations and comments of the applicant issuer and refuse the authorisations in the cases indicated in article 19 (2).


### 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 , notify that decision to applicant issuers. where an applicant issuer is authorised , its crypto-asset white paper shall be deemed to be approved. ### 1. esma shall , within one month after having received the 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 , notify that decision to applicant issuers. where an applicant issuer is authorised , its crypto-asset white paper shall be deemed to be approved.


### 2. competent authorities shall refuse authorisation where there are objective and demonstrable grounds for believing that: ### 2. esma shall refuse authorisation where there are objective and demonstrable grounds for believing that:


### 3. competent authorities shall inform the eba , esma and the ecb and , where applicable , 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 and crypto-asset service providers referred to in article 57: ### 3. the esma shall inform the eba and the ecb and , where applicable , 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 and crypto-asset service providers referred to in article 57:


### 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 for damage caused to her or him due to that infringement. ### 1. the issuer of asset-referenced tokens or its management body is solely responsible for the information provided in its crypto-asset key information sheet or in a modified crypto-asset key information sheet and shall be held legally liable to pay compensation for any claim , loss or damage resulting from providing information which is not complete , fair or clear or misleading , in infringement of article17. a holder of such asset-referenced tokens may claim damages from that issuer of asset-referenced tokens or its management body for damage caused to her or him due to that infringement , in accordance with the applicable national law as determined by the relevant rules of private international law.


### 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. ### deleted


### 1. issuers of asset-referenced tokens shall establish and maintain effective and transparent 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 to facilitate the handling of such complaints between holders of asset-referenced tokens and such third-party entities. ### 1. issuers of asset-referenced tokens shall establish and maintain effective and transparent procedures for the prompt , fair and consistent handling of complaints received from holders of asset-referenced tokens and other interested parties , including consumer associations. 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 to facilitate the handling of such complaints between holders of asset-referenced tokens and such third-party entities.


### 3. natural persons who either own , directly or indirectly , more than 20% of the share capital or voting rights of issuers of asset-referenced tokens , or who exercise , by any other means , a power of control over such issuers shall have the necessary good repute and competence. ### 3. natural persons who either own , directly or indirectly , more than 20% of the share capital or voting rights of issuers of asset-referenced tokens , or who exercise , by any other means , a power of control over such issuers shall have the necessary good repute and competence and be fit and proper for the purpose of anti-money laundering and combatting the financing of terrorism.


### 11. issuers of asset-referenced tokens shall ensure that they are regularly audited by independent auditors. the results of those audits shall be communicated to the management body of the issuer concerned and made available to the competent authority. ### 11. issuers of asset-referenced tokens shall ensure that they are regularly audited by independent external auditors , at least annually. the results of those audits shall be communicated to the management body of the issuer concerned and the esma at the latest within 4 weeks of the date of the valuation and shall be made publicly available without delay , unless the competent authority has requested a delay of such publication in the interest of the holders and financial stability.


### b. whereas although tax policy largely remains a member state responsibility , the single market requires a minimum degree of coordination in setting tax policy1 ; ### b. whereas although tax policy largely remains a member state responsibility , an economic and monetary union requires a more appropriate framework to ensure cooperation and coordination in the field of taxation , particularly to achieve optimal results in preventing base erosion , dumping and tax competition and therefore require a degree of coordination or harmonisation in setting tax policy1 ;


### c. whereas tax policy fragmentation creates various obstacles for companies and citizens in the single market , including legal uncertainty , red tape , the risk of double taxation and difficulties claiming tax refunds; whereas these obstacles discourage cross-border economic activity in the single market; whereas policy fragmentation also creates risks for tax authorities such as double non-taxation and arbitrage possibilities (such as tax planning); ### c. whereas tax policy fragmentation creates various obstacles for citizens and companies in the single market , including legal uncertainty , red tape , the risk of double taxation and difficulties claiming tax refunds; whereas these obstacles discourage cross-border economic activity in the single market ; whereas policy fragmentation equally creates risks for tax authorities such as double non-taxation and arbitrage possibilities (such as tax planning and aggressive tax avoidance practices); whereas policy fragmentations increases tax authorities’ cost of enforcement ;


### d. whereas within the eu’s social market economy , adequate tax levels and simple and clear tax laws should not distort economic actors’ decision-making; whereas sound tax policies should support the creation of jobs and economic growth and improve the competitiveness of the eu and its member states; ### d. whereas within the eu’s social market economy , adequate tax levels and simple and clear tax laws should aim at being least distortive as possible; whereas holistic tax systems should fulfil four objectives including revenue raising , redistribution , repricing and representation leading to fair societies and sustainable and carbon-neutral economy;


### e. whereas the overall level of taxation differs considerably between member states , as demonstrated by the fact that the tax-to-gdp ratio varied between 22.1 % in ireland and 46.1 % in denmark in 20192 ; whereas on aggregate , the tax burden in the eu (40.1 %) is high even when compared to other advanced economies (the organisation for economic co-operation and development (oecd) average was 34.3 % in 2018); ### e. whereas the overall level of taxation differs considerably between member states , as demonstrated by the fact that the tax-to-gdp ratio varied between 22.1 %in ireland and 46.1 % in denmark in 20192;whereas on aggregate , the tax to gdp in the eu (40.1 %) is higher compared to the organisation for economic co-operation and development (oecd) average of 34.3 %in 2018; whereas strong tax competition in the eu appears to have been a major driving force behind the steep decline in corporate income tax rates that has brought the average european corporate income tax rate below the average rate in oecd countries;


### 1. recalls that member states are free to decide on their own economic policies and in particular their own tax policies; recalls , however , that member states must exercise this competence consistently with union law; ### 1. recalls that member states are free to decide on their own economic policies and in particular their own tax policies within the boundaries of the eu treaties and insofar eu law is transposed and properly enforced; highlights , however , that tax differentials and excessive tax competition distort the international allocation of capital and production and the cross-border spillovers of other countries’ tax policies may limit de facto tax sovereignty;