The European Union Banking Authority calls for preparation before the MiCA

The European Banking Authority (EBA) issued a statement today cEarly preparation for the adoption of the Markets in Crypto Assets (MiCA) regulations.

Back in May, the European Council approved the newly formed MiCA Regulations, becoming the first comprehensive regulatory framework for cryptocurrency trading.

In line with its duties, the EBA, which acts as the EU’s financial watchdog, has begun to unveil measures aimed at ensuring a “smooth” transition to the new regulated trade regime, which is expected to start in 2024.

Related reading: EU MiCA Cryptography Act Receives Publication in the Official Gazette

The EBA issues guidelines for stablecoin operations

In the statement released today, the European Banking Authority is pushing for a MiCA accreditation setup in relation to Asset Reference Tokens (ARTs) or Electronic Financial Token Transactions (EMTs).

ARTs represent stablecoins whose value is tied to more than one asset, while EMTs are also stablecoins but with a single reference asset.

In general, the EBA encourages stablecoin issuers to make the necessary decisions to adopt the MiCA regulations in order to avoid large and sudden business adjustments in the future.

To that end, the European regulator has released a set of guidelines that begin by urging stablecoin operators to fully disclose the rights and risks associated with owning any token while ensuring equal and fair treatment for all holders.

Moreover, the EBA stressed the importance of a well-defined business model and admonished stablecoin issuers for sound governance, particularly in terms of risk management.

Finally, the European Banking Authority stated that all financial institutions offering stablecoins in the EU must put in place “robust backup, redemption and redemption arrangements” while ensuring continuous communication with the relevant authority in their jurisdiction.

However, the EBA also reminded all stablecoin users that the rights and protections stipulated in the MiCA regulations regarding the use of ARTs and EMTs will not take effect until June 30, 2024.

Total Crypto Market Cap Valued $1.149 Trillion On The 4-Hour Chart | Source: TOTAL Chart On Tradingview.com

The European Union’s ESMA is exploring the MiCA regulation, and issuing an advisory pack on new proposals

In other news today, the European Securities and Market Authority (ESMA), another EU financial regulator, released an advisory paper seeking input on enforcement of the MiCA regulations.

Under the new MiCA legal framework, ESMA is tasked with communicating technical standards and guidelines to explain some of the provisions in the upcoming system.

To that end, this consulting package represents the first of three papers, with the other two papers scheduled to be published in October 2023 and the first quarter of 2024, respectively.

ESMA states that the consultation papers are open to receiving comments from all stakeholders in the crypto space, including crypto asset operators, crypto asset service providers, financial institutions with crypto investments, and private individuals with an interest in the crypto space.

However, submission of any response to the first consultation paper will end by September 20, 2023.