On 8 March 2024, the European Banking Authority (EBA) issued a consultation on draft guidelines on redemption plans under Articles 47 and 55 of the Markets in Crypto-Assets Regulation (MiCAR).

By way of background, under MiCAR, a redemption plan must be developed by each issuer of an asset-referenced token (ART) or of an e-money token (EMT) to ensure the orderly redemption of the tokens when the Member State competent authority (NCA) assesses that the issuer is “unable or likely to be unable to fulfil its obligations”.

The draft guidelines lay down guidance for issuers when drawing up a redemption plan and for NCAs when assessing such a plan. In terms of content the guidelines are articulated in four sections and sub-sections. The draft guidelines shall apply to all issuers of ARTs and to all issuers of EMTs, however it is clarified that the sections and provisions relating to the reserve of assets do not apply to credit institutions issuing EMTs and to e-money institutions (EMIs) issuing non-significant EMTs.

The draft guidelines can be summarised as follows:

  • Section 1 relates to the principle of proportionality and lays down the elements to be considered to ensure an appropriate level of detail of the content of the redemption plan and an adequate periodicity for its review or update.
  • Section 2 relates to general principles and concerns the specification of the main features and objectives of the redemption plan, as referred to Article 47 MiCAR. It clarifies aspects for the achievement of the equitable treatment of all token holders, including the suspension of individual redemption claims.
  • Section 3 relates to the content of the redemption plan and focuses on governance requirements, relating, for instance, to the processes applicable for the development, update, and the execution of the redemption plan, as well as to the identification of the responsible persons.
  • Section 4 relates to triggers of the redemption plan. In addition to three situations where MiCAR considers that the issuer is “unable or likely to be unable to fulfil its obligations” (such as insolvency, resolution, or withdrawal of authorisation), the draft guidelines specify elements to be considered by the NCA to assess whether the issuer is unable or likely to be unable to fulfil its obligations.

The draft guidelines also cover aspects of pooled issuance (where the same token is issued by multiple issuers), indicating the need for a common plan agreed upon by all issuers.

Next steps

The deadline for comments on the consultation is 10 June 2024.

The EBA will hold a virtual public hearing on the consultation on 22 May from 14:00 to 16:00 Paris time.