The European Banking Authority (EBA) has released a statement today calling for early preparation in adopting 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 trading cryptocurrencies.

In line with its duties, the EBA, which serves as a financial watchdog for the European Union, has started unveiling measures aim at ensuring a “smooth” transition into the new regulated trading regime, which is expected to begin in 2024.

Related Reading: EU’s Crypto Law MiCA Receives Publication In Official Journal

In the statement released today, the European Banking Authority is pushing for the preparation of MiCA adoption in regard to asset-reference tokens (ARTs) or electronic money tokens (EMTs) operations. 

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

In general, The EBA is encouraging stablecoin issuers to make the necessary provisions to adopt the MiCA regulations in order to avoid significant and abrupt business adjustments in the future.

To that effect, the European regulator released a set of guiding principles that begins by urging stablecoins operators to fully disclose the rights and risks attached to owning any token while ensuring equal and fair treatment to all holders. 

Furthermore, the EBA emphasized the importance of a well-defined business model and admonished stablecoin issuers to achieve sound governance, especially in relation to risk management. 

Finally, the European Banking Authority stated that all financial institutions offering stablecoins in the EU should set in place “robust reserve, recovery, and redemption arrangements” while ensuring steady communication with the relevant authority in their jurisdiction.

That said, the EBA also reminded all stablecoins users that the rights and protections laid out in MiCA regulations concerning the use of ARTs and EMTs will not take effect until June 30, 2024.

In other news today, the European Securities and Market Authorities (ESMA), another European Union financial regulator, has released a consultation paper seeking input on the enforcement of MiCA regulations.

Under the new MiCA legal framework, the ESMA is tasked with communicating technical standards and guidelines explaining certain provisions in the incoming regime.

To that effect, this consultation package represents the first of three papers, with the other two scheduled to be published in October 2023 and Q1 2024, respectively.

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

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

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