E-Money Regulations

E-money is defined in the 2EMD as being a store of monetary value stored via electronic or magnetic means. E-money is represented by a claim on e-money issuer, which is issued on the receipt of funds, for the purpose of making payment transactions. For e-money, to fall within the category, it must be accepted by a natural or legal person other than the e-money issuer itself. E-Money Regulations aim to standardise rules on digital transactions across all member states, and ensure safe services as well as equal competition. Some stablecoins may fall under the E-money regulations – when they are backed by a fiat currency and share similar characteristics to e-money. Nevertheless, e-money regulations have not been designed to address the specificities of stablecoins and thus the associated risks, therefore they are additionally regulated by the Markets in Crypto Assets regulation (MiCA) under the category of ‘e-money tokens’.

March 2024 European Securities and Markets Authority (ESMA)

The European Securities and Markets Authority (ESMA) published its third consultation package under the Markets in Crypto-Assets Regulation (MiCA).

In the consultation package, ESMA is seeking input on four sets of proposed rules and guidelines, covering:

  • Detection and reporting of suspected market abuse in cryptoassets (RTS).
  • Policies and procedures, including the rights of clients, for cryptoasset transfer services (Guidelines).
  • Suitability requirements for certain cryptoasset services and format of the periodic statement for portfolio management (Guidelines).
  • ICT operational resilience for certain entities under MiCA (Guidelines).

Deadline for comments is 25 June 2024.

ESMA will publish a final report based on the feedback received and will submit the draft technical standards to the European Commission for endorsement by 30 December 2024 at the latest.

March 2024 European Banking Authority

The European Banking Authority (EBA) launched a consultation on the redemption Guidelines that it is required to issue under Regulation (EU) 2023/1114 on Markets in Crypto-assets (MiCA).

MiCA mandates the EBA to develop technical standards and guidelines to specify the requirements for asset-referenced tokens and e-money tokens.

The EBA is seeking consultation responses on its proposed Guidelines to redeem asset-referenced or e-money tokens in the event that an issuer fails to fulfil its obligations under MiCAR.

The proposed Guidelines subject to the consultation include the following:

  • A clarification of the principles of redemption, such as equitable treatment of token holders.
  • A description of the steps for the redemption plan, including the communication measures, the content of the redemption claims and the distribution plans.
  • Addressing the scenario of pooled issuance wherein the same token is issued by multiple issuers.
  • Considering the circumstances under which an authority is entitled to activate the plan, and the role that the prudential and resolution authorities will play in this.

Deadline for comments is 10 June 2024.

February 2024 Commission de Surveillance du Secteur Financier (CSSF)

The CSSF has invited entities considering a notification or submission of an authorisation file for the provision of CASP services or the issuance of asset-referenced token (ART) or e-money token (EMT) to contact it now to initiate a preliminary dialogue.

The targeted entities are those with concrete projects to provide services on cryptoassets (‘CASP’ license) or issue ART or EMT falling under the MiCA regulation (EU) 2023/1114 entering into application on 30/6/2024 and 30/12/2024.

February 2024 Isle of Man Financial Services Authority

The Financial Services Authority published a discussion paper 'Regulation of cryptoasset activities', which seeks views on the potential expansion of the regulatory framework for financial services to include the regulation of certain activities relating to cryptoassets. 

In particular, views are being sought on the current approach to the oversight of certain cryptoasset activities for anti-money laundering and countering the financing of terrorism  purposes, potential approaches to the regulation of such activities, and how the cost of such regulation should be funded.

Deadline for comments is 9 April 2024.

October 2023 Council of the European Union

On 17 October 2023, the European Council adopted a directive amending EU rules on administrative cooperation in the area of taxation (DAC8). The amendments mainly concern "the reporting and automatic exchange of information on revenues from transactions in cryptoassets and on advance tax rulings for the wealthiest (high-net-worth) individuals."

The aim of the Directive is to "strengthen the existing legislative framework by enlarging the scope for registration and reporting obligations and overall administrative cooperation of tax administrations."

There will be a "mandatory automatic exchange" between tax authorities of information which will have to be provided by reporting cryptoasset service providers.

This directive covers a broad scope of cryptoassets, building on the definitions set out in MiCA. Also, those cryptoassets that have been issued in a decentralised manner, as well as stablecoins, including e-money tokens and certain non-fungible tokens (NFTs), are included in the scope.

July 2023 European Banking Authority

The European Banking Authority published a statement for the attention of financial institutions and other undertakings that intend to commence, or have commenced, asset-referenced token (ART) or electronic money token (EMT) activities prior to 30 June 2024 (the application date for the relevant provisions of the Markets in Crypto-assets Regulation - MiCA) and for competent authorities. 

The statement is intended to encourage timely preparatory actions to MiCA application, with the aim to reduce the risks of potentially disruptive and sharp business model adjustments at a later stage, to foster supervisory convergence, and to facilitate the protection of consumers.

The statement includes ‘guiding principles’ to which financial institutions (and other undertakings) carrying out ART/EMT activities are encouraged to have regard until the application date. These guiding principles encompass:

(i) disclosures to, and fair treatment of, potential acquirers and holders of ARTs and EMTs,

(ii) the business model,

(iii) sound governance, including effective risk management,

(iv) reserve, recovery and redemption arrangements, and

(v) communications with the relevant competent authority.

The statement is accompanied by a template that financial institutions (and other undertakings) intending to carry out, or carrying out, ART/EMT activities, are encouraged to communicate, on a timely basis, to the relevant competent authority.

The EBA reminded consumers that prior to 30 June 2024, ARTs and EMTs do not constitute regulated instruments under MiCA and so do not yet benefit from the rights and protections set out in MiCA. 

June 2023 Council of the European Union / European Parliament

On 9 June 2023, the Market in Crypto Assets Regulation (MiCA) was published in the Official Journal of the European Union as Regulation (EU) 2023/1114. The updated transfer of funds regulation, which will cover cryptossets, was published as Regulation (EU) 2023/1113. 

MiCA will enter into force on 29 June 2023 and will apply from 30 December 2024. However, the regulation will apply to e-money tokens and asset-referenced tokens from 30 June 2024.

The new transfer of funds regulation will also enter into force on 29 June 2023 and apply from 30 December 2024. 

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