RegAlertGuidance · ESMA · 27 Jun 2024
Joint EBA and ESMA Guidelines on Suitability of Management Body Members and Shareholders for Entities under MiCA
Members of the management body of issuers of ARTs and CASPs must be of sufficiently good repute, possess appropriate knowledge, skills and experience, and commit sufficient time; those subject to targeted financial sanctions are forbidden to perform their function and must be removed. Issuers of ARTs and CASPs must adopt a suitability policy, assess candidates before appointment or without undue delay, notify competent authorities of management body changes, and re-assess on relevant events. Proposed acquirers of qualifying holdings must meet the suitability requirements of Articles 42 or 84 of MiCA.
EBA/GL/2024/09
ESMA75-453128700-10
27/06/2024
Final report
On joint EBA and ESMA Guidelines on the suitability assessment of members of management body of issuers of asset-referenced tokens and of crypto-asset service providers, and
on Joint EBA and ESMA Guidelines on the suitability assessment of shareholders and members, whether direct or indirect, with qualifying holdings in issuers of asset-referenced tokens and in crypto-asset service providers
Table of content
Executive Summary 3
Background 4
Joint EBA and ESMA Guidelines on the assessment of the suitability of the members of the management body of issuers of asset-referenced tokens and of crypto-asset service providers 11
A. Compliance and reporting obligations 12
Subject matter, scope and definitions 13
B. Implementation 15
C. Joint Guidelines 15
C.1. Application of the proportionality principle 15
C.2. Notions of suitability under Articles 34(2) and 68(1) of MiCA 16
C.3. Suitability assessments of members of the management body by Issuers of ARTs and CASPs 23
C.4. Issuers of ARTs’ or CASPs’ corrective measures 27
C.5. Suitability assessment by competent authorities 28
C.6. Decision of the competent authority 29
Draft Joint Guidelines on the assessment of the suitability of the shareholders or members, whether direct or indirect, with qualifying holdings in issuers of ARTs or of CASPs 31
D. Compliance and reporting obligations 31
Subject matter, scope and definitions 33
E. Implementation 35
F. Draft Joint Guidelines 35
F.1. Acting in concert, significant influence, indirect shareholders, decision to acquire 35
F.2. Assessment of suitability of shareholders or members, whether direct or indirect, with qualifying holdings at authorisation 35
F.3. Assessment of the suitability of a proposed acquirer of a qualifying holding in accordance with Articles 42(1) or 84(1) of MiCA 36
Annex I – Template for a matrix to assess the collective competence of members of the management body 39
Accompanying documents 40
Draft cost-benefit analysis / impact assessment 40
Feedback on the public consultation 45
Executive Summary
Members of the management body of an issuer of asset-referenced tokens (ARTs) and of a cryptoasset service provider (CASP) must be of sufficiently good repute and possess individually and collectively appropriate knowledge, skills and experience and be capable of committing sufficient time to their duties; such firms need to notify their competent authority of any changes to the composition of the management body to allow for the assessment by the competent authority.
For purposes of granting authorisation as issuer of ARTs or as a CASP, shareholders and members that hold, directly or indirectly, qualifying holdings in issuers of ARTs and in CASPs must be of sufficiently good repute and, in particular, must not have been convicted of offences relating to money laundering or terrorist financing or of any other offences that would affect their good repute. Sufficiently good repute has to be maintained at all times by shareholders or members with direct or indirect qualifying holdings.
In case of the proposed acquisition of direct or indirect qualifying holdings in an authorised issuer of ARTs or in an authorised CASP, the proposed acquirer has to meet the suitability requirements set out in Articles 42 or in Article 84 of Regulation (EU) 2023/1114 (MiCA), relating to: a) the reputation of the proposed acquirer; b) the suitability of the members of the persons who will direct the business of the target issuer of ARTs or of the CASP as a result of the acquisition; c) the financial soundness of the proposed acquirer; d) the ability of the target issuer of ARTs or CASP to comply or continue to comply with the applicable prudential requirements; e) the absence of suspicion of risk of money laundering or terrorist financing arising from the acquisition.
This final report contains two Joint European Banking Authority (EBA) and European Securities Markets Authority (ESMA) Guidelines:
1. Joint Guidelines on the suitability assessment of the members of the management body of issuers of ARTs or of CASPs;
2. Joint Guidelines on the suitability assessment of shareholders and members with qualifying holdings in issuers of ARTs or of CASPs.
The Guidelines outline the different elements that should be considered in conducting the suitability assessment of the members of the management body of issuers of ARTs or of CASPs and shareholders and members with qualifying holdings in issuers of ARTs or of CASPs. Guidance is provided on the information to be considered as part of the suitability assessment as well as the method of conducting the assessment.
The Guidelines are issued in accordance with MiCA as well as Regulation (EU) 1093/2010 and Regulation (EU) 1095/2010 (Regulations establishing EBA and ESMA respectively). The Guidelines should be used by CASPs, issuers of ARTs and competent authorities when carrying out the assessment of the requirements set out in MiCA regarding the suitability of (i) members of management bodies and (ii) shareholders or members with direct or indirect qualifying holdings and (iii) persons who wish to acquire such qualifying holdings.
Background
Legal basis and objective
According to Articles 18(2)(i) and 62(2)(g) of MiCA, members of the management body of an issuer of ART or of a CASP have to be of sufficiently good repute and possess, individually and collectively, the appropriate knowledge, skills and experience to manage the applicant issuer. In particular, they should not have been convicted of offences relating to money laundering or terrorist financing or of any other offences that would affect their good repute. Members of the management body of issuers of ARTs or CASPs must also demonstrate that they are capable of committing sufficient time to effectively perform their duties. Failure to meet this requirement is a ground for refusal of authorisation under Articles 21(2)(b) and 63(10)(b) of MiCA, where there are objective and demonstrable grounds that the members of their management body do not meet the requirements set out in Article 34(2) or Article 68(1) of MiCA respectively.
In accordance with Article 33 and Article 69 of MiCA, authorised issuers of ARTs and authorised CASPs are required to notify to their competent authorities any changes to the management body and provide the necessary information to assess the compliance with Article 34(2) or Article 68 respectively.
Moreover, the authorisation should be withdrawn under Article 24(1)(c) or Article 64(1)(e) MiCA if the issuer of an ART or a CASP does not any longer meet the conditions under which the authorisation was granted, this includes situations, where the members of the management body, individually or collectively, are not any longer considered to be suitable.
According to Articles 18(2)(j), and 62(2)(h) of MiCA issuers of ARTs or CASPs, when applying for an authorisation respectively under Article 18 or 62 of MiCA, have to prove that the shareholders or members with direct or indirect qualifying holdings are of sufficiently good repute. Failure to meet this requirement is a ground for refusal of authorisation under Articles 21(2)(c) or Article 63(10)(c) of MiCA, where there are objective and demonstrable grounds that the criteria for sufficiently good repute set out in Article 34(4) and Article 68(2) of MiCA are not met, in particular if the shareholders or members have been convicted of offences relating to money laundering or terrorist financing or of any other offences that would affect their good repute.
Proposed acquisitions of direct or indirect qualifying holdings in authorised ART issuers or authorised CASPs are subject to prior prudential assessment under Articles 41(1) and 84(1) of MiCA, requiring proposed acquirers to be assessed against the five suitability criteria set out therein and relating to: a) reputation of the proposed acquirer; b) suitability of the members of the persons who will direct the business of the target undertaking as a result of the acquisition; c) the financial soundness of the proposed acquirer; d) the ability of the target undertaking to comply or continue to comply with the applicable prudential requirements; e) the absence of suspicion of risk of money laundering or terrorist financing.
EBA and ESMA have received two joint mandates under MiCA to issue respectively (i) guidelines on the assessment of the suitability of the members of the management body of issuers of ARTs and of the shareholders and members, whether direct or indirect, that have qualifying holdings in issuers of ARTs in accordance with Article 21(3), and (ii) guidelines on the assessment of the suitability of the members of the management body of the CASP and of the shareholders or members, whether direct or indirect, that have qualifying holdings in the CASP in accordance with Article 63(11). In addition to such mandates, EBA and ESMA are empowered to issue guidelines addressed to competent authorities or financial market participants, pursuant to Article 16 of their respective founding Regulations, with a view to establishing consistent, efficient and effective supervisory practices within the ESFS, and to ensuring the common, uniform and consistent application of Union law. On this basis, EBA and ESMA consider also appropriate to issue Guidelines clarifying the circumstances giving rise to a qualifying holdings, i.e acting in concert, significant influence, indirect shareholders and decision to acquire and clarifying the methodology to assess the suitability, in accordance with Article 42(1), points (a) to (e) and Article 84(1), points (a) to (e) of MiCA, of a proposed acquirer of qualifying holdings in an issuer of ARTs authorised under Article 21 of that Regulation or in a CASP authorised under Article 62 of that Regulation, respectively.
Considering the identical content and deadline of both mandates under Articles 21(3) and 63(11) of MiCA, ESMA and EBA assessed that having one single document covering both mandates, both for CASPs and for issuers of ARTs would be more practical and beneficial to stakeholders, especially considering situations where the same entity has applied for both authorisations as issuer of ART and of CASP. However, considering the differences in the applicable requirements to members of management body and to shareholders or members with qualifying holdings, the mandates are divided into two separate Guidelines, one applying to members of management bodies of issuers of ARTs and CASP and the other applying to shareholders or members with direct or indirect qualifying holdings.
The Guidelines on the suitability assessment of the members of the management body aim to specify the requirements and harmonise the suitability assessment of the members of the management body of issuers of ARTs and of CASPs, when applying for an authorisation respectively under Article 18 or 62 of MiCA and on an ongoing basis.
The Guidelines on the suitability assessment of the shareholders and members with direct and indirect qualifying holdings aim to harmonise the suitability assessment of the shareholders and members with direct or indirect qualifying holdings in issuers of ARTs and CASPs, when applying for an authorisation respectively under Article 18 or 62 of MiCA. The Guidelines also aim at providing clarifications on the circumstances giving rise to a qualifying holding such as the notions of acting in concert, indirect shareholders, significant influence and decision to acquire and on the methodology to assess the suitability of the proposed acquirer in case of a proposed acquisition in an authorised issuer of ART or CASP. The aim of these two Guidelines is to implement an EU harmonised framework for such assessments by issuers of ARTs, by CASPs and to foster supervisory convergence.
Rationale – GL on the assessment of the suitability of the management body
Having suitable management bodies as part of issuers of ARTs and CASPs robust governance arrangements contributes to the trust into the financial system and contribute to ensure the confidence in those assets and services, supporting the development of an ecosystem of crypto assets.
These Guidelines should specify further the assessment of the suitability of members of the management body, including the assessment process and assessment criteria, with the objective that the assessment of the knowledge, skills and experience required individually and collectively from members of the management body is proportionate in light of the business model of the issuer of ARTs or CASPs and risks they pose to holders of tokens, users of tokens and services and to crypto-markets and the financial stability. In any case, all members need to be of sufficiently good repute. In addition, members need to be able to commit sufficient time to perform their role, whereby the required time-commitment is relative to the business activities and strategy of the issuer of ART or of the CASP.
Credit institutions authorised under Directive 2013/36/EU do not require an authorisation to issue asset-referenced tokens or to provide any crypto-asset services in accordance with Articles 16(1)(b) and 60(1) of MiCA. Investment firms require an authorisation under MiCA, only if they intend to issue ARTs, or provide crypto asset services other than the ones already covered under their existing authorisation in accordance with Article 60(3) of this Regulation, i.e. crypto-asset services in the Union that are equivalent to the investment services and activities for which the investment firm is specifically authorised under Directive 2014/65/EU. The same Article includes some other exceptions from the authorisation requirement for central securities depositories, electronic money institutions, UCITS, alternative fund managers and market operator. Despite the absence of an authorisation requirement, that includes a fitness and propriety test of the management body, the management bodies of all those firms are subject to the ongoing suitability requirements if they perform activities covered by MiCA.
However, as an equivalent suitability framework exists for credit institutions under Directive 2013/36/EU (CRD) and Directive 2014/65/EU (MiFID II). It is therefore not necessary to address the present guidelines to credit institutions who should remain subject to the Joint EBA and ESMA Guidelines on the assessment of the suitability of members of the management body and key function holders under CRD and MiFID II. The latter includes additional requirements compared to the present guidelines. The same holds true for investment firms that provide only those crypto asset services that are covered by their existing authorisation. The aforementioned guidelines will be revised to include the more specific assessment criteria specified in paragraph 28 of Section C.2.3 of the present guidelines that are relevant for the assessment of the knowledge of members of the management body regarding the issuance of tokens or providing crypto asset services.
The suitability requirements must be met at authorisation and afterwards on an ongoing basis. In order to ensure that the requirements are met at all times, including when there are newly appointed members in the management body, the issuers of ARTs or CASP should assess the knowledge, skills, experience, good repute and ability to commit sufficient time of candidates for positions in the management body prior to their appointment or in the case of appointed members without undue delay, where an ex-ante assessment before the appointment has not been possible.
Also, other events than the appointment of new members, which may potentially affect the individual or collective suitability of members of the management body in terms of their sufficient knowledge, skills and experience, good repute and ability to commit sufficient time, should lead to a re-assessment of the respective member of the management body and, where necessary the collective suitability of the management body.
Appropriate knowledge, skill and experience cannot be determined by having worked for a period of time in a certain position or by having a specific educational degree but needs to be assessed on a case-by-case basis. These draft Guidelines provide criteria for this assessment and the assessment process. The knowledge of members of the management body should be kept up to date, taking into account changes in the nature, scale and complexity of the activities of the issuer of ARTs or CASP.
While the risks created by issuers of ARTs or CASPs differ, the assessment processes to determine the suitability of a member of the management body are similar. However, the assessment criteria need to take into account the specific business models of such firms and therefore these Guidelines provide, as necessary, for separate criteria for the assessment of the management body of issuers of ARTs and of CASPs.
These Guidelines will apply to all existing board structures, but do not interfere with the general allocation of competences in accordance with applicable company law. Accordingly, they should be applied irrespective of the board structures used (unitary, dual board structure or other board structures).
Considering all existing governance structures provided for in applicable company laws, competent authorities will ensure the effective and consistent application of these Guidelines in their jurisdiction. For this purpose, competent authorities may further clarify the governing bodies and functions on the basis of the definitions provided in these Guidelines to which the tasks and responsibilities set forth in these Guidelines pertain, when this is appropriate to ensure the proper application of these Guidelines in accordance with the governance structures provided for under the applicable company law.
Other than for the purposes of providing further guidance on the legislation applicable to issuers of ARTs and CASPs in respect of the assessment of suitability, these draft Guidelines do not aim to interfere with other legislation such as social, company or labor law, which needs to be complied with.
Competent authorities should have processes in place for the assessment of the members of the management body and the collective suitability of the management body. Competent authorities’ processes should ensure that all members of the management body are assessed.
It is important to ensure that competent authorities intervene if the management body is not suitable to conduct the business of the issuer of ARTs or CASP in a competent and responsible manner and if the members fail to meet or no longer meet the requirements of good repute or do not commit sufficient time. Measures available to competent authorities may differ between Member States depending on the applicable national laws. Such measures can range from asking for corrective measures, including training, preventing a member of the management body from performing tasks, temporarily banning or replacing a member or ultimately withdrawing the issuer of ARTs or CASP’s authorisation.
Rationale - Guidelines on the suitability assessment of the shareholders and members with qualifying holdings
The assessment of the suitability of shareholders or members with direct or indirect qualifying holdings in a supervised entity is a key aspect of the gate keeping function exercised by supervisory authorities, having regard to the significant influence that they may exercise on the management of the supervised entity. By subjecting to prior assessment shareholders or members with direct or indirect qualifying holdings, an ex-ante scrutiny is imposed at market access, with a view to ensuring the integrity, safety and soundness of the financial market.
Consistently with that general principle, MiCA requires a prior assessment of shareholders and members with direct or indirect qualifying holdings as a condition for granting authorisation to issuers of ARTs and to CASPs. A prior assessment is also imposed on proposed acquirers of direct or indirect qualifying holdings in authorised issuers of ARTs or in authorised CASPs. However, the assessment criteria differ.
For the purposes of granting authorisation, shareholders and members with direct or indirect qualifying holdings are required to be of ‘sufficiently good repute’. Such requirement has to be complied with on an on-going basis, as specified in Articles 34(4) and 68(2) of MiCA.
In case of acquisition or increase of direct or indirect qualifying holdings in an authorised issuer of ARTs or in an authorised CASP, Articles 41 and 42 of MiCA, and Articles 83 and 84 of MiCA respectively require the proposed acquirer qualifying holdings in authorised issuers of ARTs or in authorised CASPs to be assessed against a broader set of requirements and lay down five suitability criteria. The same provisions set out the prior notification requirements to the competent authority of the target authorised issuer of ART or authorised CASP and the process applicable to the prudential assessment of the proposed acquisition. The referred provisions set out in of MiCA applicable to authorised issuers of ARTs or to authorised CASPs are aligned and mirror the process, timeline and assessment criteria set out in Directive 2014/465/EU, laying down a maximum harmonisation regime for the acquisition of qualifying holdings across the financial sector, and reflected in Articles 11 and 12 of MiFID II and in Articles 22 and 23 of CRD. To note also that the definition of qualifying holding set out in point (36) of Article 3(1) of MiCA reflects the definition of qualifying holding set out in point (31) of Article 4(1) of MiFID II and in point (36) of Article 4(1) of Regulation (EU) 575/2013 (‘CRR’).
Having regard to the cross-sectoral imprint of the regime applicable to the assessment of shareholders or members with direct or indirect qualifying holdings, these Joint Guidelines aim to ensure the closest alignment with the existing assessment methodology applicable across the financial sector, as laid down in Directive 2007/44/EC and specified in the Joint ESAs Guidelines for the prudential assessment of acquisitions of qualifying holdings1 (‘ESAs Joint GL on QH’). To this end, these draft Joint Guidelines do not lay down new autonomous guidance but cross-refer to the relevant sections of the ESAs Joint GL on QH. Such drafting technique has the merit of ensuring the closest alignment also in case of subsequent amendments of the ESAs Joint GL on QH, which are the regulatory product of reference for this cross-sectoral regime. To ensure consistency, these draft Joint Guidelines integrate the definitions used in the ESAs Joint GL on QH with the relevant elements of MiCA, so that the relevant Sections of the ESAs Joint GL on QH that are cross-referred to can be read in the light of MiCA.
These draft Joint Guidelines are addressed to the competent authorities as defined in Article 3(1) point (35) (a) of MiCA. In terms of scope of application, they are based on the mandate set out in Articles 21(3) and 63(11) of MiCA requiring to specify the assessment of the ‘suitability’ of shareholders or members with direct or indirect qualifying holdings, at authorisation and on Article 16 of the ESMA and EBA Regulationsfor clarifications on qualified holdings and, together with Articles 42(1) and 84(1) of MiCA, for the assessment of a proposed acquirer in an authorised entity. Notably these draft Joint Guidelines cover:
a. the assessment of the sufficiently good repute of shareholders or members with direct or indirect qualifying holdings for purposes of granting the authorisation as issuers of ARTs or CASPs;
b. the assessment of suitability of proposed acquirers concerning direct or indirect qualifying holdings in authorised issuers of ARTs or in authorised CASPs;
c. the notion of acting in concert, indirect shareholders, significant influence and decision to acquire which are functional to the identification of a qualifying holding and preliminary to any suitability assessment.
With regard to point (a) above, the assessment of sufficiently good repute at authorisation has to cover the absence of convictions for offences relating to money laundering or terrorist financing or of any other offences that would affect their good repute (Article 18(5)(c) or 62(3)(c) of MiCA). In addition, it is opportune that such an assessment covers also the legitimate origin of the sources of funding used to acquire the qualifying holdings and to finance the business of the issuer of ART or CASP. Holders of qualifying holdings could not be considered of sufficiently good repute in case there are reasonable grounds to suspect that money laundering (ML) or terrorist financing (TF) is committed or attempted or where there is an increased ML/TF risk.
In the light of the above, for purposes of the assessment of the sufficiently good repute of shareholders or members with direct or indirect qualifying holdings, these draft Joint Guidelines cross-refer to Section 10 of the ESAs Joint GL on QH laying down the assessment methodology of the reputation criterion, and to Section 14 of the ESAs Joint GL on QH laying down the assessment methodology of the fifth assessment criterion relating to the suspicion of ML/TF. As acknowledged in
[1] Joint Guidelines for the prudential assessment of acquisitions of qualifying holdings | European Banking Authority (europa.eu);
that Section 14 of the ESAs Joint GL on QH, such criterion integrates the first assessment criterion on reputation. In the light of this, these draft Joint Guidelines have included it as part of the assessment at authorisation of the ‘sufficiently good repute’ of shareholders and members with direct or indirect qualifying holdings.
To cater for the potential use of crypto-assets for the payment of the qualifying holdings, the draft Joint Guidelines further specify the assessment of the fifth assessment criterion on suspicion of ML/TF with a view to cover the specificities of the crypto-ecosystem.
EBA/GL/2024/09
ESMA75-453128700-10
27 June 2024
Joint EBA and ESMA Guidelines on the assessment of the suitability of the members of the management body of issuers of asset-referenced tokens and of crypto-asset service providers
A. Compliance and reporting obligations
Status of these guidelines
1. This document contains guidelines issued pursuant to Article 16 of Regulation (EU) No 1093/20102 and to Article 16 of Regulation (EU) No 1095/20103 . In accordance with Article 16(3) of Regulation (EU) No 1093/2010 and of Regulation (EU) No 1095/2010, competent authorities, financial market participants and financial institutions must make every effort to comply with these guidelines. These guidelines set out appropriate supervisory practices within the European System of Financial Supervision and of how Union law should be applied.
2. Competent authorities as defined in Article 3(1) point (35)(a) of Regulation (EU) 2023/1114 to whom guidelines apply should comply by incorporating them into their practices as appropriate (e.g. by amending their legal framework or their supervisory processes), including where guidelines are directed primarily at financial market participants and financial institutions.
Reporting requirements
3. Within two months of the date of publication of these guidelines on EBA’s and ESMA’s website in all EU official languages, according to Article 16(3) of Regulation (EU) No 1093/2010 and of Regulation (EU) 1095/2010, competent authorities must notify the EBA or ESMA as to whether they (i) comply, (ii) do not comply, but intend to comply, or (iii) do not comply and do not intend to comply with these guidelines. In case of non-compliance, competent authorities must also notify ESMA or EBA within two months of the date of publication of these guidelines on ESMA’s and EBA websites in all EU official languages of their reasons for not complying with these guidelines. Notifications should be submitted by persons with appropriate authority to report compliance on behalf of their competent authorities. Any change in the status of compliance must also be reported to EBA or to ESMA.
4. Financial market participants and financial institutions are not required to report whether they comply with these guidelines.
5. Notifications will be published on the EBA website, in line with Article 16(3) of Regulation (EU) No 1093/2010 and on the ESMA website, in line with Article 16(3) of Regulation (EU) No 1095/2010.
[2] Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/78/EC, (OJ L 331, 15.12.2010, p.12).
[3] Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Securities and Market Authority (European Securities and Market Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC, (OJ L 331, 15.12.2010, p. 84).
Subject matter, scope and definitions
Subject matter
1. In accordance with Article 21(3) and Article 63(11), of MiCA, these joint guidelines concern the assessment of the suitability of members of the management body of issuers of ARTs and CASPs.
Scope of application
2. These Guidelines apply at authorisation and on an ongoing basis to competent authorities, as defined in Article 3(1) point (35) (a) of MiCA, issuers of ARTs and CASPs4 , in accordance with Articles 34(2) and 68(1) of MiCA with regard to the assessment of suitability of members of the management body of
a. an applicant issuer of ARTs seeking for an authorisation under Article 18 of MiCA or authorised in accordance with Article 21 of that Regulation (“issuer of ART” for the purpose of these Guidelines),
b. an applicant CASP seeking for an authorisation under Article 62 of MiCA, or a CASP authorised in accordance with Article 63 of that Regulation (“CASP” for the purpose of these Guidelines), or, with reference to Article 68(1) of MiCA, providing crypto-asset services as part of their authorisation in accordance with paragraphs (2), (4), (5) and (6) of Article 60 of MiCA.
3. The suitability assessment is based on the requirement that members of the management body of issuers of ARTs and CASPs must meet the criteria set out in Articles 34(2) and 68(1) respectively, which provide that members of the management body shall be of sufficiently good repute and capable of committing sufficient time to effectively perform their duties as well as the assessment of whether members of the management body have the individually and collectively appropriate knowledge, skills and experience to perform their duties. Members of the management body of issuers of ARTs and CASPs shall not have been convicted of offences relating to money laundering or terrorist financing or of any other offences that would affect their good repute. The members of the management body to be assessed include persons that will become members of the management body of an issuer of ARTs or a CASP and members that have already taken up their position. Where the management body consists of a
[4] According to Article 60(10) of Regulation (EU) 2023/1114 the entities listed in Article 60, paragraphs (1) to (6) are not subject to, among others, Article 63 of Regulation (EU) 2023/1114.
management and a supervisory function, these Guidelines apply to both functions and members of both functions5 .)
Addressees
4. These Guidelines are addressed to competent authorities as defined in Article 3(1) point (35)(a) of MiCA.
5. These Guidelines are also addressed to:
a. issuers, as defined in Article 3(1), point (10) of MiCA, authorised in accordance with Article 21 of that Regulation,
b. applicant issuers, as defined in Article 3(1), point (11) of MiCA applying for an authorisation under Article 18 of that Regulation,
c. CASPs, as defined in Article 3(1), point (15) of MiCA, authorised in accordance with Article 63 of that Regulation, or – with reference to Article 68(1) of MiCA – providing crypto-asset services as part of their authorisation in accordance with paragraphs (2), (4), (5) and (6) of Article 60 of MiCA.
d. Applicant CASPs who submitted an application for an authorisation in accordance with Article 63 of MiCA.
Definitions
6. Terms used and defined under MiCA and the ‘Joint EBA-ESMA guidelines on the assessment of the suitability of members of the management body and key function holders under Directive 2013/36/EU and Directive 2014/65/EU’, have the same meaning in these guidelines, in addition, the following definitions apply:
| Group | means a group as set out in Article 2 point 11 of Directive 2013/34/EU. |
|---|---|
| Management body in its management function | means the management body acting in its role of directing effectively the issuer of ARTs or CASP and includes the persons who direct its business. |
| Management body in its supervisory function | means, where established, the management body acting in its role of overseeing and monitoring management decision-making. |
| Directorship | means a position as a member of the management body of an institution or another legal entity. Where the management body, |
[5] Article 3(1), point 27 of Regulation (EU) 2023/1114 defines the management body as ‘the body or bodies of an issuer, offeror or person seeking admission to trading, or of a crypto-asset service provider, which are appointed in accordance with national law, which are empowered to set the entity’s strategy, objectives and overall direction, and which oversee and monitor management decision-making in the entity and include the persons who effectively direct the business of the entity’.
| depending on the legal form of the entity, is composed by a single person, this position is also counted as a directorship. | |
|---|---|
| Member | means a proposed or appointed member of the management body including acting on behalf of legal persons being a member of the management body. |
| Suitability | means in the context of a member of the management body that an assessed individual is deemed to have sufficient good repute, including honesty and integrity, and to have, individually and collectively with other members, appropriate knowledge, skills and experience and is individually able to commit sufficient time to perform the duties the member is responsible for. |
B. Implementation
Date of application
7. These guidelines apply from dd.mm.yyyy [“Please insert date [2] months after the date of publication of the guidelines in all EU official languages (date of issuance of the guidelines) on the ESMA and EBA websites”].
C. Joint Guidelines
C.1. Application of the proportionality principle
8. The proportionality principle aims to match governance arrangements consistently with the individual risk profile and business model of issuers of ARTs and CASPs, taking into account the individual position within the management body for which an assessment is made so that the objectives of the regulatory requirements, i.e. that the member is suitable regarding the specific position individually and suitable to be part of the collective management body, are effectively met.
9. Issuers of ARTs, CASPs and competent authorities should take into account the size of the issuer of ARTs or the CASP, its internal organisation and the nature, scale, and complexity of the assets issued and the services provided when assessing the individual and collective sufficient knowledge, experience and skills of members of the management body and that members individually are capable of committing sufficient time to effectively perform their duties in parallel to other obligatory time commitments they have.
10. Issuers of significant ARTs should have more sophisticated suitability policies and assessment processes as compared to issuers of non-significant ARTs. The same applies to CASPs, considering their size and the class of crypto asset services provided in accordance with Annex IV of MiCA.
11. All members of the management body of issuers of ARTs and CASPs should be of sufficiently good repute and have honesty and integrity regardless of the firm’s size, internal organisation and the nature, scope and complexity of its activities, and the duties and responsibilities of the specific position.
12. For the purpose of applying the principle of proportionality when assessing the suitability of members as regards the knowledge and experience criteria as well as the members ability to commit sufficient time, the following criteria should be taken into account by issuers of ARTs, CASPs and competent authorities:
a. the size of the issuer of ARTs or of the CASP in terms of the balance sheet total,
b. the legal form of the issuer of ARTs or CASP and if it is listed or not,
c. whether the issuer of ARTs or CASP is part of a group, and if so, the proportionality assessment for the group,
d. the nature and complexity of all business activities,
e. whether cross borders activities are provided and the size of the operations in each jurisdiction,
f. in the case of an issuer of ARTs the following additional criteria:
i. the volume and number of ARTs issued,
ii. the size of the reserve of assets held by issuers of ARTs,
iii. the type and complexity of the assets a token is referenced to,
iv. the complexity of the instruments in which the reserve of assets are invested in.
g. In the case of a CASP the following additional criteria:
i. the type and volume of services provided and their criticality for the functioning of markets in crypto assets,
ii. the type of clients.
C.2. Notions of suitability under Articles 34(2) and 68(1) of MiCA
C.2.1 Sufficient good repute
13. When assessing if the members of the management body of an issuer of ARTs or CASP are of good repute the assessment should cover in accordance with Articles 18(5)(a) and 62(3)(a) of MiCA the absence of a criminal record in respect of convictions and the absence of penalties imposed under the applicable commercial law, insolvency law and financial services law or in relation to anti-money laundering legislation and counter-terrorist financing, to fraud or to professional liability. The assessment should in addition cover any other known facts that could lead to the assessment that the member is not of sufficiently good repute as specified in this section. Those requirements apply on an ongoing basis in accordance with Articles 34(2) and 68(1) MiCA.
14. Members of the management body should not have been subject to sanctions, embargoes or measures that are related to terrorism, financing of terrorism or proliferation decided by a Member State, the Union or international organisation, e.g. United Nations. Where a member of the management body is added to such list of targeted financial sanctions, this member should be forbidden to perform its function and be removed from the management body.
15. The assessment of the good repute criteria of members of the management body of an issuer of ARTs or an CASP should be performed on the basis of the information referred to in the Commission Delegated Regulations adopted pursuant to Articles 18(6) of MiCA in the case of an issuer of ARTs and Article 62(5) of that Regulation in the case of CASPs.
C.2.2 Individual appropriate knowledge, skills and experience
16. Members of the management body should have an up-to-date understanding of the business activities of the issuer of ARTs or of the CASP and all its risks, at a level commensurate to their responsibilities. This includes an appropriate understanding of those areas for which an individual member is not directly responsible but is collectively accountable together with the other members of the management body.
17. Members of the management body should have a clear understanding of the issuer of ARTs or of the CASP’s governance arrangements, their respective role and responsibilities and, where applicable, the group structure.
18. Members of the management body should understand the conflicts of interest that may exist between the issuer of ART or the CASP and any of its stakeholders.
19. Members of the management body should be able to contribute to the implementation of an appropriate corporate and risk culture, corporate values and behaviour within the management body to conduct the business in a competent and responsible manner.
20. The assessment of appropriate knowledge, skills and experience should consider:
a. the role and duties of the position and the required capabilities;
b. the knowledge and skills attained through education, training and practice;
c. the practical and professional experience gained in previous positions and other current directorships; and
d. the knowledge, skills and experience acquired and demonstrated by the professional conduct of the member.
21. The level and profile of the education of the member and whether or not it relates to the financial sector, including crypto-assets markets, or other relevant areas should be considered. In particular, education in the areas of finance, including crypto assets, economics, law, accounting, auditing, administration, financial regulation, information technology, and quantitative methods can in general be considered to be relevant for financial entities, including issuers of ARTs and CASPs.
22. The assessment should not be limited to the educational degree of the member or proof of a certain period of service in a financial entity, issuer of ARTs or CASP or other firms in areas related to markets in crypto assets and other financial markets. A more thorough analysis of the member’s practical experience with regard to the activities of the issuer of ARTs or of the CASP should be conducted, as the knowledge gained from previous occupations depends on the nature, scale and complexity of the business as well as the function that the member performed within it.
23. To properly assess the skills of the members of the management body, issuers of ARTs and CASPs should consider using the non-exhaustive list of relevant skills set out in Annex II to the Joint EBA and ESMA Guidelines on the assessment of the suitability of members of the management body and key function holders under Directive 2013/36/EU and Directive 2014/65/EU, taking into account the role and duties of the position occupied by the member of the management body.
24. When assessing the adequate knowledge and experience of a member, consideration should be given to theoretical and practical experience relating to:
a. financial markets regulation in particular with regard to financial instruments, as defined in Article 4(1), point (15) of Directive 2014/65/EU and DLT financial instruments as defined in Article 2(1)(11) of Regulation (EU) 2022/858;
b. crypto assets, including asset-referenced and e-money tokens;
c. the relevant understanding of the different nature of different kinds of crypto assets;
d. risk management principles and procedures;
e. the management of liquidity risks, market and credit risk in relation to the business activities of the issuer of ARTs or of the CASP;
f. requirements under Regulation (EU) 2022/2554 of the European Parliament and of the Council of 14 December 2022 on digital operational resilience for the financial sector6 ;
g. requirements regarding the use of third-party providers, including outsourcing arrangements and third-party provider management;
[6] OJ L 333, 27.12.2022, p. 1–79
h. accounting and auditing;
i. anti-money laundering and antiterrorist financing obligations;
j. data protection requirements;
k. the ability to assess the effectiveness of an issuer of ARTs or CASPs’ arrangements that ensure effective governance, oversight and internal controls;
l. the interpretation of financial information and the identification of key issues based on this information;
m. managerial knowledge, including strategic planning, the understanding of an institution’s business strategy or business plan and accomplishment thereof;
n. the ability to present their views, discuss strategies and business objectives; and
o. where the members position is within an issuer of ARTs, the relevant legal requirements for the issuing of ARTs.
25. With reference to point i. above, without prejudice to the national transposition of Directive 2015/849/EU, the member of the management body of CASPs identified as responsible for the implementation of the laws, regulations and administrative provisions necessary to comply with Directive (EU) Directive 2015/849/EU should have good knowledge, skills and relevant experience regarding ML/TF risk identification and assessment, and AML/CFT policies, controls and procedures. This person should have a good understanding of the extent to which the institution’s business model exposes it to ML/TF risks.
26. When assessing the practical and professional experience gained from previous positions, particular consideration should be given to:
a. the nature of the position held and its hierarchical level;
b. the length of service within a position;
c. the number of subordinates;
d. the nature and complexity of the business where the position was held, including its organisational structure;
e. the scope of competencies, decision-making powers, and responsibilities of the member;
f. the technical knowledge gained through the position;
g. additional knowledge gained from academical activities.
27. Where applicable, members of the management body in its supervisory function should be able to challenge the decisions of the management body in its management function and other relevant management decisions where necessary and to effectively oversee and monitor management decision-making.
C.2.3 Collective appropriate knowledge, skills and experience
28. The composition of the management body should ensure that it has collectively the appropriate knowledge, skills and experience necessary to conduct all the business activities of the issuer of ARTs or of the CASP and to fulfil all of its responsibilities. This includes that the management body collectively has an appropriate understanding of all business areas and activities of the issuer of ARTs or of the CASP. The management body, as a whole, should also have appropriate knowledge, skills and experience with regard to the aspects listed under section C.2.2 and in addition regarding:
a. The effective, sound and prudent management of the issuer of ARTs or of the CASPs, including:
i. business continuity management,
ii. the adequate consideration of the interest of its clients and the integrity of the market,7
iii. the management of main risks related to the creation, use and management of crypto assets, the management of operational risks, including cyber risk,
iv. the implementation of fraud detection and prevention measures,
v. ESG factors and ESG risks, in particular regarding the consensus mechanism,
b. the legal and regulatory environment,
c. contractual law,
d. consumer protection,
e. information and communication technology and security, including, where relevant, the applied consensus mechanisms,
f. distributed ledger or similar technologies relevant for their business activities,
g. financial accounting and reporting,
[7] See RTS on conflict of interest
h. the activities of the risk management, compliance and internal audit functions or procedures, including the setting up of those functions or procedures,
i. relevant local and cross-borders financial markets, including relevant trading platforms,
j. managerial skills and experience,
k. the ability to plan strategically,
l. the management of groups and risks related to group structures, where the issuer of ARTs or CASP is a parent company of the group.
C.2.4 Sufficient time commitment of members of the management body
29. Members of the management body of issuers of ARTs, in accordance with Articles 34(2) of MiCA, or members of the management body of a CASP, in accordance with Article 68(1) of that Regulation, should be able to commit sufficient time to perform their functions and responsibilities. This includes that they are able to commit sufficient time in light of other obligations they might have.
30. Members should also be able to fulfil their duties in periods of particularly increased activity, or as a result of some major difficulty with one or more of its operations, taking into account that in such periods a higher level of time commitment than in normal periods may be required.
31. In the assessment of sufficient time commitment of a member, issuers of ARTs and CASPs should take at least the following into account:
a. the number of directorships in financial entities and other companies held by that member at the same time, taking into account possible synergies between different directorships, e.g. in a group context, including when acting on behalf of a legal person or as an alternate of a member of the management body;
b. the directorships in organisations which do not pursue predominantly commercial objectives held by that member at the same time;
c. the size, nature, scope and complexity of the activities of the entity where the member holds a directorship and, in particular, whether or not the entity is a non-EU entity;
d. the member’s geographical presence and the travel time required for the role;
e. the number of meetings scheduled for the management body;
f. any necessary meetings to be held, in particular, with competent authorities or other internal or external stakeholders outside the management body’s formal meeting schedule;
g. the nature of the specific position and the responsibilities of the member, including specific roles such as CEO, chairperson, or chair or member of a committee, whether the member holds an executive or non-executive position, and the need of that member to attend meetings in the companies listed in points (a) and (b) and in the financial entity;
h. other external professional or political activities, and any other functions and relevant activities, both within and outside the financial sector and both within and outside the EU;
i. the necessary induction and training;
j. any other relevant duties of the member considered necessary to be taken into account in the assessment as they oblige the member to commit time.
32. Issuers of ARTs and CASPs should record the roles, duties and required capabilities of the various positions within the management body and the expected time commitment required for each individual position, also taking into account the need to devote sufficient time for induction and training. For this purpose, CASPs that fall under class 1 of Annex IV of MiCA and issuers of non-significant ARTs should differentiate the expected time commitment between members of the management body in its management function and members of the management body in its supervisory function rather than for the individual positions within those functions.
33. A member of the management body should be made aware of the expected time commitment. Issuers of ARTs and CASPs may require the member to document the ability to devote the required time to the role in an appropriate way.
34. Issuers of ARTs and CASPs should monitor whether the members of the management body commit sufficient time to perform their functions. Preparation for meetings, attendance and the active involvement of members in management body meetings are all indicators of time commitment.
35. The impact of any long-term absences of members of the management body should be considered in the assessment of the sufficient time commitment of other individual members of the management body.
36. Issuers of ARTs and CASPs should keep records of all external professional and political positions held by the members of the management body. Such records should be updated whenever a member notifies the issuer of ARTs or the CASP of a change and when such changes come otherwise to the attention of the issuer of ARTs or CASP. Where such changes occur that may reduce the ability of a member of the management body to commit sufficient time to perform the members function, the issuer of ARTs or CASP should re-assess the member’s ability to dedicate sufficient time to the function.
C.3. Suitability assessments of members of the management body by Issuers of ARTs and CASPs
37. Issuer of ARTs and CASPs should have the primary responsibility for ensuring, in accordance with Articles 34(2) and 68(1) of MiCA, that the management body collectively and its members individually are suitable at all times. They should ensure that the members of the management body have collectively and individually appropriate knowledge, skills and experience to ensure the effective, sound and prudent management and business continuity of the firm and the adequate consideration of the interest of their clients and the integrity of the market.
38. Issuers of ARTs and CASPs should ensure that all members of the management body are of sufficiently good repute, taking into account the criteria referred to in Section C.2.1, and are able to commit sufficient time to effectively perform their duties at all times taking into account the criteria in Section C.2.4.
39. Without prejudice to the shareholders’ approval, the management bodies of issuers of ARTs and CASPs should adopt a suitability policy. The policy should include principles on the selection, monitoring and succession planning of its members and for re-appointing existing members and should set out at least the following:
a. the process for the selection, appointment, re-appointment and succession planning of members of the management body and the applicable internal procedure for the assessment of the suitability of members, including the internal function responsible for providing support for the assessment (e.g. human resources);
b. the criteria to be used in the assessment, which should include the suitability criteria set out in these Guidelines;
c. the criteria on the composition of the management body, including how diversity aspects in terms of gender, age, educational and professional background and geographical provenance of members of the management body are to be taken into account and, where applicable, how targets regarding the appropriate gender balance will be met;
d. the communication channel with the competent authorities; and
e. how the assessment and its result should be documented, including the setting of an appropriate retention period.
40. Issuers of ARTs and CASPs, should perform the assessment or a re-assessment of the suitability of the management body, and its members:
a. when applying for authorisation before commencing the activities that require authorisation;
b. when material changes to the composition of the management body occur, including:
i. when appointing new members of the management body, including in the context of a direct or indirect acquisition or increase of a qualifying holding in the issuer of ARTs or the CASP. This assessment should be limited to newly appointed members and the collective suitability of the management body;
ii. when re-appointing members of the management body, if the requirements of the position have changed or if the member is appointed to a different position within the management body. This assessment should be limited to the members whose position has changed and to the analysis of the relevant aspects, taking into account any additional requirements for the position and the collective suitability of the management body;
c. where material changes to the business model and activities, underlying legal provisions or technologies used occurred;
d. on an ongoing basis, in the light of any relevant new fact or situation. In particular, a re-assessment should be performed in the following cases:
i. when there are concerns regarding the individual or collective suitability of the members of the management body;
ii. in the event of a possible material impact on the reputation of a member of the management body, or the issuer of ARTs or CASPs, including cases where members do not comply with the firm’s conflict of interest policy;
e. where there are reasonable grounds to suspect that money laundering or terrorist financing has been or is being committed or attempted in connection with that issuer of ARTs or CASP, or where it has been found to be in breach of its AML/CFT obligations in the home or host Member State or in a third country in any event that can otherwise materially affect the suitability of the member of the management body.
41. Issuers of ARTs and CASPs should re-assess the sufficient time commitment of a member of the management body if that member takes on an additional directorship or starts to perform new relevant activities.
42. Where re-assessments of the collective suitability are performed, issuers of ARTs and CASPs should focus their assessment on the relevant changes in their business model and activities, strategies, technical infrastructures, and risk profile and in the distribution of duties within the management body and their effect on the required collective knowledge, skills and experience of the management body.
43. When assessing a member`s appropriate knowledge, skills and experience, issuer of ARTs or CASPs should, within the same time period, also assess the collective suitability of the management body. In particular, it should be assessed what knowledge, skills and experience the individual brings to the collective or, in the case of a member that has left the management body, the knowledge and experience that might, following the change of composition of the management body, be missing.
44. The knowledge, skills and experience assessments of individual members of the management body and of the collective management body, should be carried out before the individual members are appointed. Where applicable, the management body in its supervisory function should be responsible for performing the final assessment.
45. By way of derogation from paragraph 44, the suitability assessments may, without prejudice to national law, be performed as soon as practicable but in any case within one month of the appointment of the member of the management body, in any of the following cases for which the issuer of ARTs or the CASP has duly provided a justification:
a. Shareholders, owners or members of the issuer of ARTs or of the CASP nominate and appoint members of the management body at the shareholder’s or equivalent meeting that have not been proposed by the issuer of ARTs or by the CASP or by their management body;
b. a full individual suitability assessment prior to the appointment of an individual member or the collective suitability assessment following a change of the composition of the management body would disrupt the sound functioning of the management body, including as a result of the following situations:
i. where the need to replace members arises suddenly or unexpectedly, e.g. death or disability of a member; and
ii. where a member needed to be removed as the member was not any longer suitable.
46. The assessment of appropriate knowledge, skills and experience should take into account all matters relevant to and available for the assessments. Issuers of ARTs or CASPs should take into account the knowledge, skills and experience of the individual member of the management body when assessing the adequate collective knowledge, skills and experience of the management body and vice-versa.
47. The issuer of ARTs or the CASP should document the results of their assessment, and in particular any weaknesses identified between the necessary and the actual collective knowledge and experience of members of the management body, and measures to be taken to overcome these shortcomings, including induction or training to be provided.
48. To ensure the appropriate ongoing supervision, the issuer of ARTs and the CASP should inform the competent authority of the proposed appointment of members or without undue delay after the appointment of members.
49. Where the assessment is also carried out by competent authorities for supervisory purposes, the responsibility to assess and ensure the suitability of the management body continues to remain with the issuer of ARTs or the CASP.
C.3.1 Assessment of the individual suitability of members of the management body by CASPs and issuers of ARTs
50. As part of the assessment of the management body suitability, the issuer of ARTs or the CASP should assess the knowledge, skills and experience of individual members. For that purpose, the issuer of ART or the CASP should:
a. gather information through various channels and instruments (e.g. diplomas and certificates, recommendation letters, curricula vitae, interviews, questionnaires);
b. require the assessed individual to provide accurate information and to provide proof of that information, where necessary;
c. validate, to the extent possible, the correctness of the information provided by the assessed individual;
d. where applicable, evaluate within the management body in its supervisory function the assessment results; and
e. where necessary, identify necessary corrective measures.
51. The issuer of ARTs or the CASP should document a description of the position of the member for which an assessment was performed, including the role of that position within the issuer of ARTs or CASP and should specify the results of the assessment in relation to knowledge, skills and experience and the results of the assessment of good repute and time commitment made in line with these Guidelines.
C.3.2 Assessment of the collective suitability of members of the management body by CASPs and issuers of ARTs
52. Where applicable, in assessing the collective appropriate knowledge, skill and experience, the issuer of ARTs or the CASP should assess the composition of the management body in its management and, where applicable, its supervisory functions separately.
53. The assessment of the appropriate collective knowledge, skills and experience should provide a comparison between the appropriate knowledge, skills and experience of the management body required for the performance of all business activities, including their organisational aspects and underlying processes, and the management body’s actual collective knowledge and experience.
54. When assessing the collective appropriate knowledge, skills and experience of the management body, the issuer of ARTs or the CASP should first assess all individual members, map the results to the business activities and establish that for all such activities the management body has collectively adequate knowledge, skills and experience to ensure the effective functioning of the management body.
55. The composition of the management body should ensure that the collective decision-making processes involve appropriate discussion, challenge and oversight. For that purpose, there should be a sufficient number of members with knowledge in each area to allow a discussion of decisions to be made.
56. The issuer of ARTs or the CASP should perform an assessment of the collective suitability of the management body to perform their duties under MiCA and document the results using either:
a. The suitability matrix template included in Annex I as a basis and adapting it taking into account the criteria described in Section C.1; or
b. their own appropriate methodology in line with the criteria set out in these Guidelines.
C.4. Issuers of ARTs’ or CASPs’ corrective measures
57. If an issuer of ARTs’ or a CASP’s assessment or re-assessment concludes that the management body or a member of the management body does not possess the adequate knowledge, skill and experience, or cannot commit sufficient time, the issuer of ARTs or the CASP should take appropriate corrective measures in a timely manner.
58. Where a member of the management body is not of sufficient good repute the member should not be appointed, be replaced or not be allowed to execute the position.
59. Appropriate corrective measures may include but are not limited to: adjusting responsibilities between members; replacing certain members; recruiting additional members; training single members; or training for the management body collectively to ensure that it has appropriate collective knowledge, skills and experience.
60. If an issuer of ARTs or a CASP’s assessment or re-assessment identifies easily remediable shortcomings of the adequate knowledge, skills and experience or ability to commit sufficient time of the management body or a member of the management body, the issuer of ARTs or the CASP should take appropriate corrective measures to overcome those shortcomings in a timely manner.
61. In any case, competent authorities should be informed without delay of any material shortcomings identified concerning any of the members of the management organ and the management body’s collective composition. The information should include the measures taken or envisaged to remedy those shortcomings and the timeline for their implementation.
C.5. Suitability assessment by competent authorities
62. Competent authorities should specify the supervisory procedures applicable to the suitability assessment of members of the management body of issuers of ARTs and CASPs. When specifying the supervisory procedures, competent authorities should consider that a suitability assessment performed after the member has taken up his or her position could lead to the need to remove a non-suitable member from the management body or to a situation where the management body collectively has ceased to be suitable.
63. Competent authorities should ensure that a description of those assessment procedures is publicly available. The supervisory procedures should ensure that newly appointed members of the management body and the management body as a collective body are assessed by the competent authorities. The supervisory procedures should also ensure that re-appointed members of the management body are re-assessed by the competent authority in accordance with these Guidelines, where a re-assessment is necessary due to a change in the information required or the position held by the re-appointed member.
64. Competent authorities should ensure that their supervisory procedures allow them to address cases of non-compliance with the relevant regulatory requirements in a timely manner.
65. Competent authorities should require issuers of ARTs and CASPs to notify them without delay of any vacant positions within the management body. Competent authorities that assess the suitability of members of the management body before the appointment should require the issuer of ARTs or the CASP to notify them without undue delay after the firm decided to propose the member for appointment. Competent authorities that assess the suitability of members of the management body after the appointment should require the issuer of ARTs or the CASP to notify the appointment at the latest 2 weeks after the appointment. This notification should include the information referred to in paragraph 70.
66. In the duly justified cases referred to in paragraph 45, issuers of ARTs and CASP should be required to provide the complete documentation required under paragraph 70 to the competent authority within one month of the member being appointed.
67. Competent authorities should set out a maximum period for their assessment of suitability which should not exceed 4 months from the date when the notifications of the intended or actual appointment by the issuer of ARTs or the CASPs.
68. Where a competent authority establishes that information in addition to what is required under paragraph 70 is needed to complete the assessment, the period set under paragraph 67 may be suspended from the time when the competent authority requests additional information until its receipt.
69. Competent authorities should perform their assessment on the basis of the information provided by the issuer of ARTs and CASPs and assessed members and should assess them against the notions defined in these Guidelines, as applicable.
70. Competent authorities should require issuers of ARTs and CASPs to submit the information and documentation necessary for the assessment of the suitability of the member of the management body, including the information and documentation required for the suitability assessment at authorisation as specified in the Commission Delegated Regulation mandated under Articles 18(6) of MiCA with regard to the application of paragraph (2) (i) of this Article in the case of an issuer of ARTs and mandated under Article 62(5) of that Regulation with regard to the application of paragraph (2)(g) of this Article in the case of a CASP , containing proof of the members sufficient good repute, and the members and the management body’s appropriate individual and collective knowledge, skills and experience and ability to commit sufficient time.
71. Where appropriate on a risk-based approach and for issuers of significant ARTs, competent authorities should use also interviews for the purpose of suitability assessments.
72. The assessment of the individual and collective suitability of the members of the management body should be performed on an ongoing basis by competent authority, as part of their ongoing supervisory activities.
73. Competent authorities may attend or conduct meetings with the issuer of ARTs or CASP, including with some or all members of its management body, or participate as an observer in meetings of the management body to assess the effective functioning. The frequency of such meetings should be set using a risk-based approach.
74. Competent authorities should ensure that necessary re-assessments under sections C.3, C.3.1 and C.3.2 are conducted by issuers of ARTs and CASPs. If a re-assessment of suitability by a competent authority is prompted by a re-assessment by an issuer of ARTs or CAPS, that competent authority should take into account the circumstances that prompted the re-assessment and its impact on the individual and collective suitability of the Management body.
C.6. Decision of the competent authority
75. Competent authorities should take a decision based on the assessment of individual and collective suitability of members of the management body within the maximum period referred to in paragraph 67 or, if the period has been suspended as referred to in paragraph 68, within the maximum period of 6 months.
76. Where the outcome of the assessment of suitability by the competent authority concludes that it is not sufficiently proven that the assessed person is suitable, including in situations where the provided information is not sufficient to complete the assessment, the competent authority should object to or not approve the appointment of that person, unless the identified shortcomings are remediable and can be overcome by other measures taken by the issuer of ARTs or by the CASP.
77. Where an issuer of ARTs or a CASP fails to provide sufficient information regarding the suitability of an assessed individual to the competent authority, the latter should inform the firm that the member cannot be a member of the management body because it has not been sufficiently proven that the person is suitable or that it decided negatively.
78. Where shortcomings regarding the individual or collective knowledge, skills or experience of members of the management body are identified, the competent authority, considering the measures already taken by the issuer of ARTs or the CASP, should take appropriate measures to address the identified shortcomings and set a timeline for the implementation of these measures. Such measures should include as appropriate one or more of the following measures:
a. requiring the issuer of ARTs or the CASP to organise specific training for the members of the management body individually or collectively;
b. requiring the issuer of ARTs or the CASP to change the division of tasks amongst the members of the management body;
c. requiring the issuer of ARTs or the CASP to refuse the proposed member or to replace certain members;
d. requiring the issuer of ARTs or the CASP to change the composition of the management body to ensure the individual and collective suitability of the management body;
e. removing the member from the management body of the issuer of ARTs or of the CASP;
f. where appropriate, imposing administrative penalties or other administrative measures (e.g. setting out specific obligations, recommendations or conditions), including ultimately withdrawing the authorisation.
Draft Joint Guidelines on the assessment of the suitability of the shareholders or members, whether direct or indirect, with qualifying holdings in issuers of ARTs or of CASPs
D. Compliance and reporting obligations
Status of these guidelines
1. This document contains guidelines issued pursuant to Articles 16 of Regulation (EU) No 1093/20108 and to Article 16 of Regulation (EU) No 1095/20109 . In accordance with Article 16(3) of Regulation (EU) No 1093/2010 and of Regulation (EU) 1095/2010, competent authorities, financial market participants and financial institutions shall make every effort to comply with these guidelines. These guidelines set out appropriate supervisory practices within the European System of Financial Supervision and of how Union law should be applied.
2. Competent authorities as defined in Article 3(1) point (35)(a) of MiCA to whom guidelines apply should comply by incorporating them into their practices as appropriate (e.g. by amending their legal framework or their supervisory processes), including where guidelines are directed primarily at financial market participants and financial institutions.
Reporting requirements
3. Within two months of the date of publication of these guidelines on EBA’s and ESMA’s websites in all EU official languages, according to Article 16(3) of Regulation (EU) No 1093/2010 and of Regulation (EU) 1095/2010, competent authorities must notify the EBA or ESMA as to whether they (i) comply, (ii) do not comply, but intend to comply, or (iii) do not comply and do not intend to comply with these guidelines. In case of non-compliance, competent authorities must also notify ESMA or EBA within two months of the date of publication of these guidelines on ESMA’s and EBA websites in all EU official languages of their reasons for not complying with these guidelines. Notifications should be submitted by persons with appropriate authority to report
[8] Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/78/EC, (OJ L 331, 15.12.2010, p.12).
[9] Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Securities and Market Authority (European Securities and Market Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC, (OJ L 331, 15.12.2010, p. 84).
compliance on behalf of their competent authorities. Any change in the status of compliance must also be reported to EBA or to ESMA.
4. Notifications will be published on the EBA website, in line with Article 16(3) of Regulation (EU) No 1093/2010 and on the ESMA website, in line with Article 16(3) of Regulation (EU) No 1095/2010.
Subject matter, scope and definitions
Subject matter
5. In accordance with Article 16 of Regulation (EU) No 1093/2010 and of Regulation (EU) No 1095/2010, these draft Joint Guidelines lay down the methodology that competent authorities should use for the assessment of the circumstances giving rise to qualifying holdings (Section D.1 of the Guidelines).
6. These draft Joint Guidelines lay down the methodology that competent authorities should use for the assessment of the suitability of the shareholder or member that has qualifying holdings, whether direct or indirect (Section F.2 of the Guidelines):
a) in an applicant issuer seeking for an authorisation under Article 18 of MiCA, in accordance with the mandate set out by Article 21(3) of that Regulation;
b) in an applicant CASP seeking for authorisation under Article 62 of MiCA, in accordance with the mandate set out by Article 63(11) of that Regulation.
7. In accordance with Article 16 of Regulation (EU) No 1093/2010 and of Regulation (EU) No 1095/2010, these draft Joint Guidelines lay down the methodology that competent authorities should use for the assessment of the suitability of a proposed acquirer of direct or indirect qualifying holdings (Section D.3 of the Guidelines):
a) in an issuer of ARTs authorised under Article 21 of MiCA, in accordance with the criteria set out by Article 42(1), points (a) to (e) of that Regulation;
b) in a CASP authorised under Article 63 of that Regulation, in accordance with the criteria set out by Article 84(1), points (a) to (e) of that Regulation.
Scope of application
8. In accordance with Articles 18(2), point (j) or 62(2)(h) of MiCA, in case of application for authorisation as issuer of ARTs or as a CASP, the assessment of the proposed acquirers concerns the sufficiently good repute of the shareholders or members, whether direct or indirect, with qualifying holdings.
9. In accordance with Articles 42(1) and 84(1) of MiCA, in case of issuer of ART or CASP authorised under Article 21 or 63 of that Regulation, the assessment of the proposed acquirers concerns the suitability, based on the five assessment criteria set out therein, of the shareholders or members, whether direct or indirect, with qualifying holdings.
10. These guidelines do not apply to issuers of ARTs or CASPs that are authorised as credit institutions under Directive 2013/36/EU. Moreover, CASPs that are financial entities listed in Article 60, providing crypto-asset services as part of their authorisation in accordance with paragraphs (2) to (6) of Article 60 of MiCA are not subject to Articles 63 and 84 but remain subject to the provisions of Article 68(2).
Addressees
11. These guidelines are addressed to competent authorities as defined in Article 3(1), point (35)(a) of MiCA.
Definitions
12. Unless otherwise specified, terms used and defined in MiCA have the same meaning in these Draft Joint Guidelines. In addition, for the purposes of these guidelines, the following definitions apply including for purposes of cross-reference to the Joint ESAs Guidelines on QH:
| Proposed acquirer | Means natural or legal person who, whether individually or acting in concert with another person or persons, intends to acquire or to increase, directly or indirectly, a qualifying holding in a target undertaking which is a an ART issuer authorised under Article 21 of MiCA or a CASP authorised under Article 63 of that Regulation, or a shareholder or member, who, whether directly or indirectly, individually or acting in concert with another person or persons, holds qualifying holding in an applicant issuer of ART seeking for an authorisation in accordance with Article 18 of that Regulation or in an applicant CASP seeking for an authorisation in accordance with Article 62 of that Regulation |
|---|---|
| Sectoral Directives or Regulations | Means MiCA |
| Shareholder or member | means a natural or legal person who owns shares in the target undertaking or, depending on the legal form of an institution, other owners or members of the target undertaking |
| Target supervisor | Means the competent authority, as defined in Article 3(1) point (35)(a) of MiCA, which is responsible for the supervision of the target undertaking |
| Target undertaking | Means : - an applicant issuer applying for an authorisation under article 18 of MiCA or - an issuer of ARTs authorised in accordance with Article 21 of that Regulation; or |
| - an applicant CASP applying for an authorisation under article 62 of MiCA; or - a CASP, authorised in accordance with Article 63 of MiCA. | |
| Joint ESAs Guidelines on QH | Means the Joint EIOPA, EBA and ESMA Guidelines on the prudential assessment of acquisitions and increases of qualifying holdings in the financial sector of 16 December 2016 (JC/GL/2016/01). |
E. Implementation
Date of application
13. These guidelines apply from dd.mm.yyyy [“Instruction to editors – Please insert date [2] months after the date of publication of the guidelines in all EU official languages (date of issuance of the guidelines) on the ESMA and EBA websites”].
F. Draft Joint Guidelines
F.1. Acting in concert, significant influence, indirect shareholders, decision to acquire
14. Competent authorities should determine whether the circumstances giving rise to a proposed acquisition of qualifying holding in a target undertaking are met, preliminary to the assessment of the suitability of the proposed acquirer.
15. For these purposes competent authorities should apply the assessment methodology set out in the Joint ESAs Guidelines on QH, namely in Title II, Chapter 1, Section 4 on Acting in concert, Section 5 on Significant influence, Section 6 on Indirect acquisitions of qualifying holdings, Section 7 on Decision to Acquire.
F.2. Assessment of suitability of shareholders or members, whether direct or indirect, with qualifying holdings at authorisation
16. Pursuant to Article 21(2), point (c) or Article 63(10), point (c) of MiCA, competent authorities shall assess whether the proposed acquirer with qualifying holdings in an undertaking applying for an authorisation under article 18 or for an authorisation under Article 62 of that Regulation are of sufficiently good repute as referred to in Article 34(4) and 68(2) of that Regulation (EU). Such assessment should be based on the criteria set out in Article 42(1) or in Article 84(1), point (a), on the reputation of the proposed acquirer and on point (e), on the absence of reasonable grounds to suspect that ML/TF are being committed or attempted, of MiCA.
17. For the assessment of the reputation of the proposed acquirer, competent authorities should refer for their assessment on the information set out to in the Commission Delegated Regulations adopted pursuant to Articles 18(6) of MiCA in the case of an issuer of ARTs and Article 62(5) of that Regulation in the case of CASPs and should apply the methodology set out in Title II, Chapter 3, Section 10 of the Joint ESAs Guidelines on QH, on Reputation of the proposed acquirer – first assessment criterion, as applicable.
18. For the assessment of the absence of reasonable grounds to suspect that ML/TF are being committed or attempted, competent authorities should apply the methodology set out in Title II, Chapter 3, Section 14 of the Joint ESAs Guidelines on QH, on Suspicion of money laundering or terrorist financing by the proposed acquirer – fifth assessment criterion. Furthermore, competent authorities should apply paragraph 28 of these draft Joint Guidelines whenever the funds for the acquisition of the qualifying holdings consist in crypto-assets or whenever they derive from the exchange of crypto-assets into fiat currency.
19. For the purposes of the assessment of the aspects of sufficiently good repute relating to professional competences of the proposed acquirer, competent authorities should apply proportionality in accordance with paragraph 8.3 of section 8 of the ESAs Guidelines on QH, on Proportionality.
F.3. Assessment of the suitability of a proposed acquirer of a qualifying holding in accordance with Articles 42(1) or 84(1) of MiCA
20. In order to assess whether a natural or legal person have made the decision to acquire, competent authorities should apply Section 7 of the ESAs Joint GL on QH on Decision to acquire.
21. Competent authorities have to assess the suitability of proposed acquirers of direct or indirect qualifying holdings in an issuer of ARTs authorised in accordance with Article 21 of MiCA or in a CASP authorised in accordance with Article 63 of that Regulation, in accordance with the criteria set out in points (a) to (e) of Article 42(1) or of Article 84(1) of that Regulation respectively.
22. For the assessment of the criterion set out in Article 42(1), point (a) or in Article 84 (1), point (a) of MiCA on the reputation of the proposed acquirer, competent authorities should refer for their assessment to the information set out in the Commission Delegated Regulations adopted pursuant to Articles 42(4) of MiCA in the case of an issuer of ARTs and to Article 84(4) of that Regulation in the case of CASPs and should apply the methodology set out in Title II, Chapter 3, Section 10 of the Joint ESAs Guidelines on QH, on Reputation of the proposed acquirer – first assessment criterion, as applicable.
23. For the assessment of the criterion set out in Article 42(1), point (b) or in Article 84(1), point (b) of MiCA, relating to the reputation, knowledge, skills and experience of any person who will direct the business of the target undertaking, competent authorities should apply the assessment methodology laid down in the draft EBA and ESMA Joint Guidelines on the suitability assessment of the members of the management body of issuers of ARTs or of CASPs.
24. For the assessment of the criterion set out in Article 42(1), point (c) or in Article 84(1), point (c) of MiCA, competent authorities should apply the methodology set out in Title II, Chapter 3, Section 12 of the Joint ESAs Guidelines on QH, on Financial soundness of the proposed acquirer – third assessment criterion.
25. For the assessment of the criterion set out in Article 42(1), point (d), relating to the continuous compliance with the requirements set out in Title III of MiCA, or in Article 84(1), point (d) relating to the continuous compliance with the requirements set out in Title V of that Regulation, when it concerns prudential requirement, competent authorities should apply the methodology set out in Title II, Chapter 3, section 13 of the Joint ESAS Guidelines on QH, on compliance with prudential requirements of the target undertakings with that requirement.
26. With specific regard to issuers of ARTs, the continuous compliance with the prudential requirements on liquidity includes the requirements relating to the composition, management, investment, segregation and custody of the reserve of assets, with the view to meeting any potential request of redemption by the holders of the token.
27. For the assessment of the criterion set out in Article 42(1), point (e), or in Article 84(1), point (e) of MiCA respectively, competent authorities should apply the methodology set out in Title II, Chapter 3, Section 14 of the Joint ESAs Guidelines on QH, on Suspicion of money laundering or terrorist financing by the proposed acquirer – fifth assessment criterion.
28. Whenever the funds for the acquisition of the qualifying holdings consist in crypto-assets or whenever they derive from the exchange of crypto-assets into fiat currency, competent authorities, in addition to the application of the assessment methodology laid down in Title II, Chapter 3, Section 14 of the Joint ESAs Guidelines on QH, on the suspicion of money laundering or terrorist financing, should also identify:
a. the distributed ledger address used by the proposed acquirer, where a transfer of crypto-assets is registered on a network using distributed ledger technology or similar, and the crypto-asset account number used by the proposed acquirer, where such an account exists and is used to process the transaction;
b. the crypto-asset account number used by the proposed acquirer, where a transfer of crypto-assets is not registered on a network using distributed ledger technology or similar;
c. where a transfer of crypto-assets is not registered on a network using distributed ledger technology or similar technology and not made from or to a crypto-asset account, a unique transaction identifier; and
d. the crypto-asset service provider(s) of the parties to the transaction, as applicable.
29. Target supervisors should apply the principle of proportionality in their assessment in accordance with Section 8 on Proportionality of the Joint ESAs Guidelines on QH in case of proposed acquirers in an issuer of ART authorised in accordance with Article 21 of MiCA, or in a CASP authorised in accordance with Article 63 of that Regulation.
30. In case the proposed acquirer intends to acquire a qualifying holding in a target undertaking which is an issuer of ARTs authorised in accordance with Article 21 of MiCA or in a CASP authorised in accordance with Article 63 of that Regulation, target supervisors should apply Title II, Chapter 2, Section 9, paragraphs 9.1 to 9.3 of the Joint ESAs Guidelines on QH with regard to the procedure applicable to the notification submitted by the proposed acquirer.
Annex I – Template for a matrix to assess the collective competence of members of the management body
Annex I to the Guidelines is provided as a separate Excel file.
Accompanying documents
Draft cost-benefit analysis / impact assessment
As per Article 16(1) of Regulation (EU) No 1093/2010 (EBA Regulation) and of Regulation (EU) No 1095/2010 (ESMA Regulation), Guidelines developed by the EBA and by ESMA shall be accompanied by an Impact Assessment (IA) analysing ‘the potential related costs and benefits.’ This section presents the IA of the main policy options included in these Guidelines on:
a. Joint EBA and ESMA Guidelines on the suitability assessment of members of management body of issuer in asset-referenced tokens or of crypto-asset service providers, and
b. Joint EBA and ESMA Guidelines on the suitability assessment of shareholders and members, whether direct or indirect, with qualifying holdings in issuer of asset-referenced tokens or in crypto-asset service providers in accordance with Articles 21(3) and 63(11) of MiCA.
MiCA sets out a new legal framework for issuers of ARTs and for CASPs laying down suitability requirements for members of the management body and for shareholders and members with direct or indirect qualifying holdings. Namely, members of the management body have to be of sufficiently good repute and possess appropriate knowledge, skills and experience, both individually and collectively, to perform their duties. Shareholders and members with direct or indirect qualifying holdings have to be of sufficiently good repute for purposes of granting authorisation; in case of proposed acquisition or increase of direct or indirect qualifying holdings, they have to be subject to a comprehensive prudential assessment against the five assessment criteria set out in Article 42(1), letters (a) to (e) or in Article 84(1), letters (a) to (e).
A. Problem identification
MiCA sets out the same suitability requirements for the members of the management body of issuers of ARTs and of CASPs. Similarly, for purposes of granting authorisation MiCA sets out the same requirement of sufficiently good repute for shareholders and members with direct or indirect qualifying holdings in applicant issuers of ARTs and in applicant CASPs, and the same suitability requirements for proposed acquisitions or increase in qualifying holdings in authorised issuers of ARTs or authorised CASPs.
2. The lack of harmonised criteria for the assessment of the suitability of the members of the management body and for the shareholders or members with direct or indirect qualifying holdings may lead to diverging approaches and different practices across Member States hindering the level playing field and potentially affecting the sound and prudent management of the issuers of ARTs and of CASPs.
Against this background, the new EU regulatory framework confers on the EBA and ESMA two mandates to jointly develop (i) Guidelines on the assessment of the suitability of the members of the management body of issuers of asset-referenced tokens and of the shareholders and members, whether direct or indirect, that have qualifying holdings in issuers of asset-referenced tokens (Article 21(3) of MiCA) and (ii) Guidelines the assessment of the suitability of the members of the management body of the applicant crypto-asset service provider and of the shareholders or members, whether direct or indirect, that have qualifying holdings in the applicant crypto-asset service provider (Article 63(11) of MiCA.
B. Policy objectives
3. The Guidelines aim at laying down harmonised criteria and methodology for the assessment of the suitability of a) members of the management body of issuers of ARTs and of CASPs and b) shareholders and members with direct or indirect qualifying holdings of issuers of ARTs and CASPs, with a view to ensuring level playing field across the EU and sound and prudent management of the concerned supervised entities.
C. Baseline scenario
In a baseline scenario, there would be no harmonisation of the criteria and methodology for the assessment of the members of the management body and of shareholders or members with direct or indirect qualifying holdings, and the CAs would carry out their assessment based on national laws and practices, which would ultimately result in diverging approaches and assessments. Such practices would also ultimately lead to regulatory arbitrage across MSs, with potential applicants choosing to file an application for authorisation where the approaches to assessment are perceived as more lenient or more suitable to their situation.
4. The costs and benefits of the underlying Regulation are not assessed within this impact assessment.
D. Options considered, Cost-Benefit Analysis, Preferred options
5. Section D. presents the main policy options discussed and the decisions made during the drafting of the two Guidelines. Advantages and disadvantages of the policy options and the preferred options resulting from this analysis are assessed below.
Policy issue 1: Merger of the two joint mandates under Articles 21(3) and 63(11) of MiCA by topic
The EBA and ESMA considered three policy options as to the development of the two joint mandates conferred by MiCA, having regard that they have the same content and that the regime applicable to the members of the management body of issuers of ARTs and of CASPs is the same. Similarly, the suitability assessment requested to be performed in respect of shareholders or members with direct or indirect qualifying holdings at authorisation and in case of acquisition is the same for issuers of ARTs and for CASPs. Additionally, consideration has been given that the issuers of ARTs and CASPs may be the same undertaking.
Option 1a: Two separate guidelines, one for issuers of ARTs, another for CASPs
Option 1b: One set of guidelines applicable to both issuers of ARTs and CASPs
Option 1c: Two separate guidelines, one applicable with respect to members of the management body, another applicable to shareholders or members with direct or indirect qualifying holdings. Given that the rules for ART issuers and CASPs are the same with respect to the suitability of the members of the management body, and to shareholders or members with direct or indirect qualifying holdings, Option 1a, which splits the guidelines by type of entity was discarded. By contrast, Options 1b and 1c, ensure an efficient rulemaking process and to avoid unnecessary duplication of rules.
Option 1b has the advantage of the adoption of one single set of Guidelines applicable to both issuers of ARTs and to CASPs and of covering the suitability assessment of both the members of the management body and of shareholders or members with direct or indirect qualifying holdings, however it fails to appropriately take into account the differences between the suitability criteria applicable to the members of the management body and to the shareholders or members respectively. Such differences are also reflected in the different addressees of each of these Guidelines: the Guidelines relating to the suitability criteria of the members of the management body are addressed to issuers of ARTs, CASPs and CAs, whereas the Guidelines on the assessment of the shareholders or members with direct or indirect qualifying holdings are exclusively addressed to CAs.
In the light of the above and, having regard that the two parts of the mandate are distinct, Option 1c suggesting the merger of the two mandates by topic ensures to achieve the pursued goal of efficient rulemaking and avoidance of duplication of rules. At the same time this approach allows to appropriately reflect the differences and complete separateness of the two legs of the mandate. In addition, Option 1c allows a more orderly drafting of these Guidelines with benefits in terms of legal clarity legal clarity.
Option 1c has therefore been chosen as the preferred option.
Policy issue 2: Consistency with the existing cross-sectoral regulation and supervisory practices on the assessment of proposed acquisitions of qualifying holdings
The EBA and ESMA paid specific attention to the circumstance that MiCA incorporates the same definition of qualifying holdings laid down in MiFID II and in the CRD, and the same assessment criteria and process as that laid down in MiFID II and in the CRD in case of acquisition or increase of qualifying holdings in going concern. Having regard to the cross-sectoral and maximum harmonisation regime on qualifying holdings under EU law, the achievement of the highest consistency with the EU cross-sectoral regime in place laid down in sectoral acts and specified in the ESAs Guidelines on the prudential assessment of proposed acquisitions of qualifying holdings10 has been considered a policy objective to achieve. For this purpose, two policy options have been considered.
Option 2a: develop the Joint Guidelines via cross-references to the ESAs Joint Guidelines on the prudential assessment of proposed acquisitions of qualifying holdings
Option 2b: develop the Joint Guidelines by copying the ESAs Joint Guidelines on the prudential assessment of proposed acquisitions of qualifying holdings
Both Options 2a and 2b ensure the closest alignment with the ESAs Joint GL on QH. The drafting technique suggested in Option 2b has the advantage of having the full set of guidance in one document, however it has the disadvantage that a) when incorporating the content of another piece of regulation, changes are inevitably made that may alter somehow the methodology or obligations laid down the text and may give rise to misalignments and needs for interpretation, b) in case the Joint ESAs GL on QH are updated, the current Guidelines under MiCA remain static and become outdated. Conversely, Option 2a has the advantage a) of the highest alignment with the Joint ESAs Guidelines on QH, which are the regulatory standard of reference, and that are already known by the market operators and by the CAs and b) automatically being updated in case the Joint ESAs Guidelines on QH are amended, thanks to the dynamic cross-reference to that text. Option 2a has therefore been chosen as the preferred option.
Similarly to the assessment of the suitability of the acquisitions of qualifying holdings, MiCA contains requirements on the assessment of the management body of issuers of ARTs and CASPs as under CRD and MIFID II. However, some specific requirements differ between those frameworks. The suitability requirements under that Regulation does not require the assessment of independence of mind and does not contain a limitation of the number of directorships, which is included in Article 91 of the CRD.
6. While the Guidelines provided follow in general the approach taken under MiFID II and CRD to ensure a level playing field, the assessment criteria for knowledge and experience have been specified and aligned with the business model of issuers of ARTs and CASPS, while the criteria for the assessment of the sufficient good repute and skills are based mainly on cross references to existing guidelines, avoiding the duplication of legal provisions.
The assessment processes and the required documentation to be submitted to competent authorities have been aligned with the framework under MiCA and the additional mandates provided to submit draft RTS regarding the documentation to be submitted for suitability assessments. Regarding the time periods for assessments, a more proportionate approach has been taken that allows for an assessment period of 4 months to ensure supervisory convergence and a consistent approach across sectors and in particular with the CRD Guidelines.
[10] Available at https://www.eba.europa.eu/regulation-and-policy/other-topics/joint-guidelines-for-the-prudential-assessment-of-acquisitions-of-qualifying-holdings
Cost-benefit analysis
Overall, the guidelines are assessed as bringing more benefits than costs to the main stakeholders (See table 1). The guidelines are proportionate and tailored to the different business model of ARTs and CASPs as necessary and based on the GL on Fit and Proper under the CRD.
Table 1. Costs and benefits of the guidelines
| Stakeholders | Costs | Benefits |
|---|---|---|
| ART issuers and CASPs | Need to fulfil the requirements if not previously applied | Clarity and harmonisation with respect to the criteria to assess the suitability of the management body and the shareholder and members with qualifying holdings The guidelines are proportionate to the different business models |
| Competent Authorities | Costs related to checking additional documentation with respect to the new requirements | Harmonisation of rules, reducing the risk of arbitrage |
| Clients of ART issuers and CASPs | None | Increased confidence in the qualifications of the management board and shareholder and on the suitability of the shareholders and members with qualifying holdings |
Feedback on the public consultation
The EBA publicly consulted on the draft proposal contained in this paper.
The consultation period lasted for three months and ended on 22 January 2024. 6 responses were received, 4 of which were published on the EBA website.
This paper presents a summary of the key points and other comments arising from the consultation, the analysis and discussion triggered by these comments and the actions taken to address them if deemed necessary.
In many cases several industry bodies made similar comments or the same body repeated its comments in the response to different questions. In such cases, the comments, and EBA analysis are included in the section of this paper where EBA considers them most appropriate.
Changes to the draft Guidelines have been incorporated as a result of the responses received during the public consultation.
Summary of key issues and the EBA’s response
The majority of comments received concerned the principle of proportionality as articulated in the Joint GL on the suitability assessment of the members of the management body, which – according to the respondents – should be clarified in order to provide further guidance on its application. The respondents therefore suggested the amendment of the provisions regarding the proportionality principle to complement the relevant criteria with illustrative examples and case studies. In addition, some respondents believed that the draft guidelines on the assessment of suitability of the members of the management body should be aligned to the EBA-ESMA Guidelines on the assessment of the suitability of members of the management body and key function holders (EBA/GL/2021/06) with regard to the provisions on the suitability assessment to be performed both by the ART issuer or the CASP and by the competent authority. Specifically, the respondents suggested amending the provisions regarding the time period for the assessment by the competent authority and the deadline for the notification of the assessment of the member of the management body by the ART issuer or the CASP.
Summary of responses to the consultation and the EBA’s analysis
| Comments | Summary of responses received | EBA analysis | Amendments to the proposals |
|---|---|---|---|
| Responses to questions in Consultation Paper EBA/CP/2023/ | |||
| Question 1: Are the sections on subject matter, scope, definitions, addressees and implementation of the draft joint EBA and ESMA Guidelines on the assess-ment of the suitability of the members of the management body of issuers of ARTs and CASPs appropriate and sufficiently clear? | |||
| Definitions | One respondent notes that the guidelines definition for “Management body in its management function” correctly identifies the entities concerned (“the issuer of ARTs or CASP”), while this is not the case for the definition of “Management body in its supervisory function”. The respondent suggests harmonising the two definitions on this specific point for consistency reasons. | The definitions are consistent with the existing defini-tions under other sectoral directives and regulations and is consistent with the guidelines on internal gov-ernance for issuers of ARTs. | No change |
| Definitions | One respondent suggest to clarify whether term “Member” may refer both to a natural and/or a legal person (in this latter case, it should then be clarified on whom the suitability assessment should be carried out, i.e. the legal person and/or the natural person representing it, and how). If a different approach must | Member means a proposed or appointed member of the management body including acting on behalf of legal persons being a member of the management body. | The guidelines have been clari-fied |
| be adopted in that respect for the management body in its supervisory function, the respondent deems that this should also be further specified in the GLs. | |||
| Definitions | One respondent notes that the acronyms CASP and ART are neither defined by MiCA nor by the GLs that use them and should be defined as per the MiCA terminology. | The acronyms have been defined in the executive summary and are used across the guidelines to facilitate the reading. | No change |
| Definitions | One respondent suggests that providing further examples or case studies could enhance understanding, especially given the complex and evolving nature of crypto-assets and related services.I | Guidelines specify further the requirements of the Regulation (EU) 2023/1114 and how they are applied. Considering the legal nature of Guidelines they cannot contain examples. | No change |
| Question 2: Are the provisions on the application of the proportionality principle appropriate and sufficiently clear? | |||
| Application of the proportionality principle | One respondent welcomes additional refinement of what instruments the ESAs and the NCAs would consider ‘complex’ in the context of the criteria of “complexity of instruments in which the reserve of assets are invested in” (as this particular criterion does go | It belongs to the issuer to assess the complexity of instruments. The draft RTS on highly liquid financial instruments under Article 38(5) of MICAR should also be taken into account. | No change |
| Comments | Summary of responses received | EBA analysis | Amendments to the proposals |
|---|---|---|---|
| beyond what is mandated for traditional financial institutions under EBA/GL/2021/06, as well as the MiCA Level I text in the context of suitability of the management body), as the current proposal does not go into detail as to what instruments that can compose an ART’s reserve of asset fulfil the requirement for more sophisticated policies and processes with regard to assessing members of the management body. Another respondent added this may be especially important considering that ARTs are, by definition, complex tokens: they may reference a value or a right, or a ‘combination’ of values and rights, including one or more official currencies (Art. 3-1(6) MiCA). That being said, the ‘nature’ of the reserve could also be added as a criterion to be considered (cf. Art. 36-4 MiCA), provided that this term is itself adequately defined. | Same comment as above for “nature”. | No change | |
| Application of the proportionality principle | One respondent suggested that additional points 12 f (i) and (ii) go beyond what is necessary for the purpose of proportionality when assessing the suitability of members as regards the knowledge and experience | The principle of proportionality should be also considered for CASP and the criteria listed are relevant for this purpose. | No change |
| criteria as well as the members ability to commit sufficient time. The main criteria are, thus enough without the need for such additions. | No change | ||
| Another respondent added that in para 12.f.i the notion of “criticality for the functioning of markets in crypto assets” remains too vague and therefore requires further guidance. | This notion is well defined under the outsourcing framework and DORAs framework. | ||
| Application of the proportionality principle | One respondent noted that in paragraph 12.e.ii, the term used by MiCA is not ‘volume’ but ‘size’ (Art. 36-4 and Art. 36-11(c) MiCA). ‘Reserve of assets’ are the defined terms by MiCA (Art. 3-1(32) MiCA), not ‘reserve assets’. | The comments have been accommodated. | The guidelines have been clarified |
| Application of the proportionality principle | One respondent suggested that the following paragraph should become a separate point f. in paragraph 12: “in the case of an issuer of ARTs the following additional criteria: i. the volume and number of ARTs issued, | The comment has been accommodated. | The guidelines have been clarified |
| Comments | Summary of responses received | EBA analysis | Amendments to the proposals |
|---|---|---|---|
| ii. the volume of reserve assets held by issuers of ARTs, iii. the complexity of the assets a token is referenced to, iv. iv. the complexity of the instruments in which the reserve assets are in-vested in,”. | |||
| Application of the proportionality principle | One respondent welcomes further guidance regarding the impact of the class of a CASP (as per Annex IV of MiCA) on the necessity to have more sophisticated suitability policies and assessments or, a contrario, the possibility to have lighter policies and assessments (in line with what has been done in paragraph 31). This would also mitigate the risk of divergent interpretations by competent authorities and therefore the risk of forum shopping. | The application of proportionality has been further specified under the guidelines by indicating a list of non exhaustive criteria that can be used by issuers for the application of this principle. It belongs then to the issuers to demonstrate to their CAs the correct application and consideration of these criteria. The risk of forum shopping is very much limited as the application of this principle means applying the requirements with a certain flexibility however it does not mean a waiver. | No change |
| Comments | Summary of responses received | EBA analysis | Amendments to the proposals |
|---|---|---|---|
| Application of the proportionality principle | A few respondents welcomes additional guidance on applying the principle of proportionality in practice, possibly through illustrative examples (e.g. via the inclusion of a decision-making framework or flowchart to assist in applying the proportionality principle). | It is not possible to provide for example under regulatory products. The guidelines provide for some situations where proportionality could be considered i.e. the need to have a risk management function or the possibility to merge it with the compliance for smaller and less complex firms. | No change |
| Question 3: Are the provisions on the notion of sufficiently good repute appropriate and sufficiently clear? | |||
| Sufficient good repute | One respondent suggested including more detailed criteria or indicators for assessing good repute (e.g. standardised process for background checks and verifications), considering the diverse backgrounds from which individuals in the crypto sector may come. | The criteria mentioned in the guidelines refer to the criteria as specified in the Commission Delegated Regulation mandated under Articles 18(6) of MiCA in the case of an issuer of ARTs and mandated under Article 62(5) of that Regulation in the case of CASP to ensure a consistent approach. | The guidelines have been clarified |
| Sufficient good repute | One respondent suggest clearly defining the validity period when using third-party credit reports for member’s suitability assessment process. | The comment related most likely to the following criterion to consider: being a defaulting debtor (e.g. having negative records at a reliable credit bureau if available). The use of records in this case should take into account national law. | No change |
| Comments | Summary of responses received | EBA analysis | Amendments to the proposals |
|---|---|---|---|
| Sufficient good re-pute | One respondent notes that any cross-reference to the EBA-ESMA GLs on the assessment of the suitability of members of the management body under CRD and MiFID (as this is done in paragraph 15) should gener-ally be avoided. Regarding specifically paragraph 15 this cross-reference could be a source of confusion since certain of the elements in paragraph 13 are also dealt with in the Existing Guidelines and the articula-tion between the respective provisions is not clear. | It is now referred to the Commission Delegated Reg-ulation mandated under Articles 18(6) of MiCA in the case of an issuer of ARTs and mandated under Article 62(5) of that Regulation in the case of CASPParagraph 13 and 15 are fully in line and well-articulated. Para-graph 13 provides for the general principles as fore-seen under MICAR for ARTs and CASP and paragraph 15 further specify these principles. | The guidelines have been clari-fied |
| Sufficient good re-pute | One respondent suggests it would be worth clarifying certain elements regarding the criminal records to be provided as part of the suitability assessment, namely: - the jurisdictions from which criminal records should be provided in respect of proposed members of the management body (jurisdiction in which the relevant issuer of ARTs/CASP is authorised or nationality(ies) or places of residence of the proposed members) and a reasonable maximum reference period to that ef-fect (for instance, country(ies) of residence of the pro-posed member for the last 5 years); | The criminal record is linked to the nationality(ies) and/or the country of residence so both should be provided. | No change |
| Comments | Summary of responses received | EBA analysis | Amendments to the proposals |
|---|---|---|---|
| - in case of residence in a federal State a criminal record should only be obtained in the State in which the person is residing and not in all the States constituting that federal State; - criminal records, when available, do not have to be supplemented by other types of background checks (such as FBI checks). | |||
| Individual appropriate knowledge, skills and experience | One respondent suggests that any cross-reference to the EBA-ESMA GLs on the assessment of the suitability of members of the management body under CRD and MiFID (as this is done in para. 23) should generally be avoided. The list of relevant skills set out in Annex II of such EBA-ESMA GLs should be duplicated in the guidelines which are the object of the present consultation. Furthermore, in section D.2.2, the same respondent suggests that it could be useful to add a provision similar to paragraph 58 of the Existing Guidelines, that will be applicable to | See answer above for the good repute criteria. In addition, to properly assess the skills of the members of the management body, the guidelines specify that issuers of ARTs and CASPs should consider using the non-exhaustive list of relevant skills set out in Annex II to the Joint EBA and ESMA Guidelines on the assessment of the suitability of members of the management body and key function holders under Directive 2013/36/EU and Directive 2014/65/EU, taking into account the role and duties of the position occupied by the member of the management body. | No change |
Question 4: Are the provisions on the notion of individual and collective appropriate knowledge, skills and experience appropriate and sufficiently clear?
| Comments | Summary of responses received | EBA analysis | Amendments to the proposals |
|---|---|---|---|
| any issuer of ARTs or CASP that is subject to the internal organisation requirements set out in directive 2015/849/EU, as amended. | |||
| Collective appropriate knowledge, skills and experience | One respondent calls for further guidance on how to assess collective suitability in practice, which would be beneficial, particularly in diverse and multi-disciplinary teams (which is often the case with CASPs and ART issuers). | The guidelines are clear on this aspect. The composition of the management body should ensure that it has collectively the appropriate knowledge, skills and experience necessary to conduct all the business activities of the issuer of ARTs or of the CASP and to fulfil all of its responsibilities. This includes that the management body collectively has an appropriate understanding of all business areas and activities of the issuer of ARTs or of the CASP. An annex with an example of a collective matrix has been added. However, issuers of ARTs or CASP should adapt it to their own specificities. | The guidelines have been clarified |
| Collective appropriate knowledge, skills and experience | One respondent suggests that point 27 (v) is beyond the purpose of suitability assessment as it is more of a political nature. ESG criteria should only be included if CASPs are required to perform their own ESG reviews and analyses and this should only | Given the relevance of ESG factors underlined also under the recitals of MICAR, the collective assessment of the suitability of the management body should consider this criterion. | No change |
| be in the hands of the Issuers, who are predominantly required to prepare the white paper including ESG criteria as per MiCA. | |||
| Collective appropriate knowledge, skills and experience | One respondent suggests clarifying the meaning of the phrase in para. 27 “The adequate consideration of the interest of their clients and the integrity of the market”. | Some aspects related to the nature of clients can be considered for example whether the clients are non professional clients or professional clients. See also the draft RTS on requirements for policies and procedures on conflicts of interest for issuers of ARTs under MiCAR. | No change |
| Question 5: Are the provisions on the sufficient time commitment of a member of the management body appropriate and sufficiently clear? | |||
| Sufficient time commitment of a member of the members of the management body | One respondent notes that the time commitment expectations for members of the management body should be exclusively set by the ARTs issuer or CASP (as those may differ depending on the scale of the business and the management body structure, in line with the proportionality principle) and remarks that NCAs should only be allowed to assess the time commitment of members of the management body against the requirements set out by the ARTs issuer or CASP, and not interfere or challenge the time commit- | Time commitment is required under MiCAR and should be assessed for members of the management body of ARTs issuers and CASP against the criteria specified under the guidelines. This assessment should be performed by the firms taking into account also the application of the principle of proportionality. Members of the management body should be able to commit sufficient time to perform their functions and responsibilities. This includes that they are | No change |
| Comments | Summary of responses received | EBA analysis | Amendments to the proposals |
|---|---|---|---|
| ment for an individual position, if strictly set, documented and communicated by the business in alignment with their time commitment demands and structures. | able to commit sufficient time in light of other obligations they might have. They should be able to demonstrate their time commitment to the CAs. | ||
| Sufficient time commitment of a member of the members of the management body | One respondent suggests incorporating further guidelines on managing and documenting time commitments, especially in scenarios involving cross-functional or multiple roles within the same organisation. | The guidelines are clear and consistent with other sectoral approaches | No change |
| Sufficient time commitment of a member of the members of the management body | One respondent calls for taking into account the overall time commitment of the body. It should be clarified that it makes a difference if e.g., 3 or even 4 persons are members of the management body or if it is just two of them etc. | The time commitment should be assessed for each individual member of the management body in line with Articles 34(2) AND 68(1) of MiCAR. | No change |
| Sufficient time commitment of a member of the members of the management body | One respondent suggests that to mitigate the risk of divergent interpretations by competent authorities in various Member States, it could be useful to have a kind of benchmarking available, as contemplated under paragraph 41 of the Existing Guidelines. Furthermore, in respect of paragraph 30, the assessment of a | The assessment of time commitment depends very much on the specificities of an issuer of ARTs and CASP (organisational arrangements, complexity of activities, size…). A benchmarking is foreseen under MiCAR. The guidelines do not state that directorships in non EU entities (including UK and Switzerland) are | No change |
| directorship in a non-EU entity should not automatically be considered as not equivalent to an EU directorship. Respondent highlights the extension to Switzerland and the UK that should be considered. The member's geographical presence and the travel time required for the job do not seem to be relevant criteria for this sector either. | not equivalent but directorships within these entities should assessed against time commitment (including against travel time, and member’s geographical presence, number of directorships and so on…). As member of the management body are finally responsible for the entity to comply with its regulatory obligations, a certain time commitment and operational substance should be justified in order to avoid the risk of setting up empty shells. | ||
| Sufficient time commitment of a member of the members of the management body | One respondent asks how the criteria should be applied in situations where the member of the management body has executive and/or day to day functions on the entity, especially in case of start ups or non complex institutions. | In line with the application of the proportionality, members of the management body in the management function can also have an operational function and this is taken into account for the assessment of time commitment. | No change |
| Question 6: Are the provisions in section D.3 and subsections D.3.1 and D.3.2. on the suitability assessment appropriate and sufficiently clear? | |||
| Suitability assessments of members of the manage- | One respondent suggests providing that, if the member of the management body has another role subject to suitability assessment (e.g. as a director in an investment firm), the suitability assessment should take | The responsibility to assess and ensure the suitability of the members of the management body belongs to remain with the issuer of ARTs or the CASP. Where the assessment is also carried out by competent authorities for supervisory purposes, the responsibility | No change |
| ment body by Issu-ers of ARTs and CASPs | this as a basis and asses only additional points regard-ing MiCA (e.g., special topics regarding Crypto Assets, cyber risks etc). | to assess and ensure the suitability of the manage-ment body continues to remain with the issuer of ARTs or the CASP. However, other suitability assess-ment performed by other CAs may be also taken into account (see Guidelines on the system for the ex-change of information relevant to fit and proper as-sessment). | |
| Suitability assess-ments of members of the manage-ment body by Issu-ers of ARTs and CASPs | One respondent suggests providing for a basic suita-bility matrix template, as set out in Annex I to the EBA-ESMA GLs on the assessment of the suitability of members of the management body and key function holders under CRD and MiFID . | A template has been added. However, this template should be adapted to the specificities of each issuer of ARTs and CASP | |
| Suitability assess-ments of members of the manage-ment body by Issu-ers of ARTs and CASPs | One respondent suggests enhancing these sections with more practical examples and scenarios that could further aid in their application and interpreta-tion. | Guidelines cannot provide for examples. | No change |
Question 7: Are the provisions in section D.4 on corrective measures appropriate and sufficiently clear?
| Comments | Summary of responses received | EBA analysis | Amendments to the proposals |
|---|---|---|---|
| Issuers of ARTs’ or CASPs’ corrective measures | One respondent welcomes the addition of a more detailed timeline for implementing corrective measures, as well as the provision of specific case studies and further guidance. | The objective is also to have a proportionate approach and a risk-based approach. Providing for more details would go against the above-mentioned approaches. Besides, the current wording of ‘Issuers of ARTs’ or CASPs’ corrective measures’ section is in line with the one included in other similar guidelines. | No change |
| Question 8: Are the provisions in sections D.5 and D.6 on the assessment and decisions by competent authorities appropriate and sufficiently clear? | |||
| Suitability assessment by competent authorities | One respondent suggests reducing the provision requiring a 6-month maximum period for the NCA’s suitability assessment in para. 66 to a 4-month maximum period, in line with Title VIII of the Joint EBA-ESMA Guidelines applied to credit institutions, so as to avoid negative impact on the daily operations of businesses. One respondentsuggests reducing the provision requiring a 6-month maximum period for the NCA’s suitability assessment in para. 66 to a 2-month maximum period, so as to avoid negative impact on the daily operations of businesses. | The comment has been accommodated and the guidelines specifies a period of 4 month in line with other sectoral regulatory products | The guidelines have been clarified. |
| Comments | Summary of responses received | EBA analysis | Amendments to the proposals |
|---|---|---|---|
| On the same matter, another respondent recommends amending para. 66 and 74 in regard to special cases (e.g. open positions, emergency appointments etc), in order to provide that in such cases the suitability assessment should not take longer than 1 month. | |||
| Suitability assessment by competent authorities | Several respondents deem the concept of “without undue delay” in para. 64 to be unclear and suggest providing for an harmonized deadline, such as a two-week deadline as in the Joint EBA-ESMA on suitability of members of the management body in credit institutions and investment firms. | Undue delay in this case means that as soon as the issuer of ART or the CASP knows that a position is or will be vacant. A distinction is made between the CAs that perform ex ante assessment or ex-post assessment. Competent authorities that assess the suitability of members of the management body after the appointment should require the issuer of ARTs or the CASP to notify the appointment at the latest 2 weeks after the appointment. | No change |
| Suitability assessment by competent authorities | One respondent believes that section D.5 does not sufficiently distinguish between the suitability assessment process (including applicable timeframe) applicable when there is a change in the management body of an already authorised issuer of ARTs | At authorization, the 2 RTS on authorisation in respect of issuers of ARTs and of CASPs specify the information requirements that the applicant issuers, or applicant CASPs have to include in the application for authorisation, to enable the competent authority to | No change |
| or CASP and the suitability assessment process (including applicable timeframe) of the management body for an applicant issuer of ARTs or applicant CASP. | assess the sufficiently good repute of the members of the management body The guidelines specify that the supervisory procedures should also ensure that re-appointed members of the management body are re-assessed by the competent authority in accordance with these Guidelines, where a re-assessment is necessary due to a change in the information required or the position held by the re-appointed member. In addition If a re-assessment of suitability by a competent authority is prompted by a re-assessment by an issuer of ARTs or CAPS, that competent authority should take into account the circumstances that prompted the reassessment and its impact on the individual and collective suitability of the Management body. | ||
| Decision of the competent authority | One respondent suggests that ARTs issuers and CASPs should be allowed more flexibility in these initial stages of MiCA enforcement, by implementing in later revisions of the GLs the provisions on the NCAs’ powers in para. 77(f) to address shortcomings in relation to the non-suitability of members of the management | MiCAR requirements for issuers of ARTs and CASP are directly applicable and must be complied with, considering the principle of proportionality. It belongs to CAs to take the necessary and proportionate corrective measures or enforcement decisions | No change |
| body through withdrawal of authorisation and administrative penalties. In the meantime, the respondent believes that other corrective measures such as setting out specific obligations, recommendations or conditions can be more beneficial for the industry and would empower the prevention of shortcomings as the sector in Europe grows. | |||
| One respondent suggests integrating feedback mechanisms in order to improve communication between the entities and the competent authorities. | Supervisory dialogues exist and are effective between CAs and supervised entities and different supervisory tools exist in this context. | No change | |
| Question 9: Are the draft Joint Guidelines on the assessment of the suitability of the shareholders or members, whether direct or indirect, with qualifying holdings in issuers of ARTs or of CASPs appropriate and sufficiently clear? | |||
| One respondent believes that a full alignment might not be beneficial in light of the novelty of the industry, both as a market overall and as an EU-regulated market, and could lead to significant restrictions that could stifle the industry’s growth in Europe and the integrity of the EU crypto market. Therefore, the respondent believes that the ESAs may more effectively | The EBA and ESMA note that the full alignment with current law practice of other sectoral acts of the assessment methodology for proposed acquisitions of qualifying holdings in going concern is the legislator’s approach: Articles 41, 42 MiCAR for ART issuers and 83, 84 MiCAR for CASPS set out the same regime envisaged in other sectoral acts, eg. in MiFID, and CRD. | No change |
| Comments | Summary of responses received | EBA analysis | Amendments to the proposals |
|---|---|---|---|
| achieve the desired objectives of these GLs by revisiting the existing GLs that they propose to apply to crypto as well to make sure specific caveats are added to reflect the reality and cross-border nature of this industry. | The only distinction made by the legislator concerns the restriction of the assessment to the sufficiently good repute of shareholders or members with direct or indirect qualifying holdings at authorisation. Such distinction is reflected in the Joint Guidelines. | ||
| One respondent remarks that the approach of referencing to the existing Joint ESAs GL on Qualifying Holdings makes it more difficult to read the text and apprehend the exact rules applicable at once. | Considering the full alignment policy pursued, the cross-reference– which is perfectly consistent with legislative drafting technique – ensures the highest level of consistency, it facilitates notification by proposed acquirers and assessment by the competent authorities. | ||
| One respondent suggests providing for a transitional period where unaudited financial statements such as management accounts and balance sheets are accepted, considering that some applicant CASPs or ARTs issuers may originally be based in third countries and that not all third countries require and enforce the same standards as the EU in obtaining audited financial statements. | The Joint Guidelines deal with the assessment methodology, the information requirements are set out in the RTS on information for notification of proposed acquisition of qualifying holdings. | No change |
| Comments | Summary of responses received | EBA analysis | Amendments to the proposals |
|---|---|---|---|
| One respondent suggests the provision of additional clarity on the practical aspects of implementing these assessments, especially in complex ownership structures. | The Joint Guidelines lay down assessment methodology and proportionality requirements for intra-group or other special transactions. | No change |
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- Obligation 229
- Permission 7
- Definition / condition 134
- Reporting template 1
- background, boilerplate
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The links and the sentences they come from (3)
- Issued under
“Articles 42 or in Article 84 of Regulation (EU) 2023/1114 (MiCA)”
“Regulation (EU) 1093/2010 and Regulation (EU) 1095/2010 (Regulations establishing EBA and ESMA respectively)”
“Regulation (EU) 1093/2010 and Regulation (EU) 1095/2010 (Regulations establishing EBA and ESMA respectively)”
Mentions (6): 6 documents this one mentions without changing them
- Refers to
“internal organisation requirements set out in directive 2015/849/EU, as amended.”
“Group means a group as set out in Article 2 point 11 of Directive 2013/34/EU.”
“Credit institutions authorised under Directive 2013/36/EU do not require an authorisation”
“point (36) of Article 4(1) of Regulation (EU) 575/2013 (‘CRR’)”
“as laid down in Directive 2007/44/EC and specified in the Joint ESAs Guidelines”
- Common references
- Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (recast) Text with EEA relevance2014 · EU · cited by 136 ESMA documents
“Directive 2014/65/EU (MiFID II)”
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