The European Council presidency and the European Parliament reached a provisional agreement on the markets in crypto-assets (MiCA) proposal, which covers issuers of unbacked crypto-assets, “stablecoins,” and the trading venues and wallets where crypto-assets are held. In addition, the European Commission (EC) adopted a new Digital Strategy, which provides a corporate approach to further streamline the information technology initiatives, refocus on digital modernization, and provision of innovative services.
Under the provisional agreement reached, crypto-asset service providers will need an authorization to operate within the European Union. National authorities will be required to issue authorizations within a timeframe of three months. Regarding the largest crypto-asset service providers, national authorities will transmit relevant information regularly to ESMA. Non-fungible tokens—that is, digital assets representing real objects like art, music, and videos—will be excluded from the scope, except if they fall under the existing crypto-asset categories. Within 18 months, the European Commission will be tasked to prepare a comprehensive assessment and, if deemed necessary, a specific, proportionate and horizontal legislative proposal to create a regime for non-fungible tokens and address the emerging risks of such new market. MiCA rules will protect consumers against certain risks associated with the investment in crypto-assets and help them avoid fraudulent schemes. MiCA rules will also cover any type of market abuse related to any type of transaction or service, notably for market manipulation and insider dealing. Actors in the crypto-assets market will be required to declare information on their environmental and climate footprint. ESMA will develop the draft regulatory technical standards on the content, methodologies, and presentation of information related to principal adverse environmental and climate-related impact. Within two years, the European Commission will have to provide a report on the environmental impact of crypto-assets and the introduction of mandatory minimum sustainability standards for consensus mechanisms, including the proof-of-work. The provisional agreement is subject to approval by the Council and the European Parliament before going through the formal adoption procedure.
The new Digital Strategy is based on guiding principles, which will be reinforced by the update, such as digital by default and once-only, security and privacy, openness and transparency, interoperability and cross-border, and user-centric, data-driven and agile. The strategy strengthens internal cooperation and knowledge sharing between departments and with member states. There will be increased support for staff to boost their digital skills. The corporate strategy encompasses five strategic objectives:
- Foster a digital culture by empowering all staff and equip them with the necessary skills and tools to think "digital first," while encouraging cross-functional teams and collaboration, supported by a flexible and accessible digital workplace
- Enable digital-ready EU policymaking by ensuring digital technologies are considered from the very beginning of the policy cycle, making new policies fit for the Digital Decade
- Empower business-driven digital transformation by supporting EC departments in reinventing their business by leveraging innovative technologies and data reuse
- Ensure a seamless digital landscape by efficiently managing a streamlined portfolio of information technology systems
- Sustain a green, secure, and resilient infrastructure as the foundation of the EC's operations and new ways of working
Keywords: Europe, EU, Banking, Securities, Crypto-Asset, MiCA, Stablecoins, Fintech, Regtech, Digital Strategy, ESG, Climate Change Risk, European Council, EC, ESMA, European Parliament
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
The Australian Prudential Regulation Authority (APRA) has published the findings of its latest climate risk self-assessment survey conducted across the banking, insurance, and superannuation industries.
The French Prudential Supervisory Authority (ACPR) published a notice related to the methods for calculating and publishing prudential ratios under the Capital Requirements Directive (CRD IV) and the minimum requirement for own funds and eligible liabilities (MREL).
The Financial Stability Institute (FSI) of the Bank for International Settlements recently published a paper proposing a framework for classifying financial stability regulation as either entity-based or activity-based.
The European Insurance and Occupational Pension Authority (EIOPA) published the risk dashboard based on Solvency II data and the final version of the application guidance on climate change materiality assessments and climate change scenarios in the Own Risk and Solvency Assessment (ORSA).
The European Banking Authority (EBA) and the European Central Bank (ECB) published their responses to the consultations of the International Sustainability Standards Board (ISSB) and the European Financial Reporting Advisory Group (EFRAG) on sustainability-related disclosure standards.
A Consultative Group on Risk Management (CGRM) at the Bank for International Settlements (BIS) published a report that examines incorporation of climate risks into the international reserve management framework.
The European Banking Authority (EBA) published the final guidelines on liquidity requirements exemption for investment firms, updated version of its 5.2 filing rules document for supervisory reporting, and Single Rulebook Question and Answer (Q&A) updates in July 2022.
The European Insurance and Occupational Pensions Authority (EIOPA) published Version 2.8.0 of the Solvency II data point model (DPM) and XBRL taxonomy.
The European Union published, in the Official Journal of the European Union, an opinion from the European Economic and Social Committee (EESC); the opinion is on the proposal for a regulation to amend the Capital Requirements Regulation (CRR).
HM Treasury published a draft statutory instrument titled “The Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2022,” along with the related explanatory memorandum and impact assessment.