Examining the evolving regulatory landscape and its impact on governance and stablecoins.
Increased Attention to Boards
Board accountability seems to be getting more attention in several of the EU's current legislative measures, like DORA and the Network and Information Society Directive (NIS 2). Additionally, MiCA lays out a number of requirements for management bodies. For instance, it mandates that the management bodies of CASPs and ART issuers "assess and periodically review" the efficacy of the policy arrangements and compliance protocols (Art. 30o, n.o 2 a) and 61o, n.o 5 of MiCA). Additionally, management bodies of ARTs and EMTs issuers are required to make sure that the asset reserves are managed effectively and prudently and that the issuance or redemption of tokens always matches the amount in the reserves (Article 32o No. 3, 52o No. 1 a) MiCA).
Violations could result in hefty administrative fines for the management body. Additionally, the management body of a company can be held independently accountable for the information made available to the public through the crypto-asset white paper (Articles 14 No. 1, 22 No. 1, and 47 No.1 from MiCA), which would further protect holders of crypto-assets.
The National Competent Authority (NCA) for the approval and oversight of entities that will be subject to MiCA will be the Central Bank.
As a result, the Central Bank has started to be ready to adopt MiCA and has formed a cross-sectoral team to incorporate MiCA into the Central Bank's supervisory and authorization processes and methodologies. To examine any dangers to consumer protection and financial stability, the Central Bank will keep an eye on developments involving crypto-assets.
Regulations for stablecoins
Asset-backed stablecoins must adhere to tight regulations, and algorithmic stablecoins are prohibited.
Algorithmic stablecoins are no more (at least in the EU). Algorithmic stablecoins will be prohibited by MiCA, and fiat-backed stablecoins will also need to be backed by a liquid reserve with a 1:1 ratio.
Other requirements for stablecoin issuers will include, but not be limited to:
• Implementing specific procedures to safeguard the backing assets and reserve assets;
• Establishing procedures for handling complaints; and
• Establishing and maintaining a reserve of assets isolated from other assets that shall be held in custody by a third party.
Timeline:
