European Banking Authority launches consultation activity to clarify crypto asset liquidity and stress testing standards under MiCAR

On November 8th, the European Banking Authority (EBA) announced the launch of three consultation activities aimed at developing regulatory technical standards (RTS) to clarify the liquidity requirements of relevant token issuers, the minimum content of liquidity management policies, and high-liquidity financial instruments in asset reserves. In addition, the EBA also consulted on draft guidelines for liquidity stress testing to establish common reference parameters for stress testing scenarios. These consultations are part of the delivery of the Markets in Crypto-Assets Regulation (MiCAR) prudential package and constitute the third batch of MiCAR policy products. The consultation activities will continue until February 8, 2024.
Regarding the liquidity requirements for asset reserves, the EBA proposes to establish a minimum ratio of asset reserves with maturities of 1 to 5 working days and outlines the overall technology for managing asset reserve liquidity. In addition, the draft RTS specifies the specific minimum deposit amount for assets referred to by tokens. Regarding high-liquidity financial instruments, the EBA has identified financial instruments that can be considered high-liquidity and can bear minimum market risk, credit risk, and concentration risk, as well as the range of asset reserves that can be invested in. In developing these RTS, the EBA needs to consider the correlation between various asset types that may be referenced by asset reference tokens and the high-liquidity financial instruments that issuers may invest in to mitigate their different market value fluctuations.