Skip to the text
In this act Article 2 of 4

Article 2 — Criteria and factors for the purposes of the EBA temporary intervention powers

Financial servicesLevel 2Delegated RegulationMiCAIn forceOfficial source

The EBA shall take into account the following factors and criteria to determine whether there is a significant investor protection concern or a threat to the orderly functioning and integrity of markets in crypto-assets or to the stability of the whole or part of the financial system in the Union:

2(a)
a)the degree of complexity of the asset-referenced token or e-money token or the type of activity or practice related to asset-referenced tokens or e-money tokens in relation to the type of clients, as assessed in accordance with point (c), involved in the activity, or practice, taking into account, in particular, the following:
Copy link
2(a)(i)
i)the degree of transparency of costs and charges associated with the asset-referenced token or e-money token, the activity or practice related to asset-referenced tokens or e-money tokens and, in particular, the lack of transparency resulting from multiple layers of costs and charges;
Copy link
2(a)(ii)
ii)the nature and scale of any risks;
Copy link
2(a)(iii)
iii)the size and the composition of the reserve of assets referred to in Article 36 of Regulation (EU) 2023/1114;
Copy link
2(a)(iv)
iv)whether the asset-referenced token or e-money token or service is bundled with other products or linked to different services;
Copy link
2(a)(v)
v)the complexity of any terms and conditions;
Copy link
2(b)
b)the size of potential detrimental effects, considering, in particular, the following:
Copy link
2(b)(i)
i)the reference value of the asset-referenced token or e-money token;
Copy link
2(b)(ii)
ii)the number of clients, token holders or market participants involved;
Copy link
2(b)(iii)
iii)the relative share of the asset-referenced token or e-money token in investors’ portfolios;
Copy link
2(b)(iv)
iv)the probability, scale and nature of any detriment, including the amount of loss potentially suffered;
Copy link
2(b)(v)
v)the anticipated duration of the detrimental consequences;
Copy link
2(b)(vi)
vi)the volume of the issuance;
Copy link
2(b)(vii)
vii)the number of intermediaries involved;
Copy link
2(b)(viii)
viii)the growth of the market or sales;
Copy link
2(b)(ix)
ix)the average amount invested by each client in the asset-referenced token or e-money token;
Copy link
2(c)
c)the type of clients involved in an activity or practice related to asset-referenced tokens or e-money tokens or to whom an asset-referenced token or e-money token is marketed or sold, taking into account, in particular, the following:
Copy link
2(c)(i)
i)whether the client is a retail holder or a qualified investor;
Copy link
2(c)(ii)
ii)clients’ skills and abilities, including the level of education, experience with similar products or selling practices;
Copy link
2(c)(iii)
iii)clients’ economic situation, including their income and wealth;
Copy link
2(c)(iv)
iv)clients’ core financial objectives, including pension saving and home ownership financing;
Copy link
2(d)
d)the degree of transparency of the asset-referenced token or e-money token or the type of activity or practice related to asset-referenced tokens or e-money tokens, taking into account, in particular, the following:
Copy link
2(d)(i)
i)any hidden costs and charges;
Copy link
2(d)(ii)
ii)the use of techniques drawing clients’ attention but not necessarily reflecting the suitability or overall quality of the product or service;
Copy link
2(d)(iii)
iii)the nature of risks and transparency of risks;
Copy link
2(d)(iv)
iv)the use of product names or terminology or other information that is misleading by implying a greater level of security or return than those which are actually possible or likely, or which imply product features that do not exist;
Copy link
2(d)(v)
v)the use of unfair, unclear or misleading information in communications;
Copy link
2(e)
e)the particular features or components of the asset-referenced token or e-money token or the activity or practice related to asset-referenced tokens or e-money tokens;
Copy link
2(f)
f)the existence and degree of disparity between the expected return or profit for investors and the risk of loss in relation to the asset-referenced token or e-money token or the activity or practice related to asset-referenced tokens or e-money tokens, taking into account, in particular, the following:
Copy link
2(f)(i)
i)the structuring costs of such asset-referenced tokens, e-money tokens, activity or practice and other costs;
Copy link
2(f)(ii)
ii)the disparity in relation to the issuer’s risk retained by the issuer;
Copy link
2(f)(iii)
iii)the risk/return profile or risk/benefit profile;
Copy link
2(g)
g)the costs and ease with which investors are able to sell the relevant asset-referenced token or e-money token or switch to another asset-referenced token or e-money token, taking into account, in particular, the following:
Copy link
2(g)(i)
i)the degree of liquidity in the market for the asset-referenced token or e-money token;
Copy link
2(g)(ii)
ii)the frequency of trading availability;
Copy link
2(g)(iii)
iii)the issuance size and size of the secondary market;
Copy link
2(g)(iv)
iv)the presence or absence of liquidity providers or secondary market makers;
Copy link
2(g)(v)
v)the features of the trading system;
Copy link
2(g)(vi)
vi)any other barriers to exit;
Copy link
2(h)
h)the pricing and associated costs of the asset-referenced token or e-money token or the activity or practice related to asset-referenced tokens or e-money tokens, taking into account, in particular, either of the following:
Copy link
2(h)(i)
i)the use of hidden or secondary charges;
Copy link
2(h)(ii)
ii)charges that do not reflect the level of service provided;
Copy link
2(i)
i)the selling practices associated with the asset-referenced token or e-money token, taking into account, in particular, the following:
Copy link
2(i)(i)
i)the communication and distribution channels used;
Copy link
2(i)(ii)
ii)the information, marketing or other promotional material associated with the investment;
Copy link
2(i)(iii)
iii)the assumed investment purposes;
Copy link
2(i)(iv)
iv)whether the decision to buy is a secondary or tertiary following an earlier purchase;
Copy link
2(j)
j)the financial and business situation of the issuer or of the provider of services of an asset-referenced token or e-money token, taking into account, in particular, either of the following:
Copy link
2(j)(i)
i)the financial situation of the issuer or of the provider of services related to the asset-referenced token or e-money token;
Copy link
2(j)(ii)
ii)the transparency of the business situation of the issuer or of the provider of services related to the asset-referenced token or e-money token;
Copy link
2(k)
k)whether there is insufficient or unreliable information about an asset-referenced token or e-money token, provided either by the issuer or the offeror or service provider, to enable market participants at whom it is targeted to make an informed decision, taking into account the nature and type of the asset-referenced token or e-money token;
Copy link
2(l)
l)whether the asset-referenced token or e-money token or the activity or practice related to asset-referenced tokens or e-money tokens poses a high risk to the performance of transactions entered into by participants or investors in the relevant market;
Copy link
2(m)
m)whether the asset-referenced token or e-money token or the activity or practice related to asset-referenced tokens or e-money tokens would leave the Union economy vulnerable to risks;
Copy link
2(n)
n)whether the characteristics of an asset-referenced token or e-money token make it particularly susceptible to being used for the purposes of financial crime and, in particular whether those characteristics could potentially encourage the use of asset-referenced tokens or e-money tokens for the following:
Copy link
2(n)(i)
i)any fraud or dishonesty;
Copy link
2(n)(ii)
ii)misconduct in, or misuse of information, in relation to a financial market;
Copy link
2(n)(iii)
iii)handling the proceeds of crime;
Copy link
2(n)(iv)
iv)the financing of terrorism;
Copy link
2(n)(v)
v)facilitating money laundering;
Copy link
2(o)
o)whether the activity or practice related to asset-referenced tokens or e-money tokens poses a particularly high risk to the resilience or smooth operation of markets, the payment system and their infrastructures;
Copy link
2(p)
p)whether the asset-referenced token or e-money token or the activity or practice related to asset-referenced tokens or e-money tokens poses a high risk of disruption to financial institutions deemed to be important to the financial system of the Union;
Copy link
2(q)
q)the relevance of the distribution of the asset-referenced token or e-money token as a funding source for the issuer;
Copy link
2(r)
r)whether an asset-referenced token or e-money token or an activity or practice related to asset-referenced tokens or e-money tokens poses risks to the market or payment systems infrastructure;
Copy link
2(s)
s)whether an asset-referenced token or an activity or practice related to asset-referenced tokens or e-money tokens could threaten investors’ confidence in the financial system.
Copy link