Criteria for significance classification

Cross-border transactions, in particular those that are associated to uses as a means of exchange, are the transactions with the international dimension that are most likely to pose risks to financial stability, monetary policy transmission and monetary sovereignty of the Union. Those transactions also reflect the international activity of an issuermeans a natural or legal person, or other undertaking, who issues crypto-assets; of an asset-referenced tokenmeans a type of crypto-asset that is not an electronic money token and that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies; or e-money token on international scale outside the Union in relation to their uses for payments and remittances. Therefore, the EBA should consider the indicators of the significance of the market share of value of cross-border transactions in an asset-referenced tokenmeans a type of crypto-asset that is not an electronic money token and that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies; or e-money token into and from the Union and the significance of the estimated market share of value of such transactions that are associated to uses of such tokens as a means of exchange. The indicator of the significance of the market share of value of cross-border transactions in an asset-referenced tokenmeans a type of crypto-asset that is not an electronic money token and that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies; or e-money token should be further divided in two separate sub-indicators relating to inflow transactions and outflow transactions, since the effects of each type of transaction on financial stability and monetary sovereignty can be different.

To capture the non-cross border aspect of significance of an issuermeans a natural or legal person, or other undertaking, who issues crypto-assets;’s activities on international scale, the EBA should also consider the core indicators on the global market capitalisation of an asset-referenced tokenmeans a type of crypto-asset that is not an electronic money token and that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies; or an e-money token, and on the global market capitalisation of all asset-referenced tokensmeans a type of crypto-asset that is not an electronic money token and that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies; and e-money tokens issued by the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets;. The market capitalisation on an international scale of a token should be understood to include the same token issued outside the Union to distinguish that capitalisation from the market capitalisation referred to in Article 43(1), point (b), of Regulation (EU) 2023/1114.

As regards the assessment of the criterion of significance of the interconnectedness of asset-referenced tokensmeans a type of crypto-asset that is not an electronic money token and that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies; or e-money tokens or their issuersmeans a natural or legal person, or other undertaking, who issues crypto-assets; with the financial system, as referred to in Article 43(1), point (f), of Regulation (EU) 2023/1114, the indicators should capture direct and indirect interconnectedness of the tokens and their issuersmeans a natural or legal person, or other undertaking, who issues crypto-assets; with the financial system. Both a direct and an indirect interconnectedness could result in contagion effects in both directions, that is from issuersmeans a natural or legal person, or other undertaking, who issues crypto-assets; of asset-referenced tokensmeans a type of crypto-asset that is not an electronic money token and that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies; and e-money tokens to traditional financial system and vice versa. For that purpose, it is necessary to set out the core indicators of the significance of the share of non-deposit reserve assets that are financial instrumentsmeans financial instruments as defined in Article 4(1), point (15), of Directive 2014/65/EU; issued by financial institutionsmeans any of the following:a credit institution;an investment firm;an electronic money institution;a payment institution;a UCITS management company;an alternative investment fund manager;an insurance undertaking as defined in Article 13, point (1), of Directive 2009/138/EC of the European Parliament and of the Council(2) Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 335, 17.12.2009, p. 1, ELI: http://data.europa.eu/eli/dir/2009/138/oj).;a reinsurance undertaking as defined in Article 13, point (4), of Directive 2009/138/EC;an institution for occupational retirement provision as defined in Article 6, point (1), of Directive (EU) 2016/2341 of the European Parliament and of the Council(3) Directive (EU) 2016/2341 of the European Parliament and of the Council of 14 December 2016 on the activities and supervision of institutions for occupational retirement provision (IORPs) (OJ L 354, 23.12.2016, p. 37, ELI: http://data.europa.eu/eli/dir/2016/2341/oj).;, and of the significance of the share of the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets;’s asset holdings relative to the total supply of specific financial instrumentsmeans financial instruments as defined in Article 4(1), point (15), of Directive 2014/65/EU;. In addition, the following ancillary indicators should be set out: the ownership structure of the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets; of an asset-referenced tokenmeans a type of crypto-asset that is not an electronic money token and that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies; or an e-money token, the concentration of custody of the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets;’s reserve assets, and portfolio overlap of the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets;’s reserve assets with the reserve assets of issuersmeans a natural or legal person, or other undertaking, who issues crypto-assets; of other asset-referenced tokensmeans a type of crypto-asset that is not an electronic money token and that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies; and e-money tokens.

Assessing the significance of the share of non-deposit reserve assets that are financial instrumentsmeans financial instruments as defined in Article 4(1), point (15), of Directive 2014/65/EU; issued by financial institutionsmeans any of the following:a credit institution;an investment firm;an electronic money institution;a payment institution;a UCITS management company;an alternative investment fund manager;an insurance undertaking as defined in Article 13, point (1), of Directive 2009/138/EC of the European Parliament and of the Council(2) Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 335, 17.12.2009, p. 1, ELI: http://data.europa.eu/eli/dir/2009/138/oj).;a reinsurance undertaking as defined in Article 13, point (4), of Directive 2009/138/EC;an institution for occupational retirement provision as defined in Article 6, point (1), of Directive (EU) 2016/2341 of the European Parliament and of the Council(3) Directive (EU) 2016/2341 of the European Parliament and of the Council of 14 December 2016 on the activities and supervision of institutions for occupational retirement provision (IORPs) (OJ L 354, 23.12.2016, p. 37, ELI: http://data.europa.eu/eli/dir/2016/2341/oj).; is key when assessing the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets;’s interconnectedness with the financial system. That core indicator should measure direct interconnections with the financial sector via the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets;’s reserve of assetsmeans the basket of reserve assets securing the claim against the issuer;. Distress in financial institutionsmeans any of the following:a credit institution;an investment firm;an electronic money institution;a payment institution;a UCITS management company;an alternative investment fund manager;an insurance undertaking as defined in Article 13, point (1), of Directive 2009/138/EC of the European Parliament and of the Council(2) Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 335, 17.12.2009, p. 1, ELI: http://data.europa.eu/eli/dir/2009/138/oj).;a reinsurance undertaking as defined in Article 13, point (4), of Directive 2009/138/EC;an institution for occupational retirement provision as defined in Article 6, point (1), of Directive (EU) 2016/2341 of the European Parliament and of the Council(3) Directive (EU) 2016/2341 of the European Parliament and of the Council of 14 December 2016 on the activities and supervision of institutions for occupational retirement provision (IORPs) (OJ L 354, 23.12.2016, p. 37, ELI: http://data.europa.eu/eli/dir/2016/2341/oj).; the financial instrumentsmeans financial instruments as defined in Article 4(1), point (15), of Directive 2014/65/EU; of which are included in the reserve assets could affect the value of the reserve assets that back the token holders’ claims on the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets; to redeem the token. When assessing that indicator, the EBA should consider the sub-indicators of the share of non-deposit reserve assets that are financial instrumentsmeans financial instruments as defined in Article 4(1), point (15), of Directive 2014/65/EU;, of the share of non-deposit reserve assets that are derivatives in case of asset-referenced tokensmeans a type of crypto-asset that is not an electronic money token and that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies;, or of the share of covered bonds in case of e-money tokens. The share of non-deposit reserve assets that are derivatives and the share of covered bonds are necessary as sub-indicators since, on the one hand, counterparties of derivatives might be credit institutionsmeans a credit institution as defined in Article 4(1), point (1), of Regulation (EU) No 575/2013 and authorised under Directive 2013/36/EU; and therefore a margin call on them could have significant effects on the financial system, and, on the other hand, a fire sale of covered bonds by the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets; could negatively impact the liquidity of credit institutionsmeans a credit institution as defined in Article 4(1), point (1), of Regulation (EU) No 575/2013 and authorised under Directive 2013/36/EU;.

The core indicator on the significance of the share of asset-referenced tokensmeans a type of crypto-asset that is not an electronic money token and that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies; or e-money tokens issuermeans a natural or legal person, or other undertaking, who issues crypto-assets;’s asset holdings relative to the total supply of the specific financial instrumentsmeans financial instruments as defined in Article 4(1), point (15), of Directive 2014/65/EU;, including units of an undertaking for collective investment in transferable securities and sovereign bonds, should capture indirect interconnections between, on the one hand, issuersmeans a natural or legal person, or other undertaking, who issues crypto-assets; of asset-referenced tokensmeans a type of crypto-asset that is not an electronic money token and that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies; and e-money tokens and, on the other hand, the financial system. Such indirect connections could affect the traditional financial system, in particular where the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets; of an asset-referenced tokenmeans a type of crypto-asset that is not an electronic money token and that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies; or an e-money token is forced to fire sell its asset holdings because of financial distress. That sell-off could drive down the value of those assets and affect financial institutionsmeans any of the following:a credit institution;an investment firm;an electronic money institution;a payment institution;a UCITS management company;an alternative investment fund manager;an insurance undertaking as defined in Article 13, point (1), of Directive 2009/138/EC of the European Parliament and of the Council(2) Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 335, 17.12.2009, p. 1, ELI: http://data.europa.eu/eli/dir/2009/138/oj).;a reinsurance undertaking as defined in Article 13, point (4), of Directive 2009/138/EC;an institution for occupational retirement provision as defined in Article 6, point (1), of Directive (EU) 2016/2341 of the European Parliament and of the Council(3) Directive (EU) 2016/2341 of the European Parliament and of the Council of 14 December 2016 on the activities and supervision of institutions for occupational retirement provision (IORPs) (OJ L 354, 23.12.2016, p. 37, ELI: http://data.europa.eu/eli/dir/2016/2341/oj).; indirectly via a decrease of the value of the assets those financial institutionsmeans any of the following:a credit institution;an investment firm;an electronic money institution;a payment institution;a UCITS management company;an alternative investment fund manager;an insurance undertaking as defined in Article 13, point (1), of Directive 2009/138/EC of the European Parliament and of the Council(2) Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 335, 17.12.2009, p. 1, ELI: http://data.europa.eu/eli/dir/2009/138/oj).;a reinsurance undertaking as defined in Article 13, point (4), of Directive 2009/138/EC;an institution for occupational retirement provision as defined in Article 6, point (1), of Directive (EU) 2016/2341 of the European Parliament and of the Council(3) Directive (EU) 2016/2341 of the European Parliament and of the Council of 14 December 2016 on the activities and supervision of institutions for occupational retirement provision (IORPs) (OJ L 354, 23.12.2016, p. 37, ELI: http://data.europa.eu/eli/dir/2016/2341/oj).; hold.

Issuersmeans a natural or legal person, or other undertaking, who issues crypto-assets; of asset-referenced tokensmeans a type of crypto-asset that is not an electronic money token and that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies; or e-money tokens can also be interconnected with the financial system through the ownership structure. That ancillary indicator should provide a complete view of the potential effects that financial distress could have in the financial system, not only from a purely financial stability risk perspective, but also in connection to reputational risks. Financial distress or critical events in the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets; of an asset-referenced tokenmeans a type of crypto-asset that is not an electronic money token and that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies; or e-money token could, via their link to the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets; through the ownership structure, have a significant effect in institutions that run other financial activities. When assessing that indicator, the EBA should focus on whether the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets; has a dispersed or concentrated ownership, whether natural or legal persons with qualifying holdingsmeans any direct or indirect holding in an issuer of asset-referenced tokens or in a crypto-asset service provider which represents at least 10 % of the capital or of the voting rights, as set out in Articles 9 and 10 of Directive 2004/109/EC of the European Parliament and of the Council(32) Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC (OJ L 390, 31.12.2004, p. 38)., respectively, taking into account the conditions for the aggregation thereof laid down in Article 12(4) and (5) of that Directive, or which makes it possible to exercise a significant influence over the management of the issuer of asset-referenced tokens or the management of the crypto-asset service provider in which that holding subsists; are financial institutionsmeans any of the following:a credit institution;an investment firm;an electronic money institution;a payment institution;a UCITS management company;an alternative investment fund manager;an insurance undertaking as defined in Article 13, point (1), of Directive 2009/138/EC of the European Parliament and of the Council(2) Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 335, 17.12.2009, p. 1, ELI: http://data.europa.eu/eli/dir/2009/138/oj).;a reinsurance undertaking as defined in Article 13, point (4), of Directive 2009/138/EC;an institution for occupational retirement provision as defined in Article 6, point (1), of Directive (EU) 2016/2341 of the European Parliament and of the Council(3) Directive (EU) 2016/2341 of the European Parliament and of the Council of 14 December 2016 on the activities and supervision of institutions for occupational retirement provision (IORPs) (OJ L 354, 23.12.2016, p. 37, ELI: http://data.europa.eu/eli/dir/2016/2341/oj).;, and the complexity of the ownership structure.

An additional channel of interconnectedness between, on the one hand, the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets; of an asset-referenced tokenmeans a type of crypto-asset that is not an electronic money token and that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies; or e-money token, and, on the other hand, the financial system, can arise via the concentration of reserve assets in a small number of financial institutionsmeans any of the following:a credit institution;an investment firm;an electronic money institution;a payment institution;a UCITS management company;an alternative investment fund manager;an insurance undertaking as defined in Article 13, point (1), of Directive 2009/138/EC of the European Parliament and of the Council(2) Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 335, 17.12.2009, p. 1, ELI: http://data.europa.eu/eli/dir/2009/138/oj).;a reinsurance undertaking as defined in Article 13, point (4), of Directive 2009/138/EC;an institution for occupational retirement provision as defined in Article 6, point (1), of Directive (EU) 2016/2341 of the European Parliament and of the Council(3) Directive (EU) 2016/2341 of the European Parliament and of the Council of 14 December 2016 on the activities and supervision of institutions for occupational retirement provision (IORPs) (OJ L 354, 23.12.2016, p. 37, ELI: http://data.europa.eu/eli/dir/2016/2341/oj).;. The higher the diversification of an issuermeans a natural or legal person, or other undertaking, who issues crypto-assets;’s reserve assets, the lower the potential contagion effects and financial stability risks of the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets;. Thus, allocating reserve assets in a low number of financial institutionsmeans any of the following:a credit institution;an investment firm;an electronic money institution;a payment institution;a UCITS management company;an alternative investment fund manager;an insurance undertaking as defined in Article 13, point (1), of Directive 2009/138/EC of the European Parliament and of the Council(2) Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 335, 17.12.2009, p. 1, ELI: http://data.europa.eu/eli/dir/2009/138/oj).;a reinsurance undertaking as defined in Article 13, point (4), of Directive 2009/138/EC;an institution for occupational retirement provision as defined in Article 6, point (1), of Directive (EU) 2016/2341 of the European Parliament and of the Council(3) Directive (EU) 2016/2341 of the European Parliament and of the Council of 14 December 2016 on the activities and supervision of institutions for occupational retirement provision (IORPs) (OJ L 354, 23.12.2016, p. 37, ELI: http://data.europa.eu/eli/dir/2016/2341/oj).; or in a highly concentrated degree is an indication of higher interconnectedness with the financial system. Because of the specific relevance of interconnectedness that may arise from the concentration of depositsmeans a deposit as defined in Article 2(1), point (3), of Directive 2014/49/EU; in credit institutionsmeans a credit institution as defined in Article 4(1), point (1), of Regulation (EU) No 575/2013 and authorised under Directive 2013/36/EU;, it is appropriate to set two sub-indicators under the ancillary indicator of concentration of issuermeans a natural or legal person, or other undertaking, who issues crypto-assets;’s reserve assets in financial institutionsmeans any of the following:a credit institution;an investment firm;an electronic money institution;a payment institution;a UCITS management company;an alternative investment fund manager;an insurance undertaking as defined in Article 13, point (1), of Directive 2009/138/EC of the European Parliament and of the Council(2) Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 335, 17.12.2009, p. 1, ELI: http://data.europa.eu/eli/dir/2009/138/oj).;a reinsurance undertaking as defined in Article 13, point (4), of Directive 2009/138/EC;an institution for occupational retirement provision as defined in Article 6, point (1), of Directive (EU) 2016/2341 of the European Parliament and of the Council(3) Directive (EU) 2016/2341 of the European Parliament and of the Council of 14 December 2016 on the activities and supervision of institutions for occupational retirement provision (IORPs) (OJ L 354, 23.12.2016, p. 37, ELI: http://data.europa.eu/eli/dir/2016/2341/oj).;. One sub-indicator should capture concentration of reserve assets in financial institutionsmeans any of the following:a credit institution;an investment firm;an electronic money institution;a payment institution;a UCITS management company;an alternative investment fund manager;an insurance undertaking as defined in Article 13, point (1), of Directive 2009/138/EC of the European Parliament and of the Council(2) Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 335, 17.12.2009, p. 1, ELI: http://data.europa.eu/eli/dir/2009/138/oj).;a reinsurance undertaking as defined in Article 13, point (4), of Directive 2009/138/EC;an institution for occupational retirement provision as defined in Article 6, point (1), of Directive (EU) 2016/2341 of the European Parliament and of the Council(3) Directive (EU) 2016/2341 of the European Parliament and of the Council of 14 December 2016 on the activities and supervision of institutions for occupational retirement provision (IORPs) (OJ L 354, 23.12.2016, p. 37, ELI: http://data.europa.eu/eli/dir/2016/2341/oj).;, and another sub-indicator should cover only depositsmeans a deposit as defined in Article 2(1), point (3), of Directive 2014/49/EU; in credit institutionsmeans a credit institution as defined in Article 4(1), point (1), of Regulation (EU) No 575/2013 and authorised under Directive 2013/36/EU;.

It is necessary to capture the contagion mechanisms that could arise from cases where there are different issuersmeans a natural or legal person, or other undertaking, who issues crypto-assets; of asset-referenced tokensmeans a type of crypto-asset that is not an electronic money token and that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies; or e-money tokens holding similar assets. Such situation could have as a result that financial distress and the resulting sell-off in one issuermeans a natural or legal person, or other undertaking, who issues crypto-assets; could have negative effects on other issuersmeans a natural or legal person, or other undertaking, who issues crypto-assets;. An ancillary indicator of a portfolio overlap of the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets;’s reserve assets with the reserve assets of other issuersmeans a natural or legal person, or other undertaking, who issues crypto-assets; should therefore be set out,