Article 34 Governance arrangements

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; shall have robust governance arrangements, including a clear organisational structure with well-defined, transparent and consistent lines of responsibility, effective processes to identify, manage, monitor and report the risks to which they are or might be exposed, and adequate internal control mechanisms, including sound administrative and accounting procedures.

Members of the management bodymeans the body or bodies of an issuer, offeror or person seeking admission to trading, or of a crypto-asset service provider, which are appointed in accordance with national law, which are empowered to set the entity’s strategy, objectives and overall direction, and which oversee and monitor management decision-making in the entity and include the persons who effectively direct the business of the entity; of 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; shall be of sufficiently good repute and possess the appropriate knowledge, skills and experience, both individually and collectively, to perform their duties. In particular, they shall not have been convicted of offences relating to money laundering or terrorist financing or of any other offences that would affect their good repute. They shall also demonstrate that they are capable of committing sufficient time to effectively perform their duties.

The management bodymeans the body or bodies of an issuer, offeror or person seeking admission to trading, or of a crypto-asset service provider, which are appointed in accordance with national law, which are empowered to set the entity’s strategy, objectives and overall direction, and which oversee and monitor management decision-making in the entity and include the persons who effectively direct the business of the entity; of 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; shall assess and periodically review the effectiveness of the policy arrangements and procedures put in place to comply with Chapters 2, 3, 5 and 6 of this Title and take appropriate measures to address any deficiencies in that respect.

Shareholders or members, whether direct or indirect, that have 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; in 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; shall be of sufficiently good repute and, in particular, shall not have been convicted of offences relating to money laundering or terrorist financing or of any other offences that would affect their good repute.

1. the reserve of assetsmeans the basket of reserve assets securing the claim against the issuer; referred to in Article 36;

2. the custody of the reserve assets, including the segregation of assets, as specified in Article 37;

3. the rights granted to the holders 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;, as specified in Article 39;

4. the mechanism through which 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; are issued and redeemed;

5. the protocols for validating transactions in 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;;

6. the functioning of the issuersmeans a natural or legal person, or other undertaking, who issues crypto-assets;’ proprietary distributed ledger technologyor ‘DLT’ means a technology that enables the operation and use of distributed ledgers;, where the 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; are issued, transferred and stored using such distributed ledger technologyor ‘DLT’ means a technology that enables the operation and use of distributed ledgers; or similar technology that is operated by the issuersmeans a natural or legal person, or other undertaking, who issues crypto-assets; or a third party acting on their behalf;

7. the mechanisms to ensure the liquidity 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;, including the liquidity management policy and procedures for issuersmeans a natural or legal person, or other undertaking, who issues crypto-assets; of significant 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; referred to in Article 45;

8. arrangements with third-party entities for operating the reserve of assetsmeans the basket of reserve assets securing the claim against the issuer;, and for the investment of the reserve assets, the custody of the reserve assets and, where applicable, the distribution of the 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; to the public;

9. the written consent of the 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; given to other persons that might offer or seek the admission to trading of the 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;;

10. complaints-handling, as specified in Article 31;

11. conflicts of interest, as specified in Article 32.

Where 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; enter into arrangements as referred to in the first subparagraph, point (h), those arrangements shall be set out in a contract with the third-party entities. Those contractual arrangements shall set out the roles, responsibilities, rights and obligations both of the 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 of the third-party entities. Any contractual arrangement with cross-jurisdictional implications shall provide for an unambiguous choice of applicable law.

Unless they have initiated a redemption plan referred to in Article 47, 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; shall employ appropriate and proportionate systems, resources and procedures to ensure the continued and regular performance of their services and activities. To that end, 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; shall maintain all of their systems and security access protocols in conformity with the appropriate Union standards.

If 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; decides to discontinue the provision of its services and activities, including by discontinuing the issue of that 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;, it shall submit a plan to the competent authoritymeans one or more authorities:designated by each Member State in accordance with Article 93 concerning offerors, persons seeking admission to trading of crypto-assets other than asset-referenced tokens and e-money tokens, issuers of asset-referenced tokens, or crypto-asset service providers;designated by each Member State for the application of Directive 2009/110/EC concerning issuers of e-money tokens; for approval of such discontinuation.

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; shall identify sources of operational risk and minimise those risks through the development of appropriate systems, controls and procedures.

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; shall establish a business continuity policy and plans to ensure, in the case of an interruption of their ICT systems and procedures, the preservation of essential data and functions and the maintenance of their activities or, where that is not possible, the timely recovery of such data and functions and the timely resumption of their activities.

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; shall have in place internal control mechanisms and effective procedures for risk management, including effective control and safeguard arrangements for managing ICT systems as required by Regulation (EU) 2022/2554 of the European Parliament and of the Council(³⁷)Regulation (EU) 2022/2554 of the European Parliament and of the Council of 14 December 2022 on digital operational resilience for the financial sector and amending Regulations (EC) No 1060/2009, (EU) No 648/2012, (EU) No 600/2014 and (EU) No 909/2014 and (EU) 2016/1011 (OJ L 333, 27.12.2022, p. 1).. The procedures shall provide for a comprehensive assessment relating to the reliance on third-party entities as referred to in paragraph 5, first subparagraph, point (h), of this Article. 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; shall monitor and evaluate on a regular basis the adequacy and effectiveness of the internal control mechanisms and procedures for risk assessment and take appropriate measures to address any deficiencies in that respect.

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; shall have systems and procedures in place that are adequate to safeguard the availability, authenticity, integrity and confidentiality of data as required by Regulation (EU) 2022/2554 and in line with Regulation (EU) 2016/679. Those systems shall record and safeguard relevant data and information collected and produced in the course of the issuersmeans a natural or legal person, or other undertaking, who issues crypto-assets;’ activities.

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; shall ensure that they are regularly audited by independent auditors. The results of those audits shall be communicated to the management bodymeans the body or bodies of an issuer, offeror or person seeking admission to trading, or of a crypto-asset service provider, which are appointed in accordance with national law, which are empowered to set the entity’s strategy, objectives and overall direction, and which oversee and monitor management decision-making in the entity and include the persons who effectively direct the business of the entity; of the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets; concerned and made available to the competent authoritymeans one or more authorities:designated by each Member State in accordance with Article 93 concerning offerors, persons seeking admission to trading of crypto-assets other than asset-referenced tokens and e-money tokens, issuers of asset-referenced tokens, or crypto-asset service providers;designated by each Member State for the application of Directive 2009/110/EC concerning issuers of e-money tokens;.

1. the monitoring tools for the risks referred to in paragraph 8;

2. the business continuity plan referred to in paragraph 9;

3. the internal control mechanism referred to in paragraph 10;

4. the audits referred to in paragraph 12, including the minimum documentation to be used in the audit.

When issuing the guidelines referred to in the first subparagraph, EBA shall take into account the provisions on governance requirements in other Union legislative acts on financial services, including Directive 2014/65/EU.