Article 37 Custody of reserve assets

1. the reserve assets are not encumbered nor pledged as a financial collateral arrangement as defined in Article 2(1), point (a), of Directive 2002/47/EC of the European Parliament and of the Council(³⁹)Directive 2002/47/EC of the European Parliament and of the Council of 6 June 2002 on financial collateral arrangements (OJ L 168, 27.6.2002, p. 43).;

2. the reserve assets are held in custody in accordance with paragraph 6 of this Article;

3. 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; have prompt access to the reserve assets to meet any requests for redemption from 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;;

4. concentrations of the custodians of reserve assets are avoided;

5. risk of concentration of reserve assets is avoided.

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; that issue two or more 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; in the Union shall have a custody policy in place for each pool of reserve of assetsmeans the basket of reserve assets securing the claim against the issuer;. 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; that have issued the same 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; shall operate and maintain a single custody policy.

1. a crypto-asset service providermeans a legal person or other undertaking whose occupation or business is the provision of one or more crypto-asset services to clients on a professional basis, and that is allowed to provide crypto-asset services in accordance with Article 59; providing custody and administration of crypto-assets on behalf of clientsmeans the safekeeping or controlling, on behalf of clients, of crypto-assets or of the means of access to such crypto-assets, where applicable in the form of private cryptographic keys;, where the reserve assets take the form of crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology;;

2. a credit institutionmeans a credit institution as defined in Article 4(1), point (1), of Regulation (EU) No 575/2013 and authorised under Directive 2013/36/EU;, for all types of reserve assets;

3. an investment firmmeans an investment firm as defined in Article 4(1), point (2), of Regulation (EU) No 575/2013 and authorised under Directive 2014/65/EU; that provides the ancillary service of safekeeping and administration of financial instrumentsmeans financial instruments as defined in Article 4(1), point (15), of Directive 2014/65/EU; for the account of clientsmeans any natural or legal person to whom a crypto-asset service provider provides crypto-asset services; as referred to in Section B, point (1), of Annex I to Directive 2014/65/EU, where the reserve assets take the form of financial instrumentsmeans financial instruments as defined in Article 4(1), point (15), of Directive 2014/65/EU;.

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 exercise all due skill, care and diligence in the selection, appointment and review of crypto-asset service providersmeans a legal person or other undertaking whose occupation or business is the provision of one or more crypto-asset services to clients on a professional basis, and that is allowed to provide crypto-asset services in accordance with Article 59;, 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 investment firmsmeans an investment firm as defined in Article 4(1), point (2), of Regulation (EU) No 575/2013 and authorised under Directive 2014/65/EU; appointed as custodians of the reserve assets as referred to in paragraph 3. The custodian shall be a legal person different from the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets;.

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 the crypto-asset service providersmeans a legal person or other undertaking whose occupation or business is the provision of one or more crypto-asset services to clients on a professional basis, and that is allowed to provide crypto-asset services in accordance with Article 59;, 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 investment firmsmeans an investment firm as defined in Article 4(1), point (2), of Regulation (EU) No 575/2013 and authorised under Directive 2014/65/EU; appointed as custodians of the reserve assets as referred to in paragraph 3 have the necessary expertise and market reputation to act as custodians of such reserve assets, taking into account the accounting practices, safekeeping procedures and internal control mechanisms of those crypto-asset service providersmeans a legal person or other undertaking whose occupation or business is the provision of one or more crypto-asset services to clients on a professional basis, and that is allowed to provide crypto-asset services in accordance with Article 59;, 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 investment firmsmeans an investment firm as defined in Article 4(1), point (2), of Regulation (EU) No 575/2013 and authorised under Directive 2014/65/EU;. The contractual arrangements between 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 the custodians shall ensure that the reserve assets held in custody are protected against claims of the custodians’ creditors.

The custody policies and procedures referred to in paragraph 1 shall set out the selection criteria for the appointment of crypto-asset service providersmeans a legal person or other undertaking whose occupation or business is the provision of one or more crypto-asset services to clients on a professional basis, and that is allowed to provide crypto-asset services in accordance with Article 59;, 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; or investment firmsmeans an investment firm as defined in Article 4(1), point (2), of Regulation (EU) No 575/2013 and authorised under Directive 2014/65/EU; as custodians of the reserve assets and the procedure for reviewing such appointment.

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 review the appointment of crypto-asset service providersmeans a legal person or other undertaking whose occupation or business is the provision of one or more crypto-asset services to clients on a professional basis, and that is allowed to provide crypto-asset services in accordance with Article 59;, 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; or investment firmsmeans an investment firm as defined in Article 4(1), point (2), of Regulation (EU) No 575/2013 and authorised under Directive 2014/65/EU; as custodians of the reserve assets on a regular basis. For the purpose of that review, 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 evaluate their exposures to such custodians, taking into account the full scope of their relationship with them, and monitor the financial conditions of such custodians on an ongoing basis.

1. 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; shall hold in custody fundsmeans funds as defined in Article 4, point (25), of Directive (EU) 2015/2366; in an account opened in the 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;’ books;

2. for financial instrumentsmeans financial instruments as defined in Article 4(1), point (15), of Directive 2014/65/EU; that can be held in custody, 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; or investment firmsmeans an investment firm as defined in Article 4(1), point (2), of Regulation (EU) No 575/2013 and authorised under Directive 2014/65/EU; shall hold in custody all financial instrumentsmeans financial instruments as defined in Article 4(1), point (15), of Directive 2014/65/EU; that can be registered in a financial instrumentsmeans financial instruments as defined in Article 4(1), point (15), of Directive 2014/65/EU; account opened in the 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;’ or investments firmsmeans an investment firm as defined in Article 4(1), point (2), of Regulation (EU) No 575/2013 and authorised under Directive 2014/65/EU;’ books and all financial instrumentsmeans financial instruments as defined in Article 4(1), point (15), of Directive 2014/65/EU; that can be physically delivered to such 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; or investment firmsmeans an investment firm as defined in Article 4(1), point (2), of Regulation (EU) No 575/2013 and authorised under Directive 2014/65/EU;;

3. for crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; that can be held in custody, the crypto-asset service providersmeans a legal person or other undertaking whose occupation or business is the provision of one or more crypto-asset services to clients on a professional basis, and that is allowed to provide crypto-asset services in accordance with Article 59; shall hold in custody the crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; included in the reserve assets or the means of access to such crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology;, where applicable, in the form of private cryptographic keys;

4. for other assets, the 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; shall verify the ownership of the issuersmeans a natural or legal person, or other undertaking, who issues crypto-assets; 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; and shall maintain a record of those reserve assets for which they are satisfied that the issuersmeans a natural or legal person, or other undertaking, who issues crypto-assets; 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; own those reserve assets.

For the purposes of point (a) of the first subparagraph, 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; shall ensure that fundsmeans funds as defined in Article 4, point (25), of Directive (EU) 2015/2366; are registered in the 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;’ books on a segregated account in accordance with the provisions of national law transposing Article 16 of Commission Directive 2006/73/EC(⁴⁰)Commission Directive 2006/73/EC of 10 August 2006 implementing Directive 2004/39/EC of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive (OJ L 241, 2.9.2006, p. 26).. That account shall be opened in the name of the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets; 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; for the purposes of managing the reserve assets of each 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;, so that the fundsmeans funds as defined in Article 4, point (25), of Directive (EU) 2015/2366; held in custody can be clearly identified as belonging to each reserve of assetsmeans the basket of reserve assets securing the claim against the issuer;.

For the purposes of point (b) of the first subparagraph, 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 investment firmsmeans an investment firm as defined in Article 4(1), point (2), of Regulation (EU) No 575/2013 and authorised under Directive 2014/65/EU; shall ensure that all financial instrumentsmeans financial instruments as defined in Article 4(1), point (15), of Directive 2014/65/EU; that can be registered in a financial instrumentsmeans financial instruments as defined in Article 4(1), point (15), of Directive 2014/65/EU; account opened in the 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;’ books and investment firmsmeans an investment firm as defined in Article 4(1), point (2), of Regulation (EU) No 575/2013 and authorised under Directive 2014/65/EU;’ books are registered in the 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 investment firmsmeans an investment firm as defined in Article 4(1), point (2), of Regulation (EU) No 575/2013 and authorised under Directive 2014/65/EU;’ books on segregated accounts in accordance with the provisions of national law transposing Article 16 of Directive 2006/73/EC. The financial instrumentsmeans financial instruments as defined in Article 4(1), point (15), of Directive 2014/65/EU; account shall be opened in the name of the issuersmeans a natural or legal person, or other undertaking, who issues crypto-assets; 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; for the purposes of managing the reserve assets of each 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;, so that the financial instrumentsmeans financial instruments as defined in Article 4(1), point (15), of Directive 2014/65/EU; held in custody can be clearly identified as belonging to each reserve of assetsmeans the basket of reserve assets securing the claim against the issuer;.

For the purposes of point (c) of the first subparagraph, crypto-asset service providersmeans a legal person or other undertaking whose occupation or business is the provision of one or more crypto-asset services to clients on a professional basis, and that is allowed to provide crypto-asset services in accordance with Article 59; shall open a register of positions in the name of the issuersmeans a natural or legal person, or other undertaking, who issues crypto-assets; 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; for the purposes of managing the reserve assets of each 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;, so that the crypto-assetsmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; held in custody can be clearly identified as belonging to each reserve of assetsmeans the basket of reserve assets securing the claim against the issuer;.

For the purposes of point (d) of the first subparagraph, the assessment whether 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; own the reserve assets shall be based on information or documents provided by the issuersmeans a natural or legal person, or other undertaking, who issues crypto-assets; 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; and, where available, on external evidence.

The appointment of crypto-asset service providersmeans a legal person or other undertaking whose occupation or business is the provision of one or more crypto-asset services to clients on a professional basis, and that is allowed to provide crypto-asset services in accordance with Article 59;, 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; or investment firmsmeans an investment firm as defined in Article 4(1), point (2), of Regulation (EU) No 575/2013 and authorised under Directive 2014/65/EU; as custodians of the reserve assets as referred to in paragraph 4 of this Article shall be evidenced by a contractual arrangement as referred to in Article 34(5), second subparagraph. Those contractual arrangements shall, amongst others, regulate the flow of information necessary to enable the issuersmeans a natural or legal person, or other undertaking, who issues crypto-assets; 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; and the crypto-asset service providersmeans a legal person or other undertaking whose occupation or business is the provision of one or more crypto-asset services to clients on a professional basis, and that is allowed to provide crypto-asset services in accordance with Article 59;, 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 investment firmsmeans an investment firm as defined in Article 4(1), point (2), of Regulation (EU) No 575/2013 and authorised under Directive 2014/65/EU; to perform their functions as custodians.

The crypto-asset service providersmeans a legal person or other undertaking whose occupation or business is the provision of one or more crypto-asset services to clients on a professional basis, and that is allowed to provide crypto-asset services in accordance with Article 59;, 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 investment firmsmeans an investment firm as defined in Article 4(1), point (2), of Regulation (EU) No 575/2013 and authorised under Directive 2014/65/EU; appointed as custodians in accordance with paragraph 4 shall act honestly, fairly, professionally, independently and in the interest of the issuersmeans a natural or legal person, or other undertaking, who issues crypto-assets; 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; and the holders of such tokens.

1. the crypto-asset service providersmeans a legal person or other undertaking whose occupation or business is the provision of one or more crypto-asset services to clients on a professional basis, and that is allowed to provide crypto-asset services in accordance with Article 59;, 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; or investment firmsmeans an investment firm as defined in Article 4(1), point (2), of Regulation (EU) No 575/2013 and authorised under Directive 2014/65/EU; have functionally and hierarchically separated the performance of their custody tasks from their potentially conflicting tasks;

2. the potential conflicts of interest have been properly identified, monitored, managed and disclosed by the issuersmeans a natural or legal person, or other undertaking, who issues crypto-assets; 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 holders 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;, in accordance with Article 32.

In the case of a loss of a financial instrumentmeans financial instruments as defined in Article 4(1), point (15), of Directive 2014/65/EU; or a crypto-assetmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; held in custody pursuant to paragraph 6, the crypto-asset service providermeans a legal person or other undertaking whose occupation or business is the provision of one or more crypto-asset services to clients on a professional basis, and that is allowed to provide crypto-asset services in accordance with Article 59;, credit institutionmeans a credit institution as defined in Article 4(1), point (1), of Regulation (EU) No 575/2013 and authorised under Directive 2013/36/EU; or investment firmmeans an investment firm as defined in Article 4(1), point (2), of Regulation (EU) No 575/2013 and authorised under Directive 2014/65/EU; that lost that financial instrumentmeans financial instruments as defined in Article 4(1), point (15), of Directive 2014/65/EU; or crypto-assetmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; shall compensate, or make restitution, to the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets; of the 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; with a financial instrumentmeans financial instruments as defined in Article 4(1), point (15), of Directive 2014/65/EU; or a crypto-assetmeans a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology; of an identical type or the corresponding value without undue delay. The crypto-asset service providermeans a legal person or other undertaking whose occupation or business is the provision of one or more crypto-asset services to clients on a professional basis, and that is allowed to provide crypto-asset services in accordance with Article 59;, credit institutionmeans a credit institution as defined in Article 4(1), point (1), of Regulation (EU) No 575/2013 and authorised under Directive 2013/36/EU; or investment firmmeans an investment firm as defined in Article 4(1), point (2), of Regulation (EU) No 575/2013 and authorised under Directive 2014/65/EU; concerned shall not be liable for compensation or restitution where it can prove that the loss has occurred as a result of an external event beyond its reasonable control, the consequences of which were unavoidable despite all reasonable efforts to the contrary.