RTS on issuer conflicts of interest

The reserve of assetsmeans the basket of reserve assets securing the claim against the issuer; is a key element 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 its sound management contributes to the protection of 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;. When identifying, preventing, managing and disclosing conflicts of interest, 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; should take into account the potential conflicts of interest arising from the management and investment of the reserve of assetsmeans the basket of reserve assets securing the claim against the issuer; referred to in Article 36 of Regulation (EU) 2023/1114 and the policies and procedures 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; should cover those aspects. Similarly, 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; should take into account the potential conflicts of interest with third parties that provide services related to the operating, the investment or 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. For the same reason, 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; should establish, implement and maintain arrangements to ensure that the third party, that provides one of the functions as referred in Article 34(5), point (h) of Regulation (EU) 2023/1114 acts in a manner consistent with their conflicts of interest policies and procedures.

In their conflict of interest policies and procedures under Article 32(1) of Regulation (EU) 2023/1114, 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; should take into consideration the actual and potential conflicts of interest which affect or potentially affect the interests of 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 well as the interests of the issuermeans 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;, including conflicts of interest which may affect its performance and situation and thus, indirectly, also the interests of holders and prospective 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;.

In order to ensure that the interests of the holders, prospective holders and 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; are sufficiently protected, the issuermeans 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; should assess and evaluate any actual and potential conflicts of interests and establish and implement appropriate measures to prevent or mitigate them at the earliest stage possible.

Transactions that are exchanges 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; for fundsmeans funds as defined in Article 4, point (25), of Directive (EU) 2015/2366; or other crypto assets including redemption 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; where 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; is one of the parties of the transaction, carry a heightened risk of conflicts of interest and therefore should be carefully assessed as to whether they can be detrimental 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;, where the transactions are carried out on behalf of persons directly or indirectly connected 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; itself.

Similarly, as the incentives foreseen in the remuneration procedures, policies and arrangements may give raise to conflicts of interest, they should be monitored to prevent any distortive application, which would be detrimental to the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets; or 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;.

In order to prevent conflict of interests detrimental to the issuermeans 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;, the policies and procedures under Article 32(1) of Regulation (EU) 2023/1114 should ensure the careful monitoring of situations where persons connected to 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 a personal, professional or political relationship with another person that has interests conflicting with those of the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets;. Such relationships have the potential to influence objectivity or judgement 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; and their connected personsmeans any of the persons referred to in Article 32(1), points (a) to (d) and point (f), of Regulation (EU) 2023/1114;. Personal relationships should include those between relatives by blood or marriage, or social relationships not limited to a formal partnership or marriage. Political relationships should include memberships of political parties, or relationships with government or other public officials. Professional relationships should consist in relationships in a professional setting, such as at work or in a business context.

To ensure trust in the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets; of 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; as well as to protect that issuermeans a natural or legal person, or other undertaking, who issues crypto-assets; from reputational damage or legal risks, in circumstances where risks of conflicts of interest are particularly significant and cannot be appropriately prevented or managed through the adopted policies and procedures including internal systems and controls, other additional specific measures should be decided on and put in place to prevent or manage the relevant conflicts of interest.

For the purpose of ensuring at all time their appropriate implementation, maintenance and review, the conflict of interest policies and procedures referred to in Article 32(1) of Regulation (EU) 2023/1114, should ensure that there are sufficient resources available for the management of the conflicts of interest and that human resources managing the conflicts of interest at the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets; of asset referenced tokens are independent from the business functions of the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets;. Such dedicated human resources should also have the necessary skills, knowledge and expertise. The person responsible for the management of conflicts of interest should be able to access and report directly 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; in its management function and, where applicable, in its supervisory function. To ensure efficient allocation and management of resources dedicated to the management of conflicts of interest, the policies and procedures should foresee that the person responsible for the management of conflicts of interest is able to commit sufficient time to this role and that the person has available sufficient resources at all times for an appropriate implementation, application, monitoring and review of those policies and procedures.

To ensure that holders and prospective 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; can take an informed decision about the asset-referenced-tokens, 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; should keep the information disclosed to the holder 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; in accordance with Article 32(3) of Regulation (EU) 2023/1114 up to date and provide a description of the identified conflicts of interest and the measures taken to manage or prevent conflicts of interest.

In order to make clear to 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; in what capacity or capacities the issuermeans 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; is acting, especially as it may often be operating in close cooperation with affiliated entities or entities of the same groupmeans a group as defined in Article 2(11) of Directive 2013/34/EU of the European Parliament and of the Council(5) Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19, ELI: http://data.europa.eu/eli/dir/2013/34/oj).., the information referred to in Article 32(3) of Regulation (EU) 2023/1114 should include a sufficiently detailed, specific and clear description of the situations which give or may give rise to conflicts of interest, including the role and capacity in which the issuermeans 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; is acting and whether the issuermeans 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; is part of a groupmeans a group as defined in Article 2(11) of Directive 2013/34/EU of the European Parliament and of the Council(5) Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19, ELI: http://data.europa.eu/eli/dir/2013/34/oj).. comprising also crypto asset service providers.

For the same reason, as well as to ensure appropriate investor protection, holders and prospective 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; should have access to the information referred to in Article 32(3) of Regulation (EU) 2023/1114 in a language with which they are familiar. Therefore, 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; should make such information available in an official language of the home Member Statemeans:where the offeror or person seeking admission to trading of crypto-assets other than asset-referenced tokens or e-money tokens has its registered office in the Union, the Member State where that offeror or person has its registered office;where the offeror or person seeking admission to trading of crypto-assets other than asset-referenced tokens or e-money tokens has no registered office in the Union but does have one or more branches in the Union, the Member State chosen by that offeror or person from among the Member States where it has branches;where the offeror or person seeking admission to trading of crypto-assets other than asset-referenced tokens or e-money tokens is established in a third country and has no branch in the Union, either the Member State where the crypto-assets are intended to be offered to the public for the first time or, at the choice of the offeror or person seeking admission to trading, the Member State where the first application for admission to trading of those crypto-assets is made;in the case of an issuer of asset-referenced tokens, the Member State where the issuer of asset-referenced tokens has its registered office;in the case of an issuer of e-money tokens, the Member State where the issuer of e-money tokens is authorised as a credit institution under Directive 2013/36/EU or as an electronic money institution under Directive 2009/110/EC;in the case of crypto-asset service providers, the Member State where the crypto-asset service provider has its registered office; as defined in Article 3(1), point (33)(d), of Regulation (EU) 2023/1114 and in a language which is customary in the sphere of international finance. At the time of adoption of this Regulation, English is the customary language in the sphere of international finance but that could evolve in the future.

The processing of personal datameans personal data as defined in Article 4, point (1), of Regulation (EU) 2016/679;, including information collected for the purposes of the conflict of interest policies and procedures referred to in Article 32(1) of Regulation (EU) 2023/1114, by 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; should be carried out in compliance with the right to protection of personal datameans personal data as defined in Article 4, point (1), of Regulation (EU) 2016/679; of the persons concerned, as set out in Articles 7 and 8 of the Charter of Fundamental Rights of the European Union and must comply with Regulation (EU) 2016/679 of the European Parliament and of the Council(²)Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ L 119, 4.5.2016, p. 1, ELI: http://data.europa.eu/eli/reg/2016/679/oj)..

The conflict of interest policies and procedures referred to in Article 32(1) of Regulation (EU) 2023/1114 as further specified in the regulatory technical standards set out in this Regulation should provide for the communication of personal datameans personal data as defined in Article 4, point (1), of Regulation (EU) 2016/679; when necessary and proportionate to ensure the adequate identification, prevention, management and disclosure of conflicts of interest potentially detrimental 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; or to 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;, taking into account the fundamental rights to privacy and to the protection of personal datameans personal data as defined in Article 4, point (1), of Regulation (EU) 2016/679; of the connected personsmeans any of the persons referred to in Article 32(1), points (a) to (d) and point (f), of Regulation (EU) 2023/1114;. In line with the principle of data minimisation as laid down in Regulation (EU) 2016/679, 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; should specify which categories of personal datameans personal data as defined in Article 4, point (1), of Regulation (EU) 2016/679; they will process to identify, prevent and manage conflicts of interest in their policies and procedures referred to in Article 32(1) of Regulation (EU) 2023/1114, in a way appropriate to their size and internal organisation, to the groupmeans a group as defined in Article 2(11) of Directive 2013/34/EU of the European Parliament and of the Council(5) Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19, ELI: http://data.europa.eu/eli/dir/2013/34/oj).. where applicable, their business model, suitable for the nature, scale and complexity of their activities. The regulatory technical standards set out in this Regulation specify the criteria to identify categories of personal datameans personal data as defined in Article 4, point (1), of Regulation (EU) 2016/679; that are necessary and proportionate to ensure the adequate identification, prevention, management and disclosure of conflicts of interest potentially detrimental to the holders or 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;, having regard to the risks to the fundamental rights to privacy and to the protection of personal datameans personal data as defined in Article 4, point (1), of Regulation (EU) 2016/679; of the persons referred to in Article 32(1), points (a) to (d) and point (f), of Regulation (EU) 2023/1114.

This Regulation is based on the draft regulatory technical standards submitted to the Commission by the European Banking Authority.

The European Banking Authority has conducted open public consultations on the draft regulatory technical standards on which this Regulation is based, analysed the potential related costs and benefits and requested the advice of the Banking Stakeholder Groupmeans a group as defined in Article 2(11) of Directive 2013/34/EU of the European Parliament and of the Council(5) Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182, 29.6.2013, p. 19, ELI: http://data.europa.eu/eli/dir/2013/34/oj).. established in accordance with Article 37 of Regulation (EU) No 1093/2010 of the European Parliament and of the Council(³)Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/78/EC (OJ L 331, 15.12.2010, p. 12, ELI: http://data.europa.eu/eli/reg/2010/1093/oj).,

The European Data Protection Supervisor was consulted in accordance with Article 42(1) of Regulation (EU) 2018/1725 of the European Parliament and of the Council(⁴)Regulation (EU) 2018/1725 of the European Parliament and of the Council of 23 October 2018 on the protection of natural persons with regard to the processing of personal data by the Union institutions, bodies, offices and agencies and on the free movement of such data, and repealing Regulation (EC) No 45/2001 and Decision No 1247/2002/EC (OJ L 295, 21.11.2018, p. 39, ELI: http://data.europa.eu/eli/reg/2018/1725/oj). and delivered an opinion on 17 July 2024,