Article 4 Policies and procedures

The policies and procedures referred to in Article 32(1) of Regulation (EU) 2023/1114 shall be set out in writing and shall reflect the size, complexity and nature 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; and the range of activities carried out by 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; and 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).. to which it belongs.

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; 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 responsible for the definition, adoption and implementation of these policies and procedures. It shall periodically identify and address any deficiencies in the effectiveness of those policies 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 effective internal communication channels to inform and provide ongoing access to employees and 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 their conflict of interest policies and procedures and provide appropriate updated trainings on those conflict of interest policies and procedures.

Issuersmeans a natural or legal person, or other undertaking, who issues crypto-assets; of assets-referenced tokens shall establish effective external communication channels to inform third parties of their conflict of interest policies and procedures.

Where 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 a member 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).., the policies and procedures referred to in Article 32(1) of Regulation (EU) 2023/1114 shall cover conflicts of interest between the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets; and other 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).. entities.

1. a description of the circumstances which may give rise to a conflict of interest in accordance with Articles 2 and 3;

2. the processes to be applied in order to identify, prevent, manage, and disclose the conflicts of interest referred to in Articles 2 and 3.

The processes referred to in paragraph 5 shall differentiate between conflicts of interest that persist and need to be managed permanently and those that occur occasionally and need to be mitigated by a case-specific measure.

1. effective processes to promptly report and communicate through appropriate internal reporting channels of any matter that may result, or has resulted, in a conflict of interest;

2. effective processes to prevent and control the exchange of information between connected personsmeans any of the persons referred to in Article 32(1), points (a) to (d) and point (f), of Regulation (EU) 2023/1114; engaged in activities where a conflict of interest may arise, where the exchange of that information may harm the interests of 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; or may affect the performance of such connected personmeans any of the persons referred to in Article 32(1), points (a) to (d) and point (f), of Regulation (EU) 2023/1114;’s duties and responsibilities;

3. measures to ensure that conflicting activities or transactions are entrusted, where possible, to different persons within the same 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; or otherwise subject to targeted monitoring and measures that achieve the same effect;

4. measures to ensure that connected personsmeans any of the persons referred to in Article 32(1), points (a) to (d) and point (f), of Regulation (EU) 2023/1114; who perform outside business activities related 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; are prevented from having inappropriate influence within 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; regarding those activities;

5. measures to ensure that the risk of conflicts of interest is addressed at the level 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; or by its responsible committee. Those measures shall ensure that the members of the committee or 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; do not have a conflict of interest and shall provide sufficient guidance on the identification and management of conflicts of interest that may affect the 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; to take objective and impartial decisions in the best 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;;

6. measures to ensure the conferral of the responsibility to the 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; to inform other members of and abstain from voting on any matter where the members have or may have a conflict of interest or where the objectivity of those members or ability to properly fulfil their duties towards 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; may be otherwise compromised;

7. measures to ensure that 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; are prevented from being a member 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; in the management or supervisory function in competing 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;.

Where the conflicts of interest policies and procedures are insufficient to prevent or mitigate the risks of damage 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; or 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 issuermeans a natural or legal person, or other undertaking, who issues crypto-assets; shall amend the policies and procedures to address any deficiencies.

The policies and procedures referred to in Article 32(1) of Regulation (EU) 2023/1114 shall require 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; to keep records and document the types of activities or situations giving rise or which may give rise to the conflicts of interest referred to in Article 2(1) and Article 3(1) and, for each type of activity or situation, the measures taken to prevent or mitigate such conflicts. The records shall be kept for a retention period of 5 years.

The policies and procedures referred to in Article 32(1) of Regulation (EU) 2023/1114 shall ensure that the transactions referred to in Article 2(4) are identified by or notified 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; before a decision on the execution of the transaction and its conditions is taken. Those policies and procedures shall also ensure that decisions to enter into such transactions are taken objectively, in the interest of each party, and that the conditions for the transaction are the same as the conditions that apply between independent parties for the same transactions in the absence of a conflict of interest.

1. decision-making processes for entering into those transactions are set out and that thresholds, expressed as the volume of the transaction, above which such a transaction requires the approval by 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; are established;

2. employees and 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; are made aware of the rules applied on those transactions, and of the measures established by 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; in relation to them;

3. 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 informed promptly of any of those transactions;

4. a record is kept of the transaction notified to or identified by 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;, documenting the date and time of the transaction, the conditions, its volume, the counterparty and any authorisation or prohibition in connection with that transaction.