Preamble Recitals

Requirements set out in Articles 45(1) of Regulation (EU) 2023/1114 also apply to electronic money institutions issuing significant e-money tokens, in accordance with Article 58(1), point (a), of that Regulation, where required by the competent authority under Article 35(4) of that Regulation, to issuers of asset-reference tokens that are not significant, and, where required by the competent authority under Article 58(2) of that Regulation, to electronic money institutions issuing non-significant e-money tokens.

Credit institutions, investment firms, undertakings for collective investment in transferable securities (UCITS management companies) and alternative investment fonds managers (AIFM) that are issuers of significant ARTs are to comply with the relevant more specific or stricter requirements set for those issuers in Directives 2013/36/EU(²), (EU) 2019/2034(³), 2009/65/EC(⁴) and 2011/61/EU(⁵) of the European Parliament and of the Council, in addition to the requirements under Regulation (EU) 2023/1114 and this Regulation on governance arrangements for remuneration policies. To achieve the objective of sound and effective risk management of issuers of significant asset-referenced or e-money tokens, remuneration policies should provide incentives for staff for long-term oriented risk-taking behaviour in line with the risk appetite of issuers of significant asset-referenced or e-money tokens and contribute to the protection of the holders of asset-referenced or e-money tokens.

Considering the similarities of the business model of issuers of significant asset-referenced or e-money tokens with the business model of investment firms that issue financial instruments, and in order to ensure a level playing field across the Union, it is necessary to set out a framework for governance arrangements on remuneration policies that includes the same elements as the rules on remuneration policy applicable to investment firms. However, this framework should be tailored to issuers of significant asset-referenced and e-money tokens, whose business is different from the activity of issuing financial instruments by investment firms or the performance of related investment services. This framework should aim at ensuring the same objectives as the remuneration framework for investment firms under Directive (EU) 2019/2034.

To ensure that remuneration policies promote sound and effective risk management of the issuers of significant asset-referenced tokens or of the electronic money institutions issuing significant e-money tokens, do not provide incentives for excessive risk taking and are aligned with the long-term interests of those issuers across the European Union, it is necessary to specify the main aspects of the remuneration policies to be applied by such issuers by taking into consideration and adapting the ones already existing under other sectoral legislations for entities acting on the financial market.

To ensure that the remuneration framework provides no incentives to lower risk standards, specific requirements for the variable remuneration of staff in control functions should be set to ensure that they are remunerated mainly based on control objectives while the remuneration policies for all staff, including marketing or sales staff should provide no incentives for a preferential treatment of clients or counterparts.

In addition to the determination of an appropriate maximum ratio between variable and fixed remuneration, it is appropriate for issuers of significant asset-referenced tokens or electronic money tokens, to impose additional requirements to align the variable remuneration of staff that has a material impact on the risk profile of the issuers of asset-referenced tokens or e-money tokens within the scope if this regulation or on the risk profile of the tokens they issue, so as to ensure that the variable remuneration is linked to the risk adjusted performance of the issuer, including by requiring the application of deferral arrangements, malus and claw back.

To ensure a proper risk alignment of the variable remuneration awarded in instruments, the instruments awarded should consist of shares, share-linked or equivalent instruments or the significant tokens issued.

Environmental, social and governance (ESG) factors, including the adverse impact on the climate stemming from energy use and carbon footprint associated with the underlying information technology infrastructures and consensus mechanisms algorithms, used for the validation of transactions in blockchain systems, are relevant for issuers of asset-referenced or e-money tokens within the scope of this Regulation. ESG factors can affect the risk profile of such issuers, its business model and the acceptance of their tokens. While climate and environmental factors are particularly relevant to the activities and services of such issuers, other types of ESG factors such as tax transparency, human rights, employment conditions and adequate management of risks related to money laundering and other financial crimes are also relevant factors. It is therefore necessary that issuers of asset-referenced tokens or e-money tokens within the scope of this Regulation ensure that their remuneration policies are consistent with ESG risk-related objectives and take into account ESG risks and their possible adverse impacts. In particular, the variable remuneration should be aligned to the ESG risk factors relevant for climate and other environmental impacts caused by the consensus and validation mechanisms used.

This Regulation is based on the draft regulatory technical standards developed by the European Supervisory Authority (European Banking Authority, EBA) in consultation with the European Securities Markets Authority and submitted by the EBA to the Commission.

EBA 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 opinion of the Banking Stakeholder Group established in accordance with Article 37 of Regulation (EU) No 1093/2010 of the European Parliament and of the Council(⁶),