Article 5 Design of stress testing programme

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; or e-money tokens shall ensure that their stress testing programme is viable and realistic, and that stress testing results in informed decision-making at all management level on all existing and potential risks having material impact on the financial situation of 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; or e-money tokens shall regularly review and assess their stress testing programme to determine its effectiveness, robustness and suitability both with regard to the risk characteristics of the relevant issuermeans a natural or legal person, or other undertaking, who issues crypto-assets; itself and that of the relevant tokens issued and shall keep it updated. This assessment shall be made on an annual basis and shall fully reflect the external and internal conditions.

1. the effectiveness of the programme in meeting its intended purposes;

2. the need for improvements;

3. the identified risk factors, reasoning for and design of relevant scenarios, model assumptions and the sensitivity of results to these assumptions, as well as the role of expert judgement to ensure that it is accompanied by sound analysis;

4. the model performance, including its performance on out-of-sample data, such as data that were not used for model development;

5. how to incorporate possible solvency-liquidity adverse loops;

6. the adequacy of possible interlinkages between solvency stress tests and liquidity stress tests;

7. feedback received from competent authoritiesmeans 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; in the context of their supervisory or other stress tests;

8. the adequacy of the data infrastructure (systems implementation and data quality);

9. the appropriate level of involvement of senior management and 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;;

10. all assumptions including business and/or managerial assumptions, and management actions envisaged, based on the purpose, type and result of the stress testing, including an assessment of the feasibility of management actions in stress situations and a changing business environment;

11. the adequacy and transparency of the relevant documentation.

The stress testing programme shall be appropriately documented for all types of stress tests carried out.

The stress testing programme shall be evaluated across the organisation, for instance by the risk committee and internal auditors. Business units not responsible for the design and application of the programme or external experts shall also contribute to the assessment of this process, taking into account the relevant expertise for specific subjects.

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; or e-money tokens shall ensure, both for the initial design and for the assessment of the stress testing programme, that an effective dialogue has taken place with the involvement of experts from all business areas of the issuermeans a natural or legal person, or other undertaking, who issues crypto-assets; and that the programme and its updates have been properly reviewed by the senior management and 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;, who are also responsible for monitoring its execution and oversight.