EU, UK regulators launch consultations on digital asset data reporting and wallets

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Tech consultation season has kicked off in Europe, with regulators from the United Kingdom and the European Union seeking feedback on digital asset-related issues.

On July 15, the European Banking Authority (EBA), an independent EU Authority in charge of prudential regulation and supervision across the European banking sector, launched a consultation on draft guidelines for digital asset issuer reporting requirements.

The same day, the U.K. Payments Systems Regulator (PSR) and Financial Conduct Authority (FCA) announced they were jointly seeking views on the benefits and risks digital wallets bring to people and businesses.

EBA guidelines on reporting requirements

The EU banking regulator is seeking feedback on draft guidelines aimed at ensuring that “competent authorities” have enough information to supervise the compliance of digital asset issuers with the Markets in Crypto Asset Regulation (MiCAR)—parts of which came into force this June, with the full provisions scheduled to kick in by the end of the year.

The landmark MiCAR provides rules for offering and admission to trading asset-referenced tokens (ARTs), e-money tokens (EMTs), and other types of digital assets, as well as rules for those providing digital asset services in the EU. It sets out a range of regulatory requirements, including authorizations, conduct, and prudential requirements for issuers and mandates for issuers of certain tokens to report “data points” to the authorities.

When MiCAR’s stablecoin rules came into force on June 30, issuers of ARTs—stablecoins that purport to maintain a stable value by referencing another value or right—and EMTs—stablecoins pegged to a fiat currency—had several new obligations, including a requirement to be authorized by the Central Bank, prudential requirements, and conduct and governance requirements around marketing, dealing with conflicts of interest, and disclosure of information.

Regarding this latter obligation, the EBA has decided that the reporting requirements placed on issuers of ARTs and EMTs were “not enough to allow competent authorities and the EBA to discharge their supervisory tasks and the significance assessment tasks under MiCAR.”

Having identified these so-called “data gaps,” the banking regulator is consulting on draft guidelines specifying common templates and instructions for issuers to provide the necessary information to fill the gaps.

In addition, the draft guidelines include common templates and instructions that issuers should use to collect the data they need from the relevant Crypto-Asset Service Providers (CASPs).

The EBA said it would accept comments on the consultation paper up to October 11, 2024.

PSR and FCA call for information on digital wallets

Meanwhile, across the pond, the FCA—the U.K.’s top finance sector watchdog—and the PSR—its independent subsidiary focused on payment systems—are seeking views on the benefits and risks of digital wallets.

Building on the PSR’s previous work on contactless mobile payments and the FCA’s work on big tech activity in financial services, this consultation aims to better understand the impact on consumers and businesses that digital wallets’ increasing popularity creates.

“The use of digital wallets has grown rapidly over the last few years, and it’s likely that more than half of UK adults now use one. With Apple Pay, Google Pay and PayPal being three of the most widely used digital wallets in the UK today, digital wallets have become an increasingly important touchpoint between big tech firms and UK consumers,” said Monday’s announcement.

Specifically, the regulators are keen to learn more about:

• The benefits that digital wallets bring for users;
• Any features that mean payments don’t work as well as they could for consumers or businesses;
• Their role in unlocking the potential of account-to-account payments and how they could impact competition between payment systems;
• And whether digital wallets could raise any significant competition, consumer protection, or market integrity issues, now or in the future.

The PSR said it was particularly interested in understanding how digital wallets impact consumers’ choice of payment options at checkout. The FCA said it had a particular interest in how digital wallets may impact competition in the supply of financial services and the operational resilience and systemic safety of the U.K. financial services sector.

“Digital wallets are steadily becoming a go-to payment type and while this presents exciting opportunities, there might be risks too,” said David Geale, the PSR’s Managing Director.

“Collaboration between regulators and working with industry is crucial to ensure we’re on the front foot to support innovation and competition, making sure everyone benefits from access, protection and choice in payments. We look forward to hearing views and evidence from a wide range of stakeholders throughout this process.”

The regulators hope to hear from stakeholders across the payments and wider financial services landscape, including digital wallets, technology providers, and their service users.

The call for information is open until September 13. After that, the regulators said they would analyze all responses received and provide an update by Q1 2025.

“The UK is seeing a seismic shift in how people pay, as digital wallets become a part of everyday life for many people,” said FCA Chief Executive Nikhil Rathi. “We want to make sure we can maximise the opportunities and benefits for consumers and businesses while protecting against any risks this technology may present.”

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