Domestic

CBI establishes dedicated Fitness and Probity Unit

On 19 December 2024, the Central Bank of Ireland (CBI) announced the establishment of a dedicated Fitness and Probity Unit. This follows the publication of the Fitness and Probity Review by Andrea Enria in July 2024, which identified areas of enhancement in the operation of the CBI’s fitness and probity regime. 

Governor of the CBI, Gabriel Makhlouf, said that the announcement “is only a first step towards delivering a fitness and probity gatekeeping process aligned with the spirit and approach of the report” undertaken by Enria, adding that “work will continue in implementing and delivering a regime which supports supervisory judgement, while delivering robust, fair and transparent processes.”

Governor Makhlouf's remarks at publication of OECD review of CBI’s consumer protection supervisory functions

On 16 December 2024, the Governor of the CBI, Gabriel Makhlouf, delivered a speech on protecting consumers at the publication of the OECD review of the CBI’s consumer protection supervisory functions.

Governor Makhlouf highlighted the review of the Consumer Protection Code (the CPC) as a “key element” to ensure that the CBI’s approach to supervision and regulation remains fit for purpose. He confirmed that the CBI are aiming to publish the revised CPC in early 2025. He commented that when the revised CPC is implemented, “consumers will benefit from a package of protections that reflect how they are accessing financial services today.  Regulated firms will benefit from a clearer articulation of their Code obligations.”

Governor Makhlouf also highlighted the changes to the CBI’s supervisory model, which the CBI will begin to implement in January 2025. “The new model remains risk-based, but is evolving to deliver a more integrated approach drawing on all elements of [the CBI’s] mandate (consumer and investor protection, safety and soundness, financial stability and integrity of the system).” He added that firms “will hear one consistent voice from the [CBI], with more coordinated messaging and more streamlined demands across the full span of [the CBI’s] regulatory and supervisory mandate.” This updated supervisory mode, he said, “will place consumer protection at the heart of day-to-day supervision.”

European

ESMA statement on MiCAR transitional measures

On 19 December 2024, the European Securities and Markets Authority (ESMA) issued a statement regarding the transitional regime for crypto asset service providers (CASPs) that offered their services prior to 30 December 2024.

Under Article 143(3) of the Markets in Crypto Assets Regulation (MiCAR), CASPS may be granted additional time of until 1 July 2026 or until they are granted or refused an authorisation pursuant to Article 63 of MiCAR, whichever is sooner, to transition from compliance with the current regulatory framework to compliance with MiCAR. Member States have full discretion not to apply this transitional regime or to reduce its duration. Consequently, CASPs will face different transitional periods depending on the Member State or Member States in which they operate.

The statement reminds CASPs that the different transitional periods should be considered when providing services in more than one Member State when they transition to MiCAR. It also reminds CASPs of the communication published by ESMA in October 2023 which outlined the possible challenges of MiCAR’s transitional regime. The communication also called for market participants to apply for a MiCAR authorisation as soon as possible, highlighting the fact that without a MiCAR authorisation they would not benefit from passporting rights within the EU during the transitional period.

Member State competent authorities (NCA) are reminded that they should ensure that they are fully aware of the activities of CASPs outside the Home Member State and potential implications on the cross-border provision of services in Host Member States.

EBA provides further guidance on reporting requirements under the Markets in Crypto Assets Regulation

On 18 December 2024, the European Banking Authority (EBA) published its final guidelines on reporting requirements under MiCAR to ensure that competent authorities receive sufficient comparable information to supervise compliance of issuers with MiCAR requirements and provide the EBA with the information necessary to conduct the significance assessment under MiCAR.

The guidelines seek to close the reporting data gaps identified by the EBA, enhancing supervisory convergence, facilitating a common supervisory approach across Member States as well as ensuring a level playing field across the EEA. The guidelines will provide competent authorities with sufficient comparable information to supervise compliance of issuers with MiCAR requirements.

The guidelines include common templates and instructions that issuers should use to collect the data they need from the relevant CASPs, aligned with the data sharing approach implemented by the Commission Implementing Regulation (EU) 2024/2902.

ESMA releases last policy documents to get ready for MiCAR

On 17 December 2024, ESMA published the last package of final reports containing regulatory technical standards (RTS) and guidelines ahead of the full entry into application MiCAR. The published package contained:

• RTS on market abuse that specify systems and procedures to prevent and detect market abuse in crypto-assets, the template for reporting suspected market abuse in crypto-assets as well as coordination procedures between competent authorities for the detection and sanctioning of cross-border market abuse situations. The rules outlined in the RTS will enable supervisors to address suspicions of market abuse and follow up with enforcement actions where required.
• Guidelines on reverse solicitation that reiterate ESMA’s previous message that the reverse solicitation exemption should be understood as limited in nature and should be regarded as the exception and not be used to circumvent MiCAR requirements. This exemption will only apply to cases where the client is the exclusive initiator of the service. Further guidance is provided on the limited circumstances where this may be the case.
• Guidelines on suitability that specify how CASPs providing advice on crypto-assets or portfolio management of crypto-assets have to give suitable recommendations to their clients or make suitable investment decisions on their behalf. These rules are aligned with the MiFID II requirements so that in circumstances where CASPs are providing advice both under MiFID II and MiCAR, they would be subject to similar requirements.
• Guidelines on crypto-asset transfer services that aim to ensure investor protection for clients transferring crypto-assets, by detailing the policies and procedures that CASPs should have in place.
• Guidelines on qualification of crypto-assets as financial instruments who provide conditions and criteria for the qualification of crypto-assets as financial instruments. The guidelines aim to provide greater clarity about the delineation between the respective scopes of application of MiCAR and other sectoral regulatory frameworks (for example, MiFID II).
• Guidelines on the maintenance of systems and security access protocols that apply to offerors and persons seeking admission to trading who are not subject to the same operational resilience standards under MiCAR and DORA as their CASP and issuer counterparts. As such, the guidelines provide a streamlined set of principles for entities in scope to enable them to manage their ICT risks.

The guidelines will apply from three months after the publication of the translations. The final reports with the draft RTS have been submitted to the European Commission for adoption.

EBA finds that colleges on anti-money laundering and countering the financing of terrorism have become more effective but further progress is needed

On 16 December 2024, the EBA published its fourth report on the functioning of anti-money laundering and countering the financing of terrorism (AML/CFT) colleges. The report found that competent authorities continued to improve the functioning of AML/CFT colleges in 2023, however further progress is needed in two key areas: (i) adjusting the functioning of AML/CFT colleges to the money laundering and terrorist financing (ML/TF) risks to which the underlying firm is exposed, and (ii) discussing the need for a common approach or joint action.

The report includes recommendations to help competent authorities improve in these two areas. The EBA, through its thematic monitoring of colleges, also identified a number of ML/TF risks to which firms of the banking, payment and e-money sectors that have a technology-oriented business model could be at greater risk of exposure. The EBA advises competent authorities to take these particular risks into consideration when supervising these types of firms.

European Commission publishes Delegated Regulation on adjustment of own funds requirement and stress testing programmes under MiCAR

On 13 December 2024, the European Commission published a Delegated Regulation containing RTS specifying the adjustment of own funds requirement and minimum features of stress testing programmes of issuers of asset-referenced tokens or of e-money tokens under MiCAR. The Delegated Regulation will enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

Commission Implementing Regulation laying down implementing technical standards with regard to forms, formats and templates for crypto-asset white papers under MiCAR published in the Official Journal of the EU

On 3 December 2024, Commission Implementing Regulation (EU) 2024/2984 of 29 November 2024 laying down implementing technical standards for the application of MiCAR regarding forms, formats and templates for the crypto-asset white papers was published in the Official Journal of the EU. The Commission Implementing Regulation will enter into force on the twentieth day following that of its publication in the Official Journal of the EU.

EBA proposes criteria to appoint a central contact point for crypto-asset service providers to strengthen the fight against money-laundering and terrorism financing in host Member States

On 4 December 2024, the EBA launched a public consultation on draft RTS specifying the criteria according to which crypto-asset service providers (CASPs) should appoint a central contact point to ensure compliance with local AML/CFT obligations of the host Member State. As the same considerations apply to electronic money issuers (EMI) and payment service providers (PSPs), the EBA proposes to retain the structure and approach set out in Commission Delegated Regulation (EU) 2018/1108 and extend existing provisions to CASPs. It is also introducing new provisions for CASPs where considered necessary having regard to their business model and operations.

The consultation runs until 4 February 2025. The EBA will hold a virtual public hearing on the consultation paper on 16 January 2024. Interested stakeholders are invited to register by 3 January 2023.

For more information on these topics plpurport ease contact any member of A&L Goodbody's Financial Regulation Advisory team.

This publication provides an overview of certain legal and regulatory developments that may be of interest to certain entities. It does not purport to provide analysis of law or legal advice and is strictly for information purposes only.