Global Trustee and Fiduciary Services Bite-Sized Issue 2 2025

3 QUICK LINKS BENCHMARKS REGULATION CRYPTOASSETS DORA EMIR FSB MIFID II/MIFIR MMF SUSTAINABLE FINANCE/ESG T+1 ASIA EUROPE INTERNATIONAL LUXEMBOURG NETHERLANDS NORTH AMERICA UNITED KINGDOM Global Trustee and Fiduciary Services Bite-Sized | Issue 2 | 2025 ESMA and the European Commission Publish Guidance on non-MiCA Compliant ARTs and EMTs On 17 January 2025, ESMA published a Statement reinforcing the position related to the offer of asset-referenced tokens (ARTs) and electronic money tokens (EMTs – also known as stablecoins) in the EU under MiCA. ESMA says that the statement provides guidance on how and under which timeline CASPs are expected to comply with the requirements of Titles III and IV of MiCA, as clarified in the European Commission Q&A. In particular, NCAs are expected to ensure compliance by CASPs regarding non-compliant ARTs or EMTs as soon as possible, and no later than the end of Q1 2025. With the statement ESMA says it aims to facilitate coordinated actions at the national level and avoid potential disruptions. The European Commission have also delivered a Q&A, providing guidance on the obligations contained in titles III and IV of MiCA and how these obligations should apply to CASPs. The Q&A clarifies that certain crypto-asset services may constitute an offer to the public or an admission to trading in the EU and should therefore comply with titles III and IV of MiCA. Link to Statement here The EBA and ESMA Analyse Recent Developments in Crypto-assets On 16 January 2025, the European Banking Authority (EBA) and ESMA published a ‘Joint Report on recent developments in crypto-assets’, analysing decentralised finance (DeFi) and crypto lending, borrowing and staking. This publication is the EBA and ESMA’s contribution to the European Commission’s report to the European Parliament and Council under Article 142 of MiCA. EBA and ESMA find that DeFi remains a niche phenomenon, with value locked in DeFi protocols representing 4% of all crypto-asset market value at the global level. The report also sets out that EU adoption of DeFi, while above the global average, is lower than other developed economies (e.g., the US, South Korea). The EBA and ESMA observe that the number of DeFi hacks and the value of stolen crypto-assets has generally evolved in correlation with the DeFi market size. Since flows on decentralised exchanges represent 10% of spot crypto trading volumes globally, DeFi protocols present significant risks of money laundering and terrorist financing (ML/TF). The EBA and ESMA find the implications of maximal extractable value (MEV) on DeFi markets are widespread in DeFi and negative externalities of MEV would require technical solutions. On the lending, borrowing and staking of crypto-assets, the EBA and ESMA say that the report contains an analysis of the main types and typical features of the business models observed in the market, in both centralised and decentralised forms. Based on the existing (limited) evidence, the EBA and ESMA say that there appears to be limited engagement of EU consumers and financial institutions with crypto lending, borrowing and staking services. The report sets out and assesses the specific risks associated with each of them, such as excessive leverage, information asymmetries, exposure to ML/TF risks, and systemic risks arising from re-hypothecation and collateral chains, procyclicality and interconnectedness. In particular, some users may receive insufficient information on the terms and conditions of these services in areas such as fees, interest rates paid or yields, changes to collateral requirements, among other relevant disclosures. However, the EBA and ESMA have not identified current risks from a financial stability perspective. Link to Joint Report here