> For the complete documentation index, see [llms.txt](https://www.mica.wtf/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://www.mica.wtf/eu-level/guidelines/guidelines-on-redemption-plans-under-micar.md). # EBA/GL/2024/13 — Issuer Redemption Plans | | | | ----------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | **Authority** | EBA | | **Reference** | EBA/GL/2024/13 | | **Legal basis** | [Article 47(5) MiCA](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-6/article-47.md) | | **Status** | Final adopted; translated into the EU official languages | | **Applies from** | 10 February 2025 | | **Compliance deadline** | 10 February 2025 | | **Provenance** | English text adopted in the final report; standalone official-language publications available on EBA. | | **Source** | [EBA](https://www.eba.europa.eu/activities/single-rulebook/regulatory-activities/asset-referenced-and-e-money-tokens-micar/guidelines-redemption-plans-under-micar) | | **Documents** | [Final report PDF](https://www.eba.europa.eu/sites/default/files/2024-10/f8fda168-4d97-4549-9cfe-46d1d1a27636/Final%20report%20on%20Guidelines%20on%20redemption%20plans%20under%20MiCAR.pdf); [compliance table XLSX](https://www.eba.europa.eu/sites/default/files/2025-01/c654ba1b-cc3b-4e34-a16f-ed70c9a7e10a/EBA%20GL%202024%2013%20-%20Guidelines%20on%20redemption%20plans%20under%20MiCAR.xlsx) | ### 1. Compliance and reporting obligations ### Status of these Guidelines 1. This document contains guidelines issued pursuant to Article 16 of Regulation (EU) No 1093/2010 5 . In accordance with Article 16(3) of Regulation (EU) No 1093/2010, competent authorities and financial institutions must make every effort to comply with the Guidelines. 2. Guidelines set the EBA view of appropriate supervisory practices within the European System of Financial Supervision or of how Union law should be applied in a particular area. Competent authorities as defined in [Article 3(1)](/mica/title-i-subject-matter-scope-and-definitions-art.-1-3/article-3.md), point (35), of Regulation (EU) 2023/1114 6 to whom the Guidelines apply should comply by incorporating them into their practices as appropriate (e.g. by amending their legal framework or their supervisory processes). ### Reporting requirements 3. According to Article 16(3) of Regulation (EU) No 1093/2010, competent authorities must notify the EBA as to whether they comply or intend to comply with these Guidelines, or otherwise with reasons for non-compliance, by \[dd.mm.yyyy]. In the absence of any notification by this deadline, competent authorities will be considered by the EBA to be non-compliant. Notifications should be sent by submitting the form available on the EBA website with the reference 'EBA/ GL/2024/13 '. Notifications should be submitted by persons with appropriate authority to report compliance on behalf of their competent authorities. Any change in the status of compliance must also be reported to the EBA. 4. Notifications will be published on the EBA website, in line with Article 16(3). ### 2. Subject matter, scope and definitions ### Subject matter 5. These Guidelines specify (a) the content of the redemption plan, (b) the periodicity for review and update of such a plan, and (c) the triggers for implementation of the redemption plan that issuers of asset-referenced tokens and issuers of e-money tokens have to draw up and maintain operational according to [Articles 47](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-6/article-47.md) and [55](/mica/title-iv-e-money-tokens-art.-48-48/chapter-1/article-55.md) of Regulation (EU) 2023/1114. ### Scope of application 6. These Guidelines apply to issuers of asset-referenced tokens and e-money tokens (as defined in points 6 and 7 of [Article 3(1)](/mica/title-i-subject-matter-scope-and-definitions-art.-1-3/article-3.md) of Regulation (EU) 2023/1114). 7. For issuers of e-money tokens that are not subject to the requirement to hold a [reserve of assets](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/reserve-of-assets.md) (because they are either credit institutions or e-money institutions issuing non-significant tokens whose relevant competent authority has not imposed it in accordance with [Article 58(2)](/mica/title-iv-e-money-tokens-art.-48-48/chapter-2/article-58.md) of Regulation (EU) 2023/1114) the sections ' Allocation of the reserve of assets to meet the token holders' redemption claims' and ' Liquidation of the reserve of assets ' , both under 4.2., do not apply except for those paragraphs for which there is an express indication to apply them mutatis mutandis , likewise for any other paragraph or section in the Guidelines assuming the [issuer](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/issuer.md) is subject to said requirement. ### Addressees 8. These Guidelines are addressed to competent authorities as defined in [Article 3(1)](/mica/title-i-subject-matter-scope-and-definitions-art.-1-3/article-3.md), point (35), of Regulation (EU) 2023/1114. 9. These Guidelines are also addressed to issuers, as defined in [Article 3(1)](/mica/title-i-subject-matter-scope-and-definitions-art.-1-3/article-3.md), point (10), of Regulation (EU) 2023/1114, of: * i) asset-referenced tokens defined in Article 3(1), point (6), of that Regulation (issuers of asset-referenced tokens -ARTs); or 4. ii) [electronic money](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/emd2/electronic-money.md) tokens defined in Article 3(1), point (7), of that Regulation (issuers of emoney tokens -EMTs). ### Definitions 10. Unless otherwise specified, terms used and defined in Regulation (EU) 2023/1114 have the same meaning in the Guidelines. ### 3. Implementation ### Date of application 11. These Guidelines apply from \[two months after publication of the translations of the Guidelines into all official languages]. ### 4. Redemption plans ### 4.1 Proportionality considerations 12. For the sake of proportionality, to determine the level of detail of the content and the frequency of the periodical review of the redemption plan the issuers and the [competent authority](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/competent-authority.md) should take into account the following criteria: * i. classification of the ARTs or EMTs as significant in accordance with [Articles 43](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-5/article-43.md) and [44](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-5/article-44.md), and 56 and 57 of Regulation (EU) 2023/1114; * ii. for issuers of an ART and for issuers of an EMT which are subject to the requirement to hold a reserve of assets under Regulation (EU) 2023/1114, the size, volatility, composition, concentration and nature of the reserve assets and of the ART or EMT itself; * iii. multiple outstanding issuances of ARTs or EMTs by the same [issuer](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/issuer.md); * iv. issuance of the same ART or EMT by multiple issuers; * v. the complexity and risk profile of the issuer's business model , taking into account any other financial or non-financial activity. 13. Redemption plans developed by issuers of a significant ART or EMT, or by multiple issuers in the case of pooled issuance of an ART or an EMT, or by issuers with multiple outstanding issuances or with complex business models and an increased risk profile, as determined, justified and notified by competent authorities, should: * i. have an increased level of detail and comprehensiveness to demonstrate their credibility, feasibility and timely implementation; and * ii. be revised and updated at least on an annual basis. 14. Issuers that do not meet the criteria set out in paragraph 13 should revise and update the redemption plan whenever a change materially impacts the content of the redemption plan. This is without prejudice to the possibility of the [competent authority](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/competent-authority.md) to require institutions to update their redemption plans more frequently. ### 4.2 General principles and objectives of the redemption plan 15. Where the issuer has more than one outstanding issuance of ARTs or EMTs, the redemption plan of each ART or EMT token should appropriately address the interconnectedness between outstanding ARTs and/or EMTs. 16. The redemption plan, drafted in accordance with these Guidelines, could contain [personal data](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/gdpr/personal-data.md) about directors, third parties or key function holders. In compliance with the principle of data minimisation enshrined in Article 5(1), letter (c), of Regulation (EU) 2016/679 7 , such personal data should be those deemed necessary and sufficient. When drawing up redemption plans and/or when assessing the redemption plan, issuers and competent authorities, respectively, should comply with the relevant provisions of Regulation (EU) 2016/679. Furthermore, in pursuance of data protection principles, such personal data should be kept for no longer than necessary. ### Equitable treatment and no undue economic harm 17. Issuers should draw up the redemption plan by laying down the actions and process with a view to ensuring an equitable treatment of all token holders, and the protection of the right of redemption attached to the token as described in the [crypto-asset](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/crypto-asset.md) white paper in accordance with Annex II and Annex III of Regulation (EU) 2023/1114, respectively for an ART and for an EMT. 18. For this purpose, the redemption plan should lay down the actions and related processes to ensure among other things the respect of the envisaged time and method for satisfying the right of redemption in accordance with Regulation (EU) 2023/1114 and the white paper. 19. Unless otherwise disclosed in the [crypto-asset](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/crypto-asset.md) white paper or envisaged in the applicable national law, the redemption plan should assume that all token holders with the same redeemable token are treated equally and rank pari passu . 20. In order to ensure equitable treatment of all token holders as stated in the crypto-asset white paper, the issuer should include in the redemption plan how the individual redemption of claims will be suspended upon the adoption of the competent authority's decision triggering the implementation of the redemption plan for the orderly and collective redemption of the tokens. For this purpose, the issuer should have regard to the provisions in the crypto-asset white paper and to the applicable law, including Article 46, paragraphs (3) and (4), of Regulation (EU) 2023/1114 and national insolvency law. ### Allocation of the reserve of assets to meet the token holders' redemption claims 21. Issuers of ARTs and of EMTs subject to the requirement to hold a [reserve of assets](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/reserve-of-assets.md) should develop the redemption plan on the assumption that the remaining reserve of assets underpinning the relevant ART or EMT will be used for the benefit of all token holders' redemption claim s when the issuer is assessed by the competent authority as being unable or likely to be unable to fulfil its obligations towards such holders. This should be without prejudice to the right of the token holders that the portion of their claim (if any) left unsatisfied by the liquidation of the remaining reserve of assets, should be met by the issuer in accordance with the applicable law, including the applicable insolvency law. 22. Taking into account that token holders have a right of redemption at all times and that the redemption plan may not impose undue economic harm on token holders, the redemption plan should indicate how the costs for the implementation of the redemption plan -such as for the appointment of consultants or intermediaries, or in connection with the liquidation of the reserve of assets -will be covered. 23. In order to ensure the effectiveness of the right of redemption and that undue economic harm does not affect the token holders, the issuer should make sure in the redemption plan that the costs for the liquidation of the reserve of assets or otherwise linked to the implementation of the redemption plan may only be allocated to the proceeds of the liquidation of the reserve of assets after the amount for meeting the relevant token holders' redemption claims is set aside. 24. Issuers should also clarify in the redemption plan how such costs do not amount, even indirectly, to redemption fees, which pursuant to [Articles 39(3)](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-3/article-39.md) or [49(6)](/mica/title-iv-e-money-tokens-art.-48-48/chapter-1/article-49.md) of Regulation (EU) 2023/1114 may not be imposed on the token holders, without prejudice to [Article 46(1)](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-6/article-46.md)(a) of Regulation (EU) 2023/1114. 25. Costs indicated in the redemption plan should be identified via transparent processes, be reasonable and duly justified. 26. Paragraphs 22-25 should apply mutatis mutandis to issuers which are not subject to the obligation to hold a reserve of assets, to the extent consistent with the applicable sectoral legislation. ### Liquidation of the reserve of assets 27. In order to meet the token holders' claims in a n equitable manner and to avoid undue economic harm, issuers of ARTs or of EMTs subject to the requirement to hold a reserve of assets should develop the redemption plan with the aim of ensuring the maximisation of the proceeds from the liquidation of the remaining reserve of assets within a reasonable timeframe. 28. For this purpose, the issuer should develop redemption scenarios under ordinary and stressed market conditions and lay down liquidation strategies taking into account the composition of the reserve of assets. 29. Having regard to the requirement that the execution of the redemption plan has not to affect the stability of the market of the reserve of assets, such scenarios and strategies should take into account the materiality of the reserve of assets in the underlying market for such assets. 30. When developing such scenarios, issuers subject to the requirement to hold a reserve of assets should take into account the liquidity management policy and procedures of issuers as set out in [Article 45(3)](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-5/article-45.md) of Regulation (EU) 2023/1114 and as specified in accordance with Article 45(7)(b) of Regulation (EU) 2023/1114 and the EBA Guidelines on common reference parameters of the stress test scenarios, mandated under [Article 45(8)](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-5/article-45.md) of Regulation (EU) 2023/1114 8 . 31. Redemption scenarios should reflect redemption in going concern, in the case of normal insolvency proceedings under national law or in the case of the application of the resolution strategy the issuer would be subject to (if applicable). 32. For the purpose of developing liquidation strategies, issuers may consider that transactions such as repurchase agreements and security financing transactions may be implemented, if they are instrumental to maximising the proceeds, speeding up the process and limiting the impact on the market where the assets are negotiated. 33. Paragraphs 31 and 32 should apply mutatis mutandis to issuers which are not subject to the obligation to hold a reserve of assets, to the extent consistent with the applicable sectoral legislation. ### Implementation in a timely manner 34. Issuers should ensure that the redemption plan lays down in a pragmatic and operational manner the actions to be taken immediately and in any case without undue delay by the issuer upon the competent authori ty's adoption of the decision triggering the implementation of the plan under [Article 47(1)](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-6/article-47.md) of Regulation (EU) 2023/1114. 35. The redemption plan should also include comprehensive and organised planning of the phases and related actions necessary to the full implementation of the plan and demonstrate that they achieve the orderly redemption of all the token holders and the consistency of such actions with the crypto-asset white paper. Furthermore, the redemption plan should be drawn up in a comprehensive, self-explanatory and easy-to-understand manner, including for third parties. 36. The phases for the orderly implementation of the plan should include: * i. immediate follow-up actions to the decision of the competent authority to trigger the redemption plan, including the activation of the internal processes or of the contractual arrangements for the maintenance in operation of the critical activities; * ii. publication of the communication notice informing the token holders about the process and the timeline to submit their redemption claim and the related content; * iii. to the extent that it is not included in point (i) above, implementation of the liquidation strategies for the reserve of assets as articulated in the 'L iquidation of the reserve of assets ' section above; * iv. assessment of the redemption claims; * v. development of a distribution plan, namely the plan to meet all the submitted and positively assessed redemption claims, using the total amount of the proceeds from the liquidation of the reserve of assets for the issuers subject to the requirement to hold a reserve of assets or, for issuers not subject to the requirement to hold a reserve of assets, using the [funds](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/funds.md) available to meet the redemption claims; * vi. arrangements and the timeline for the settlement of the positively assessed redemption claims. 37. The redemption plan should indicate each phase and step where the obligations to fight financial crime have to be fulfilled for purposes of the implementation of the redemption plan and in particular of the execution of the redemption process as described in the section below. 38. In order to meet the requirement that the redemption plan be implemented in a timely manner, the issuer should take into account: * i. the need to ensure adequate preparedness to support the adoption by the issuer of pragmatic and operational action immediately and in any case without undue delay upon the competent authority's decision to trigger the implementation of the plan under [Article 47(1)](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-6/article-47.md) of Regulation (EU) 2023/1114; * ii. the reasonable time to implement the liquidation strategies described in the section on the ' Liquidation of the reserve of assets ' ; * iii. the reasonable time allocated to the token holders to file their redemption claim as specified in paragraphs 53-56 below; * iv. the time necessary to verify and settle the redemption claim; * v. the time necessary to complete the distribution plan having regard to its complexity, including the number of redemption claims that have been submitted. 39. The issuer should indicate in the redemption plan the envisaged arrangements to ensure the safe custody of the proceeds from the liquidation of the reserve of assets pending the settlement of the redemption claims. ### 4.3 Content of the redemption plan ### Governance principles 40. The issuer should make sure that the redemption plan contains a clear and detailed description of the governance arrangements and processes covering its development, review and update as well as its execution. In particular, the redemption plan should: * i. indicate the member(s) of the [management body](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/dora/management-body.md) or any person(s) within the organisational structure of the issuer responsible for the development, update and implementation of the redemption plan; * ii. describe how the redemption plan is integrated into the internal control framework as referred to in the EBA Guidelines on the minimum content of the governance arrangements for issuers of ARTs 9 or other relevant regulation applicable to issuers of EMTs; * iii. describe the processes for the update or review of the plan in the case of material changes affecting the business or financial profile of the issuer or of the token(s) issued; * iv. identify the critical activities to be kept operational for the implementation of the plan, and identify the person(s) responsible, either on the issuer side or within the third-party provider, in accordance with paragraphs 42-51; * v. lay down the process for the adoption of the action of each phase to ensure the timely execution of the redemption plan upon the competent authority's decision in accordance with [Article 47(1)](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-6/article-47.md) of Regulation (EU) 2023/1114; and * vi. identify the contact person(s) who are in charge of communication with the token holders, with the competent authority(ies) and with the counterparties and/or with the public, and include those persons' up-to-date contact details within the organisation of the issuer. 41. The redemption plan should duly reflect the impact of the designation of a temporary administrator when foreseen by the applicable law as per Article 47(2) of Regulation (EU) 2023/1114, including the consequence that the [management body](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/dora/management-body.md) may not be in charge in full or in part of the implementation of the redemption plan. ### Critical activities and contractual arrangements 42. The redemption plan should include a mapping of the critical activities that are necessary for the orderly implementation of the plan. Having regard to the issuer's structural organisation, these may include internal functions of the issuers or functions provided by third parties. Based on the mapping, the redemption plan should lay down the list of such parties and outline the contractual terms in place. 43. Such mapping of the critical activities should include, where relevant, the issuer's risk management function, the trading desk, the treasury or finance function, the relevant ICT functions and systems, the anti-[money laundering](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/tofr/money-laundering.md) (AML) function (where existing, depending on the type of issuer), the relationship with the custodian of the reserve of assets (where existing), the interaction with financial intermediaries (where necessary) to access secondary and repo markets for the liquidation of reserve assets, and the relationship with crypto-asset service providers (where needed) for the identification of token holders and the collection of outstanding tokens, or with payment service providers (where needed) to make payments to the token holders assessed as entitled to the redemption claim or for other related activities. 44. Issuers of ARTs which are not obliged entities under Directive 2015/849/EU 10 should always explain in the redemption plan how they will involve intermediaries subject to that Directive so that these intermediaries: 1. perform anti-money laundering and combating the financing of terrorism (AML/CFT) checks, including customer due diligence checks on the token holders that have submitted a redemption claim; and 2. comply with their obligations under Regulation (EU) 2023/1113 (Transfer of [Funds](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/funds.md) Regulation) 11 (see paragraphs 55 and 56 of these Guidelines) with respect to the transfer. 45. With regard to the critical activities within the issuer's organisation, t he issuer should include in the redemption plan an overview of the relevant internal arrangements and processes concerning their functioning and operational continuity, including the key person(s) with up-todate emergency contact details. 46. With regard to the critical activities provided by third parties, the redemption plan should include a list of all such third-party providers, the key contact persons within the issuer and the third party in charge of the contract with up-to-date emergency contact details. 47. The redemption plan should also provide an overview of the content of the contractual arrangements, and illustrate their adequacy, including avoidance of conflicts of interests, for the achievement of the timely and equitable operationalisation of the redemption plan. The issuer should also confirm that such contracts ensure continuity of performance if the redemption plan is activated. 48. With specific regard to the custodians of the reserve of assets and to the financial intermediaries (if any) tasked with the execution of the orders provided by the issuer for the liquidation of the reserve of assets, the contractual terms outlined in the redemption plan should duly reflect the objective that the proceeds from the liquidation of the reserve of assets are maximised for token holders, that best execution for the benefit of the token holders is ensured, and that undue economic harm to token holders is avoided. 49. The list of third-party providers of critical activities and the contractual terms should be kept up to date by the issuer. Where relevant, contracts with the most significant third-party providers, including with the custodians, may be included as annexes to the redemption plan. 50. The overview of the contractual arrangements in place with third-party providers of critical activities should not prevent the issuer, if need be, from entering into contractual arrangements with any other required intermediaries at the moment of the activation of the redemption plan if this would contribute to a more effective implementation of the plan. 51. For that purpose, the redemption plan should at least clearly and operationally illustrate the selection process of the intermediaries, include a summary of proposed key contractual terms (such as tasks, timing or costs), and include a provisional term sheet as an annex to the redemption plan with a list of potential contractual partners with whom the issuer has engaged in some discussions/negotiations, as well as the selection criteria. ### Process for the orderly redemption of token holders ' claims 52. The issuer should make sure that the redemption plan lays down an orderly process for the redemption of the token holders ' claims and that this is expressed and communicated in clear, accessible and comprehensible language in line with the guidance on the communication plan in the relevant section. 53. Such a process should be articulated in an operational manner and ensure that the token holders ' redemption claims are paid in a timely manner, consistently with the requirements laid down in [Article 47](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-6/article-47.md) of Regulation (EU) 2023/1114 and with the content of the crypto-asset white paper. 54. For this purpose, the redemption plan should describe the processes, the measures to identify and address money laundering and terrorism financing (ML/TF) risks applied by the issuer, and technical facilities adopted or envisaged to be in place to process: * i. the identification of token holders and their entitlement to the redemption of the tokens; * ii. the collection and permanent removal from circulation of redeemed tokens; and * iii. the subsequent payout or delivery of assets to the token holders. 55. The description of the process should include reference to the compliance with applicable AML/CFT obligations. In particular, the redemption plan should: 1. in respect of point (i) in paragraph 54 above, refer to the execution of the customer due diligence measures applicable in accordance with Directive 2015/849/EU to the token holders submitting the redemption claim; 2. in respect of point (iii) in paragraph 54 above, refer to the checks on the information accompanying the [transfer of funds](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/tofr/transfer-of-funds.md) in accordance with Regulation (EU) 2023/1113, where applicable. Competent authorities should exercise powers and perform tasks in relation to redemption as specified in these Guidelines in effective collaboration and exchange of information with authorities competent for the prevention of money laundering and combating of terrorist financing in accordance with Article 94(5) of that Regulation. 56. The redemption plan should clearly indicate the requirements and the minimum content of the redemption claim to be filed by the token holders, which should include: 1. the identity and contact details of the individual holders (name, address, e-mail and/or phone number), indicating that any personal data would be treated in line with Regulation (EU) 2016/679; 2. the evidence that the person that files the claim is the token holder and is therefore entitled to the redemption right for which the redemption claim is filed and the necessary warranties (if any) from the token holder´s side in accordance with the crypto-asset white paper; 3. the information necessary to identify, assess and manage any risk of money laundering and terrorist financing including for the execution of the customer due diligence on token holders at redemption in accordance with Directive 2015/849/EU; 4. the number of the relevant tokens held (including fractional holdings) and the public blockchain addresses covered by the wallet where the tokens are held (where applicable); and 5. the indication of the token holder's bank or payment account for the transfer of the funds in repayment of the redemption claim, or similar data required to deliver the assets for the redemption (where applicable). Such bank or payment accounts should preferably be held with EU credit or payment institutions and in any case should not be held in high-risk third countries for purposes of ML/TF risk as referred to in Article 9 of Directive 2015/849/EU. 57. The information listed above and included in the redemption claim should also permit the issuer to assess token holders' entitlement to redemption , which is preliminary to permitting the collection and permanent removal of the redeemed tokens from circulation. For this purpose, the redemption plan should specify how the mechanism of delivery of the token against the payment will be implemented. Notably it should indicate how each redeemed token will be collected and subsequently taken out of circulation (or ' burnt ' ) by the issuer and will no longer be able to be recirculated, exchanged, transferred or sold by any party. 58. The redemption plan should also clarify the relevant sources of information, and the envisaged actions and process that will be implemented or relied upon to reconcile the number of tokens claimed for redemption with the number of outstanding tokens. 59. The redemption plan should include all relevant steps, actions and processes to develop the distribution plan to repay the token holders that have submitted a redemption claim that has been positively assessed. ### Communication plan 60. The redemption plan should include a communication plan to be activated without delay upon the adoption of the competent authority's decision to trigger the implementation of the redemption plan in accordance with [Article 47(1)](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-6/article-47.md) of Regulation (EU) 2023/1114. 61. The communication plan should include at least the following: 1. the draft public notice to be communicated to the public; and 2. the draft communication notices with the third-party providers of critical activities to be contacted immediately upon the activation of the redemption plan. Where communication notices have been agreed upon in the relevant contracts, they should be annexed to the redemption plan. The issuer should ensure consistency of the communication plan for redemption of the token holders with other existing communication plans. 62. The draft public notice should be developed in order to inform the token holders of the activation of the redemption plan upon the competent authority's decision with a view to redeem ing the tokens in an orderly, timely and equitable manner without imposing undue economic harm and in accordance with the terms set out in the crypto-asset white paper. 63. With a view to reaching the general public and the maximum number of token holders, the redemption plan should indicate the media channels where the notice should be published. In doing so, the issuer should privilege those normally used by the issuer to communicate to the public and to the market and to advertise its products and services. 64. The draft public notice should describe in clear and non-technical language the main steps of the redemption process and the actions that token holders are expected to undertake within the indicated timeframe to have their token redeemed. 65. For these purposes the draft public notice should include at least: 1. the exact date and time when the redemption plan has been activated based on a decision of the competent authority; 2. the minimum content of the redemption claim as set out in paragraph 56 of these Guidelines; 3. the timeframe, as of the publication of such a notice, within which the token holders are required to file their redemption claim with the issuer or (where applicable) the third-party service providers, in accordance with what is indicated in the white paper; and 4. the modality, technical support and location where the token holders should file their redemption claim, e.g. the exact portal of the issuer or -where applicable -of a third party. The solution(s) adopted should not discriminate against token holders, e.g. because of their place of residence. ### Issuance of the same ART or EMT by multiple issuers 66. When an ART is issued by multiple issuers, or when a significant EMT is issued by multiple issuers other than credit institutions, Regulation (EU) 2023/1114 provides that a single reserve of assets has to be set up to ensure a proper stabilisation mechanism of the token. 67. In the light of this, the redemption plan should be articulated in two sections: the first common to all issuers and agreed upon by all issuers, the second specific to each issuer. 68. Issuers should coordinate to develop and agree on the common section of the redemption plan, which should contain at least the following parts: * i. the general principles and objectives governing the redemption plan as stated in the ' General principles and objectives of the redemption plan' section of these Guidelines; * ii. the ' Critical activities and contractual arrangements ' section of these Guidelines with a view to identifying the critical activities under the control of which issuer should be operational for the effective implementation of the common redemption plan; * iii. the ' Process for the orderly redemption of token holders' claims' section ; * iv. the ' Communication plan ' section ; * v. the effective coordination between the issuers for the development, review and update of the redemption plan; * vi. the effective coordination between the issuers for the orderly implementation of the plan upon its activation by decision of the competent authority; and * vii. the commitment of all issuers to fully and faithfully comply with the terms of the redemption plan commonly agreed upon. 69. To ensure proper coordination, the issuers in the redemption plan should appoint one of them as coordinator without prejudice to the respective accountability of each issuer. The latter could be selected having regard to the comparative experience of the different issuers in the business and the level of maturity of their internal organisation, to the role in the interaction with the custodians and other third-party providers or intermediaries, and to the materiality of their participation in the issuance. Coordination tasks could include the development, review and update of the redemption plan, the implementation of the section on the communication plan, and the coordination of the management and execution of the redemption plan. 70. The second section of the redemption plan should be specifically tailored to the internal organisation of each issuer. In particular, issuers should lay down appropriate measures aimed at ensuring the application of: * i. the ' Governance principles' section of these Guidelines; and * ii. the ' Critical activities and contractual arrangements ' section , having regard to the critical activities within the issuer 's organisation or provided by third parties that need to be operational for the effective implementation of the redemption plan. 71. Competent authorities of each issuer participating in the issuance should in timely fashion consult each other and cooperate on the assessment of the redemption plan submitted by the issuers. 72. Competent authorities should consult each other and cooperate to assess whether any grounds for triggering the redemption plan are met. Competent authorities should avoid activating the redemption plan whenever the adverse effects on the outstanding ART or EMT deriving from the inability or likely inability of one issuer to fulfil its obligations are remedied without delay by one or more other issuers, in a manner that avoids a negative impact on the confidence of the token holders, on the rights of the token holders or on the stability of the markets. ### Interaction of the redemption plan with other proceedings 73. The issuer should take into account that, whilst the recovery plan, developed in accordance with [Article 46](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-6/article-46.md) of Regulation (EU) 2023/1114, and the redemption plan are two separate documents addressing two different phases and situations of the issuer's potential crisis, they should be consistent in particular as regards internal governance and risk management arrangements, processes and identification of IT systems and critical activities. 74. When the issuer is a credit institution or an entity within the scope of application of Directive 2014/59/EU 12 or is a central counterparty subject to Regulation (EU) 2021/23 13 , the issuer should develop the redemption plan consistently with its resolution plan and resolvability requirements. To this end, the issuer should take into account the entity's resolution strategy, the identified critical functions and service level arrangements that are instrumental to the entity's operational continuity, and should endeavour to ensure smooth operation of the resolution strategy and of the redemption plan at the same time. 75. In the event that the actions, contractual arrangements, procedures and systems envisaged by the issuer in the redemption p lan would be likely to have any adverse impact on the entity's resolvability, the issuer should bring them to the attention of the resolution authority in a note as an annex to the redemption plan. This is without prejudice to the resolution authority 's review of the redemption plan having regard to the entity's resolvability and to its power to address recommendations to the competent authority in accordance with [Article 47(4)](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-6/article-47.md) of Regulation (EU) 2023/1114. 76. Considering that the resolution plan is developed by the resolution authority and that the redemption plan is developed by the issuer, the two plans will be separate documents. ### 4.4 Periodicity of the review and update 77. In order to ensure that redemption plans are maintained operational and effective at all times, issuers should regularly review and update such plans, including in cases of material changes affecting the issuer or its business environment as further described in paragraph 79, and submit the revised redemption plan to the competent authority for its assessment. Any change to the recovery plan should lead to a prompt and timely review of the redemption plan to assess whether it remains consistent with the new version of the recovery plan. 78. The frequency of the review should take into account the principle of proportionality as articulated in paragraph 12 and the guidance on the frequency of the review of the redemption plan as per paragraphs 13 and 14. 79. The redemption plan should also be promptly reviewed and updated by the issuer upon the occurrence of material changes, in particular relating to: * i. the issuer's business model or organisational structure; * ii. the nature of the token, including rights and obligations attached to the token; * iii. market conditions affecting the issuer or the reserve of assets or the use of the token; * iv. emergence of any unknown vulnerability, especially in relation to ICT risk or cyber attack, which would result in ineffectiveness of the plan; and * v. legal, regulatory or supervisory aspects. ### 4.5 Triggers 80. In accordance with Article 47(1) of Regulation (EU) 2023/1114, the implementation of the redemption plan is triggered by the competent authority's decision that the issuer is ' unable or likely to be unable to fulfil its obligations ' . 81. In addition to the situations expressly mentioned in [Article 47(1)](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-6/article-47.md) of Regulation (EU) 2023/1114, namely the issuer's (i) insolvency, (ii) resolution (where applicable) or (iii) withdrawal of authorisation, these Guidelines further specify the elements for the competent authority's assessment as to whether the issuer is ' unable or likely to be unable to fulfil its obligations' under Regulation (EU) 2023/1114 . 82. In the case of commencement of crisis prevention measures or crisis management measures as defined in Article 2(1), points (101) and (102), of Directive 2014/59/EU or a resolution action as defined in Article 2, point (11), of Regulation (EU) 2021/23, the competent authority should not trigger the redemption plan without prior consultation and coordination with the relevant prudential or resolution competent authorities under Directive 2013/36/EU 14 , Directive 2014/59/EU or Regulation (EU) 2021/23 if the issuer is subject to these Directives and this Regulation. 83. For purposes of assessing whether the issuer is ' unable or likely to be unable to fulfil its obligations' under Regulation (EU) 2023/1114, the competent authority should have regard, inter alia , to the aspects listed in points (i) to (iii) of paragraph 84, exclusively relating to the requirements set out in Title III or Title IV, as applicable, of Regulation (EU) 2023/1114 and within the scope of supervision of the competent authority. 84. The aspects that the competent authority should inter alia have regard to when assessing whether the issuer is 'unable or likely to be unable to fulfil its obligations' under Regulation (EU) 2023/1114 are the following: * i. capital position of the issuer: infringement of the requirements under [Article 35(1)](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-2/article-35.md) to (5) and [Article 45(5)](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-5/article-45.md) of Regulation (EU) 2023/1114; * ii. liquidity position of the issuer under applicable requirements set out in Regulation (EU) 2023/1114 and/or of the reserve of assets: 7. o infringement of the liquidity requirements, or, if subject to a requirement to hold a reserve of assets, of the requirements relating to the level and composition of the reserve of assets set out in Chapters 3 and 5 of Title III of Regulation (EU) 2023/1114, including any specification in accordance with [Articles 36(4)](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-3/article-36.md), [38(5)](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-3/article-38.md) and [45(7)](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-5/article-45.md)(b) of that Regulation, once the relevant delegated regulations apply, in a way that would justify the withdrawal of the issuer's authorisation by the competent authority; 8. o being unable to pay debts and liabilities as they fall due; and 9. o having the reserve of assets lower than liabilities; * iii. with respect to issuers of ARTs authorised in accordance with [Article 21](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-1/article-21.md) of Regulation (EU) 2023/1114, other requirements for continuing authorisation: 2. o in relation to governance arrangements: accumulation of material weaknesses or deficiencies in key areas of the governance arrangements or internal control functions, including risk management and ICT risk management, which alone or together have a material negative prudential impact on the issuer and/or its operational resilience; or any other elements considered relevant by the competent authority; 3. o material deficiencies which in combination can have a material negative prudential impact on the issuer, such as major reputational depreciation arising from a lack of transparency in the conduct of business and operations or incomplete/inaccurate disclosure of information. 4. When assessing the issuer's inability or likely inability in the near future to comply with the applicable requirements as determined also by the factors above, the competent authority should base its determination also on elements including among other things: * i. significant adverse developments in the macroeconomic environment that are likely to threaten the issuer's position as regards own funds, liquidity requirement and/or assets backing the redemption rights of the token holders, including relevant developments in interest rates, market freeze or economic growth; such developments should significantly adversely affect the issuer's business model, the outlook for its profitability, its liquidity position, its viability and its reserve of assets; * ii. significant deterioration of market perception of an issuer, for instance due to obstacles to prompt access to the assets backing the redemption rights of token holders, such as deterioration in the solvency profile of the credit institution holding the issuer's deposits or providing custodial services, or negative volatility of the highly liquid financial instruments in the reserve of assets or the high-quality liquid assets composing the liquidity coverage ratio (LCR) requirement; * iii. significant deterioration of the market conditions, likely leading to a run on the ART or EMT by the token holders, due to, among other things, any large and/or persistent negative divergence between the market value of the token and the market value of the assets referenced, idiosyncratic shock relating to specific assets referred to by the ART or EMT, increasing and high instability of the crypto market, interconnectedness between the financial system and the crypto activities in issuers that might act as a contagion channel for the crisis (idiosyncratic or market wide), or loss of confidence of the token holders. 86. The factors and elements listed in these Guidelines, respectively in paragraphs 84 and 85, should be carefully analysed on a comprehensive basis and justified. The determination that an issuer is unable or likely to be unable to fulfil its obligations should remain subject to an expert judgement and should not be automatically derived from any of the elements described herein. This is especially true as regards the interpretation of the elements which may be affected by factors not directly related to the situation of the issuer. 87. When determining the issuer 's inability or likely inability in the near future to fulfil its obligations under Regulation (EU) 2023/1114, the competent authority should base its decision, inter alia , on the assessment of the elements described in this section and taking into account, where relevant, the failure of the prior activation of recovery options envisaged in the recovery plan developed by the issuer in accordance with [Article 46](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-6/article-46.md) of Regulation (EU) 2023/1114 or the failure of the recovery options to remedy the distressed situation. Nevertheless, the prior activation of the recovery plan should not be a necessary condition for the activation of the redemption plan. 88. In most cases it is expected that several factors, rather than merely one, set out in this section would inform the competent authority's determination that an issuer is unable or likely to be unable to fulfil its obligations. Nevertheless, there might be situations where meeting just one condition, depending on its severity and prudential impact, would be sufficient to support the competent auth ority's decis ion to trigger the redemption plan. ### Related * [central counterparty](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/dora/central-counterparty.md) — defined term used on this page * [competent authority](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/competent-authority.md) — defined term used on this page * [terrorist financing](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/tofr/terrorist-financing.md) — defined term used on this page * [credit institution](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/crr/credit-institution.md) — defined term used on this page * [credit institution](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/dora/credit-institution.md) — defined term used on this page * [credit institution](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/credit-institution.md) — defined term used on this page * [reserve of assets](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/reserve-of-assets.md) — defined term used on this page * [transfer of funds](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/tofr/transfer-of-funds.md) — defined term used on this page --- # Agent Instructions This documentation is published with GitBook. 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