> 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/q-and-a/pending-questions/eba-qa-7066-art-reserve-bail-in-eligibility.md).

# ART reserve: bail-in eligibility

|                 |                                                                                                                                                                    |
| --------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------ |
| **Authority**   | EBA                                                                                                                                                                |
| **Q\&A ID**     | 2024\_7066                                                                                                                                                         |
| **Status**      | Under Review                                                                                                                                                       |
| **Submitted**   | 26 April 2024                                                                                                                                                      |
| **Legal basis** | [Article 36(2)](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-3/article-36.md) [MiCA](https://github.com/jakesenfti/micawtf/blob/main/mica/README.md) |
| **Source**      | [EBA Q\&A](https://www.eba.europa.eu/single-rule-book-qa/qna/view/publicId/2024_7066)                                                                              |

### Question

Please clarify whether liabilities related to the [reserve of assets](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/reserve-of-assets.md) under [Article 36(2)](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-3/article-36.md) [MiCAR](https://github.com/jakesenfti/micawtf/blob/main/mica/README.md) have to be treated as secured liabilities and therefore cannot be subject to write-down and conversion or bail-in in case of resolution in the meaning of the BRRD.

### Background

According to [Article 36(1)](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-3/article-36.md) MiCAR issuers of asset-referenced tokens (ART) shall constitute and at all times maintain a [reserve of assets](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/reserve-of-assets.md) in order to stabilise the value of the ART and to ensure liquidity in case the holders of ART exercise their redemption rights.

[Article 36(2)](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-3/article-36.md) MiCAR prescribes that the reserve of assets shall be legally segregated from the issuers' estate, as well as from the reserve of assets of other ART, in the interests of the holders of the ART in accordance with applicable law, so that other creditors of the issuers have no recourse to the reserve of assets, in particular in the event of insolvency.

An expression "legally segregated ....in accordance with applicable law" in [Article 36(2)](/mica/title-iii-asset-referenced-tokens-art.-16-47/chapter-3/article-36.md) MiCA rises a question whether the Level 1 legislation establishes a special type of collateral/security, whether it refers to application of already existing types of securities or the opposite - the appropriate way to segregate the respective assets under national law does not mean that these assets serve as collateral.

This question is of substantive importance with regard to resolution of credit institutions, investment firms and other entities under Article 1 of the BRRD. If the issuers' liability to redeem the ART was secured in its very essence, this liability would be excluded from the write-down and conversion powers of the resolution authority. If this is the case the application of bail-in resolution tool regarding liability in question could not be possible. Furthermore, they would be non-eligible for MREL purposes.

*Submitted by: Ministry of finance/Margarita Glaveva (Bulgaria) · 26 April 2024*

***

*No answer published yet. This question is under review by the European Commission.*

***

**Source:** [EBA Single Rulebook Q\&A](https://www.eba.europa.eu/single-rule-book-qa/qna/view/publicId/2024_7066)

### Related

* [reserve of assets](https://github.com/jakesenfti/micawtf/blob/main/spaces/definitions/mica/reserve-of-assets.md) — defined term used on this page


---

# Agent Instructions
This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com.

## Querying This Documentation
If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.

Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter:

```
GET https://www.mica.wtf/eu-level/q-and-a/pending-questions/eba-qa-7066-art-reserve-bail-in-eligibility.md?ask=<question>&goal=<endgoal>
```

`ask` is the immediate question: it should be specific, self-contained, and written in natural language.
`goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal.

The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.