Fintech Flashcards
(14 cards)
what are the advantages of fintech?
-lower cost
- broader offering
- opening of products to wider audiences
- more effective regulatory compliance
what are the 2 regulatory approaches applied to fintech?
-innovation hubs: places where authorities meet with supervised entities to provide clarification and guidance.
-regulatory sandboxes: limited time regulatory derogations that allow fintech firms to test new technologies and services on a limited public.
which approach was adopted in the crypto-asset regulation?
full harmonisation: to ensure an higher level of legal certainty, market and investor protection. all issuers are subject to EU regulation and benefit from an EU passport. national regimes no longer apply.
how are digital assets classified?
-utility tokens: access to a service, asset or platform
-payment token: pseudo-money
-Security token: security/financial product
-hybrid token
what are ARTs and EMTs?
payment tokens, usually called stablecoins. the value of ARTs is tied to multiple fiat currencies, as well as other crypto assets, the value of EMTs is tied to a single fiat currency.
what is micar? who does it apply to? what’s the body of the regulation? which assets does it include?
1)regulation on crypto assets
2) applies to crypto-asset service providers and issuers
3) sets uniform requirements on transparency, disclosure, issuance and consumer protection
4) crypto assets not already regulated as financial instruments or structured dposits
wht are Micar conditions and regulations on the offering of crypto assets? what are exemptions?
1) The issuer must:
-meet specific requirements
-prepare a whitepaper and notify it to the relevant authority
2) the relevant authority:
-cannot pre-approve the whitepaper
- must review the self assessment in which the issuer justifies how the instrument is not a financial asset or e-money
- they can suspend or prohibit the offering, demand changes to the whitepaper and publicly flag non-compliance
3) exempt for offerings under 1M (12-month) or exclusive to qualified investors.
what are the requirements to issue an ART in Micar?
1) whitepaper must be approved by national regulator
2) must meet standards of
-capital and governance
- COI rules
- stabilisation mechanism
- reserve assets (secure/low-risk and highly liquid)
with stricter standards for issuers of significant ARTs
what are Micar conditions on issuance of EMTs?
-issuer must be a credit or e-money institution
-must comply with e-money rules
-must publish and notify a whitepaper
what are key rights for EMT holders?
-EMTs must be issued at par
-EMTs must be redeemable on demand at any time at par value
who supervises EMT issuers?
usually national authorities, however if the EMT is deemed significant the supervision duty goes to EBA. within 30 days of classifiation as significant EBA must set up a supervisory college
what are requirements for crypto asset service provider?
1)CASPs must follow rules on:
-Prudential safeguards
-Governance and organizational structure
-Client protection
-Disclosure
-Complaint handling and conflict of interest
2)Must undergo authorization and supervision.
3)Specific rules apply to each type of service listed.
what is the DLT pilot regime? what’s his goal?
A pilot regime that allows DLT-based financial market infrastructures to operate with temporary exemptions from certain EU financial rules.
DLT market infrastructures can apply for exemptions from parts of MiFID II, CSDR, etc.
National Competent Authorities (NCAs) grant these exemptions.
ESMA ensures consistency and oversight across the EU.
Exemptions are limited and conditional to maintain fairness and control.
the objective is to encourage innovation in blockchain-based finance while maintaining regulatory safeguards and market integrity.
what is dora?
regulation ensuring that entities in the EU financial systems are protected again cyber attacks and IT risks. introduces harmonized regulation.
