[ESMA70-460-189 - Heading 9 - Question 1]

Answer provided by the European Commission in accordance with article 16b(5) of the ESMA Regulation.

Until proposed Regulation on Markets in Crypto-assets (MICA) is adopted and applicable, e -money tokens referred to in Article 5(8) of the DLTR should be interpreted to mean electronic money that has been issued in compliance with Directive 2009/110/EC (E-money Directive, EMD). Electronic money tokens issued in that manner may be used by operators of DLT market infrastructures even before MICA applies. However, once MICA starts applying, the notion of e-money tokens under the DLTR should also be interpreted in light of that Regulation, which will comprehensively regulate the issuance and use of e-money tokens.

The issuer of e-money tokens should be authorised under the EMD as an electronic money institution or as a credit institution under Directive 2013/36/EU.

In accordance with Article 5(8), fifth subparagraph, of DLTR, services related to e-money tokens that are equivalent to the services listed in Section C, points (b) and (c) of the Annex to CSDR, must be provided by the operator of a DLT SS or a DLT TSS in accordance with Title IV of the CSDR or by a credit institution. Furthermore, Article 5(8) DLTR explicitly permits that e-money tokens are used by a DLT SS or a DLT TSS as a means of settlement of transactions related to DLT financial instruments under certain conditions.

The DLTR does not require that e-money tokens used for settlement on a DLT market infrastructure must be issued on the same distributed ledger as the one used by the DLT market infrastructure to trade or settle DLT financial instruments. Therefore, DLT market infrastructures are free to use distinct distributed ledgers for the ‘cash’ and the ‘asset’ leg of the transaction.

Disclaimer in relation to the answers provided by the European Commission in accordance with Article 16b(5) of the ESMA Regulation: these answers clarify provisions already contained in the applicable legislation. They do not extend in any way the rights and obligations deriving from such legislation nor do they introduce any additional requirements for the concerned operators and competent authorities. The answers are merely intended to assist natural or legal persons, including competent authorities and Union institutions and bodies in clarifying the application or implementation of the relevant legal provisions. Only the Court of Justice of the European Union is competent to authoritatively interpret Union law. The views expressed in the internal Commission Decision cannot prejudge the position that the European Commission might take before the Union and national courts.