DTI Foundation Update: October 2023

Welcome to the DTI Foundation’s latest Update. Our aim is to share news on DTIF initiatives, statistics, regulatory updates and recent publications impacting digital asset markets.  

DTI Foundation initiatives

On 5 October, ESMA published its second consultation paper on technical standards for the Markets in Cryptoassets Regulation (MiCA). ESMA considers the ISO 24165 DTI standard as appropriate for the unique, unambiguous identification for crypto-assets under MiCA.

“For the purpose of identifying crypto-assets, the European Securities and Markets Authority (ESMA) established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council considers that the Digital Token Identifier (DTI) is appropriate as it follows the principles of uniqueness, neutrality, reliability, open source, scalability, accessibility on a cost-recovery basis, is offered under an appropriate governance framework and is adopted for use in the Union.”

Comments are due by 14 December 2023. ESMA expects to publish a final report and submit the draft technical standards to the European Commission for endorsement by June 2024.

The DTIF responded to IOSCO’s consultation report ‘Policy Recommendations for Decentralized Finance (DeFi)’ with the intention of addressing concerns related to market integrity and investor protection issues arising from DeFi activities.

See the full response here.

ICMA FinTech and Digitalisation Forum, 5 December 2023, London

25 October 2023: FCA published its warning about common issues with crypto marketing. Since 8 October 2023, firms wishing to promote cryptoassets in the UK must, by law, be authorised or registered by the FCA, or have their marketing approved by an authorised firm. Since the regime went live, the FCA has issued 221 alerts.

20 October 2023: EBA published three consultations in relation to MiCA. Consultations include (i) draft Guidelines on internal governance arrangement for issuers of asset-referenced tokens (ii) draft technical standards on the procedure for the approval of white papers of asset-reference tokens issued by credit institutions, and (iii) draft technical standards on governance arrangements of the remuneration policy, under MiCA.

20 October 2023: EBA and ESMA published a consultation paper on two draft Joint Guidelines covering suitability assessment of members of the management body, and suitability of shareholders and members with qualifying holdings of issuers of asset referenced tokens (ARTs) and of crypto-asset service provider (CASPs).

20 October 2023: Hong Kong SFC and HKMA published a joint circular on intermediaries’ virtual asset-related activities.

19 October 2023: US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced the proposal of new regulation to enhance transparency in convertible virtual currency mixing and combat terrorist financing.

19 October 2023: US Federal Deposit Insurance Corporation published its report on FDIC Strategies Related to Crypto-Asset Risks.

17 October 2023: Basel Committee on Banking Supervision published its consultation paper on disclosure of banks’ cryptoasset exposures.

17 October 2023: ESMA published its letter to President of the Economic and Financial Affairs Council and Council of the European Union on the effective application of the application of the MiCA Regulation. The letter calls for Member State to designate without delay the NCAs responsible for carrying out the functions and duties provided for in the MiCA Regulation, and invites Member States to consider reducing the duration of the grand-fathering clause to a maximum of twelve months.

17 October 2023: ESMA published its statement to crypto-asset market participants and NCAs to start preparing for the transition and implementation of MiCA.

17 October 2023: ESMA published a speech from its Chair Verena Ross on its data strategy for the EU.

17 October 2023: EU Council announced the adoption of a directive to boost cooperation between national taxation authorities (DAC8), mainly concerned with exchange of information on revenues from transactions in crypto-assets.

17 October 2023: ECB published its occasional paper on the future of DAOs in finance, which proposes that the establishment of regulatory frameworks on crypto- assets and crypto-asset services, such as the EU Markets in Crypto-Assets (MiCA) Regulation, may force DAOs to rethink their legal status, governance and operational models.

16 October 2023: Australian Treasury published its proposed paper on regulating digital asset platforms. The government intends to introduce a regulatory framework to address consumer harms in the crypto ecosystem while supporting innovation. Deadline for responses is 1 December 2023.

16 October 2023: Reserve Bank of Australia published a speech from Assistant Governor Brad Jones addressing a tokenised future for the Australian Financial System.

13 October 2023: G20 Finance Ministers and Central Bank Governors press release noted Ministers and Governors adopted the Roadmap proposed in the IMF-FSB synthesis paper on Crypto assets to achieve common goals of macro-economic and financial stability and to ensure effective, flexible, and coordinated implementation of the comprehensive policy framework for crypto assets.

13 October 2023: Californian Governor Gavin Newsom signed Assembly Bill 39 which establishes the Digital Financial Assets Law. Beginning July 1, 2025, this bill requires the Department of Financial Protection and Innovation (DFPI) to create a robust regulatory framework, including licensure and enforcement authority, for certain crypto activities. 

11 October 2023: France’s Autorité de Contrôle Prudentiel et de Résolution published a summary of its public consultation on a regulatory framework for DeFi.

11 October 2023: ESMA published two articles on DeFi, one on developments and risks in the EU market and another on a methodology for the categorisation of smart contracts. 

11 October 2023: The Securities and Markets Stakeholder Group published its advice to ESMA on its first consultation package for specifying technical standards under MiCA.

9 October 2023: FCA issued 146 alerts in first 24 hours of the UK’s new crypto marketing regime.

5 October 2023: ESMA published its second consultation on technical standards for MiCA. In addition, ESMA has made available a MiCA white papers Proof of Concept to allow market participants to familiarise themselves with Inline XBRL, illustrating a concrete application of the proposed format requirements included in the draft Implementing Technical Standard (ITS).

5 October 2023: ESMA published two studies on the EU DLT Pilot Regime. The studies reiterate (i) the benefits of the Digital Token Identifier to market stakeholders and (ii) its importance as an additional field for reporting DLT transactions.

5 October 2023: Basel Committee on Banking Supervision announced it will soon publish a consultation paper on a set of disclosure requirements related to banks’ cryptoasset exposures. These disclosures would complement the prudential standard for such exposures that was published in December 2022. 

5 October 2023: Canadian Securities Administrators announced interim terms and conditions that would apply to crypto asset trading platforms and the issuers of fiat-backed crypto assets if they wish to continue allowing Canadian clients to purchase or deposit these assets.

4 October 2023: BIS published its report on Project Atlas on mapping the world of decentralised finance.

4 October 2023: Qatar Financial Centre published its consultation paper on its Proposed Digital Assets Regulatory Rules Framework. Responses are due by 4 January 2024.

29 September 2023: IMF published its working paper on assessing macrofinancial risks from crypto assets.

29 September 2023: EBA published its response to the EU Commissions Call for Advice on significance criteria and supervisory fees under the Markets in Crypto-Assets Regulation.

28 September 2023: ESMA published its work programme for 2024, focusing on digital change and the green transition. Work includes the development of technical standards for MiCA and publication of the first annual report under the EU’s DLT Pilot Regime.

28 September 2023: US Representative Don Beyer (D-VA) announced the introduction of the Off-Chain Digital Commodity Transaction Reporting Act, legislation that would protect participants in the digital asset market by requiring trading platforms to report all transactions to a repository registered with the CFTC.