1. PAYMENTS
1.1 EBA updates to the Single Rulebook Q&A on PSD2
During the quarter, the European Banking Authority (EBA) updated its Single Rulebook Questions and Answers (Q&A) publication on Directive 2015/2366/EU (the Revised Payment Services Directive or PSD2) (the Single Rulebook Q&A).
The Q&As in respect of the following articles have been updated:
- Article 66 – Rules on access to payment account in the case of payment initiation services; and
- Article 97 – Authentication.
The updated Single Rulebook Q&A document can be accessed here.
1.2 European Parliament adopts first reading position on proposed PSD3 and PSR
On 23 April 2024, the European Parliament published a press release announcing that it had adopted its position at first reading on the proposed Directive on payment services and electronic money services in the internal market (PSD3) and the proposed Payment Services Regulation (PSR).
The Parliament voted to adopt the proposed texts of PSD3 and PSR that were set out in reports adopted by its Economic and Monetary Affairs Committee (ECON) in February 2024. ECON's press release summarises the focus of PSR and PSD3 as follows:
- Protection for payment service users from fraud and misuse of data;
- Transparency of fees and charges for payment services;
- Creating a level playing field between banks and non-bank payment service providers; and
- Provisions to improve access to cash, especially in remote or rural areas.
The texts of the reports were published in March 2024.
The Parliament has closed the first reading without agreement with the Council of the EU. It expects that negotiations between Parliament and Council will begin after the Parliamentary elections to be held in June 2024.
A copy of the press release can be viewed here.
1.3 National Payments Strategy: Summary Report on public consultation
On 24 April 2024, then Minister for Finance Michael McGrath published a summary report of the responses to the recent public consultation which had sought the public's view on a new National Payment Strategy ("NPS") for Ireland.
Some 85 formal responses to the consultation paper were received compared to the 28 submissions received in the preparation of the National Payments Plan in 2013. Topics covered include instant payments and the interplay of payment fraud, cash access and the acceptance of cash, and crypto-assets transactions within the payment ecosystem. Many stakeholders made it clear that payment fraud is an issue requiring action from many actors across the economy including big tech, financial services, postal services etc.
A copy of the summary of submissions from the public consultation on the National Payment Strategy can be viewed here.
2. DIGITAL FINANCE & CRYPTO-ASSETS
2.1 ESMA publishes TRV Risk Analysis - Crypto assets: Market structures and EU relevance
On 10 April 2024, The European Securities and Markets Authority (ESMA) published an article "Crypto assets: Market structures and EU relevance" which offers a detailed overview of patterns in crypto-asset secondary markets.
ESMA's article aims to improve specifically their understanding of crypto-asset trading and the extent to which it resembles or differs from traditional financial markets. ESMA also identifies current and potential areas of risk, not only to consumers but also to market order and financial stability. Finally, ESMA's analysis informs and supports the implementation of Regulation on markets in crypto assets ((EU) 2023/1114) (MiCA).
ESMA observes that the market concentration among exchanges has increased over time and around 55% of transactions are executed on crypto exchanges that hold an EU VASP license. However, most of those transactions are likely to occur outside of the EU according to ESMA. It notes that euro plays only a minor role in the market's on- and off-rap transactions. The ESMA review also notes that liquidity in the market can vary widely with the largest exchanges typically having higher liquidity, and that, unsurprisingly, liquidity is significantly better for the most-traded crypto-assets.
ESMA says it will continue to monitor crypto-assets, the risks they pose to consumers and their implications for traditional financial markets.
The article can be accessed here.
2.2 EBA issues final reports containing three sets of final draft RTS and one set of final draft ITS under MiCA
On 7 May 2024, the EBA published reports containing three sets of final draft regulatory technical standards (RTS) and the final draft implementing technical standards (ITS) under MiCA:
- The final report on draft RTS on information for application
for authorisation to offer to the public and to seek admission to
trading of asset-referenced tokens (ARTs) and
draft ITS on standard forms, templates and procedures for the
information to be included in the application under Article 18(6)
and (7) of MiCA (EBA/RTS/2024/03 / EBA/ITS/2024/03).
The final report on EBA/RTS/2024/03 / EBA/ITS/2024/03 can be accessed here.
- The final report on draft RTS on the detailed content of
information necessary to carry out the assessment of a proposed
acquisition of qualifying holdings in issuers of asset-referenced
tokens under Article 42(4) of MiCA (EBA/RTS/2024/04).
The final report on EBA/RTS/2024/04 can be accessed here.
- The final report on draft RTS on the approval process for white
papers for ARTs issued by credit institutions under Article 17(8)
of MiCA (EBA/RTS/2024/05).
The final report EBA/RTS/2024/05 can be accessed here.
In a related press release, the EBA explains that these technical standards are key to regulate access to the European Union (EU) market by issuers of ARTs and persons intending to exercise significant influence on these undertakings through the acquisition of qualifying holdings.
The EBA published consultations on initial draft versions of these RTS and ITS in July and October 2023. The press release notes that following the consultation process, some recitals referencing the obligation to comply with the privacy regime have been added to both the final draft RTS on information for authorisation and the final draft RTS on information for notification of proposed acquisition of qualifying holdings.
The EBA will next submit the final draft RTS to the European Commission for endorsement, they will then be subject to scrutiny by the European Parliament and the Council of the EU before being published in the Official Journal of the EU (OJ). The EBA will also submit the final draft ITS to the Commission for endorsement and publication in the OJ.
The EBA press release can be accessed here.
2.3 ESMA and European Commission provide updates on the implementation of the DLT Pilot Regime
On 7 May 2024, the European Commission published a letter (dated 3 May 2024) sent by the European Commissioner for Financial Services, Financial Stability and Capital Markets Union (CMU), Mairead McGuinness, to Verena Ross, ESMA Chair, on implementation of the Regulation on a pilot regime for market infrastructures based on distributed ledger technology (DLT) ((EU) 2022/858) (DLTR or DLT Pilot Regime Regulation).
This letter is a response to a letter received from Ms. Ross in April 2024 explaining that ESMA does not intent to publish an annual interim report in accordance with Article 15 of the DLTR as no DLT market infrastructures have been authorised, and setting out some challenges related to the implementation of the DLT Pilot Regime.
In the European Commission letter Ms McGuinness clarifies that there is no expiration date for the DLT Pilot Regime and that the Commission remains fully committed to the DLT Pilot Regime.
A copy of the European Commission letter of 3 May 2024 may be accessed here.
A copy of the ESMA letter of 3 April 2024 may be accessed here.
To view the full article, click here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.