Tokenised deposits: what does the EBA report show?

On December 12th, 2024 the European Banking Authority (“EBA”) published a report to facilitate awareness of tokenised deposits, as well as assess their potential benefits and challenges (EBA/REP/2024/24). The purpose of the report is to promote convergence in the classification of tokenised deposits in contrast with electronic money tokens (EMTs) issued by credit institutions under the Markets in Crypto-Assets Regulation (MiCA).

What is asset tokenisation?

Tokenisation, in the context of financial assets, refers to the process of representing rights in a digital form, using distributed ledger technology (DLT) or similar technology.

Tokens can be represented directly on the DLT, or they can represent ‘off-chain’ assets. Relying on input from relevant authorities, the EBA presents in the report initial insights into the possible advantages and challenges associated with tokenized deposits, which could differ depending on their design features.

Tokenised deposits versus EMTs – what does the EBA report suggest?

The report establishes indicative characteristics that may be used to distinguish tokenised deposits from EMTs issued by credit institutions under MiCA.

Conclusions of the report are as follows:

• the tokenisation of deposits has the potential to offer some opportunities to make exchanges involving transfer of funds from on-chain deposit accounts more efficient, including through programmability functionalities. Some potential challenges, including in relation to regulatory classification, operational risks, and financial inclusion can also be identified. The development of tokenised deposits, and so of related benefits and challenges, as well as any regulatory or supervisory issues, deserves ongoing attention in the context of the continued digitalisation of the EU banking and payment sector,

• EBA encourages competent authorities to carry out regular market monitoring and knowledge exchange with regard to projects to tokenise deposits in their jurisdiction, by using a common template questionnaire developed by the EBA for use in the context of line supervision,

• The EBA will continue to monitor deposit tokenisation and will promote discussion between competent authorities at regular intervals. To this aim, the EBA will make available to competent authorities a questionnaire to facilitate market monitoring of projects by credit institutions to tokenise deposits.

Want to know how these changes may affect your business?

If you have questions, feel free to contact our office – our experts can help you understand the report and adapt to the upcoming changes.

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