4.3 Content of the redemption plan

The issuer should make sure that the redemption plan contains a clear and detailed description of the governance arrangements and processes covering its development, review and update as well as its execution. In particular, the redemption plan should:

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• i. indicate the member(s) of the management body or any person(s) within the organisational structure of the issuer responsible for the development, update and implementation of the redemption plan;
• ii. describe how the redemption plan is integrated into the internal control framework as referred to in the EBA Guidelines on the minimum content of the governance arrangements for issuers of ARTs⁹ or other relevant regulation applicable to issuers of EMTs;
• iii. describe the processes for the update or review of the plan in the case of material changes affecting the business or financial profile of the issuer or of the token(s) issued;
• iv. identify the critical activities to be kept operational for the implementation of the plan, and identify the person(s) responsible, either on the issuer side or within the third-party provider, in accordance with paragraphs 42-51;
• v. lay down the process for the adoption of the action of each phase to ensure the timely execution of the redemption plan upon the competent authority’s decision in accordance with Article 47(1) of Regulation (EU) 2023/1114; and
• vi. identify the contact person(s) who are in charge of communication with the token holders, with the competent authority(ies) and with the counterparties and/or with the public, and include those persons’ up-to-date contact details within the organisation of the issuer.

The redemption plan should duly reflect the impact of the designation of a temporary administrator when foreseen by the applicable law as per Article 47(2) of Regulation (EU) 2023/1114, including the consequence that the management body may not be in charge in full or in part of the implementation of the redemption plan.

Critical activities and contractual arrangements

The redemption plan should include a mapping of the critical activities that are necessary for the orderly implementation of the plan. Having regard to the issuer’s structural organisation, these may include internal functions of the issuers or functions provided by third parties. Based on the mapping, the redemption plan should lay down the list of such parties and outline the contractual terms in place.

Such mapping of the critical activities should include, where relevant, the issuer’s risk management function, the trading desk, the treasury or finance function, the relevant ICT functions and systems, the anti-money laundering (AML) function (where existing, depending on the type of issuer), the relationship with the custodian of the reserve of assets (where existing), the interaction with financial intermediaries (where necessary) to access secondary and repo

9 EBA/GL/2024/06. Available here: https://www.eba.europa.eu/sites/default/files/2024-06/611ef3d4-4d67-467f-bf0d-4c2b1dd0ef5e/Final%20report%20on%20draft%20Guidelines%20on%20internal%20governance%20of%20issuers%20of% 20ARTs.pdf. 20 markets for the liquidation of reserve assets, and the relationship with crypto-asset service providers (where needed) for the identification of token holders and the collection of outstanding tokens, or with payment service providers (where needed) to make payments to the token holders assessed as entitled to the redemption claim or for other related activities.

Issuers of ARTs which are not obliged entities under Directive 2015/849/EU¹⁰ should always explain in the redemption plan how they will involve intermediaries subject to that Directive so that these intermediaries:

• a) perform anti-money laundering and combating the financing of terrorism (AML/CFT) checks, including customer due diligence checks on the token holders that have submitted a redemption claim; and
• b) comply with their obligations under Regulation (EU) 2023/1113 (Transfer of Funds Regulation)¹¹ (see paragraphs 55 and 56 of these Guidelines) with respect to the transfer.

With regard to the critical activities within the issuer’s organisation, t he issuer should include in the redemption plan an overview of the relevant internal arrangements and processes concerning their functioning and operational continuity, including the key person(s) with up-to-date emergency contact details.

With regard to the critical activities provided by third parties, the redemption plan should include a list of all such third-party providers, the key contact persons within the issuer and the third party in charge of the contract with up-to-date emergency contact details.

The redemption plan should also provide an overview of the content of the contractual arrangements, and illustrate their adequacy, including avoidance of conflicts of interests, for the achievement of the timely and equitable operationalisation of the redemption plan. The issuer should also confirm that such contracts ensure continuity of performance if the redemption plan is activated.

With specific regard to the custodians of the reserve of assets and to the financial intermediaries (if any) tasked with the execution of the orders provided by the issuer for the liquidation of the reserve of assets, the contractual terms outlined in the redemption plan should duly reflect the objective that the proceeds from the liquidation of the reserve of assets are maximised for token holders, that best execution for the benefit of the token holders is ensured, and that undue economic harm to token holders is avoided.

10 Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC (OJ L 141, 5.6.2015, p. 73). 11 Regulation (EU) 2023/1113 of the European Parliament and of the Council of 31 May 2023 on information accompany-ing transfers of funds and certain crypto-assets and amending Directive (EU) 2015/849 (OJ L 150, 9.6.2023, p. 1).

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The list of third-party providers of critical activities and the contractual terms should be kept up to date by the issuer. Where relevant, contracts with the most significant third-party providers, including with the custodians, may be included as annexes to the redemption plan.

The overview of the contractual arrangements in place with third-party providers of critical activities should not prevent the issuer, if need be, from entering into contractual arrangements with any other required intermediaries at the moment of the activation of the redemption plan if this would contribute to a more effective implementation of the plan.

For that purpose, the redemption plan should at least clearly and operationally illustrate the selection process of the intermediaries, include a summary of proposed key contractual terms (such as tasks, timing or costs), and include a provisional term sheet as an annex to the redemption plan with a list of potential contractual partners with whom the issuer has engaged in some discussions/negotiations, as well as the selection criteria.

Process for the orderly redemption of token holders ’ claims

The issuer should make sure that the redemption plan lays down an orderly process for the redemption of the token holders ’ claims and that this is expressed and communicated in clear, accessible and comprehensible language in line with the guidance on the communication plan in the relevant section.

Such a process should be articulated in an operational manner and ensure that the token holders ’ redemption claims are paid in a timely manner, consistently with the requirements laid down in Article 47 of Regulation (EU) 2023/1114 and with the content of the crypto-asset white paper.

For this purpose, the redemption plan should describe the processes, the measures to identify and address money laundering and terrorism financing (ML/TF) risks applied by the issuer, and technical facilities adopted or envisaged to be in place to process:

• i. the identification of token holders and their entitlement to the redemption of the tokens;
• ii. the collection and permanent removal from circulation of redeemed tokens; and
• iii. the subsequent payout or delivery of assets to the token holders.

The description of the process should include reference to the compliance with applicable AML/CFT obligations. In particular, the redemption plan should:

• a) in respect of point (i) in paragraph 54 above, refer to the execution of the customer due diligence measures applicable in accordance with Directive 2015/849/EU to the token holders submitting the redemption claim;

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• b) in respect of point (iii) in paragraph 54 above, refer to the checks on the information accompanying the transfer of funds in accordance with Regulation (EU) 2023/1113, where applicable.

Competent authorities should exercise powers and perform tasks in relation to redemption as specified in these Guidelines in effective collaboration and exchange of information with authorities competent for the prevention of money laundering and combating of terrorist financing in accordance with Article 94(5) of that Regulation.

The redemption plan should clearly indicate the requirements and the minimum content of the redemption claim to be filed by the token holders, which should include:

• a) the identity and contact details of the individual holders (name, address, e-mail and/or phone number), indicating that any personal data would be treated in line with Regulation (EU) 2016/679;
• b) the evidence that the person that files the claim is the token holder and is therefore entitled to the redemption right for which the redemption claim is filed and the necessary warranties (if any) from the token holder´s side in accordance with the crypto-asset white paper;
• c) the information necessary to identify, assess and manage any risk of money laundering and terrorist financing including for the execution of the customer due diligence on token holders at redemption in accordance with Directive 2015/849/EU;
• d) the number of the relevant tokens held (including fractional holdings) and the public blockchain addresses covered by the wallet where the tokens are held (where applicable); and
• e) the indication of the token holder’s bank or payment account for the transfer of the funds in repayment of the redemption claim, or similar data required to deliver the assets for the redemption (where applicable). Such bank or payment accounts should preferably be held with EU credit or payment institutions and in any case should not be held in high-risk third countries for purposes of ML/TF risk as referred to in Article 9 of Directive 2015/849/EU.

The information listed above and included in the redemption claim should also permit the issuer to assess token holders’ entitlement to redemption , which is preliminary to permitting the collection and permanent removal of the redeemed tokens from circulation. For this purpose, the redemption plan should specify how the mechanism of delivery of the token against the payment will be implemented. Notably it should indicate how each redeemed token will be collected and subsequently taken out of circulation (or ‘ burnt ’ ) by the issuer and will no longer be able to be recirculated, exchanged, transferred or sold by any party.

The redemption plan should also clarify the relevant sources of information, and the envisaged actions and process that will be implemented or relied upon to reconcile the number of tokens claimed for redemption with the number of outstanding tokens.

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The redemption plan should include all relevant steps, actions and processes to develop the distribution plan to repay the token holders that have submitted a redemption claim that has been positively assessed.

Communication plan

The redemption plan should include a communication plan to be activated without delay upon the adoption of the competent authority’s decision to trigger the implementation of the redemption plan in accordance with Article 47(1) of Regulation (EU) 2023/1114.

The communication plan should include at least the following:

• a) the draft public notice to be communicated to the public; and
• b) the draft communication notices with the third-party providers of critical activities to be contacted immediately upon the activation of the redemption plan. Where communication notices have been agreed upon in the relevant contracts, they should be annexed to the redemption plan.

The issuer should ensure consistency of the communication plan for redemption of the token holders with other existing communication plans.

The draft public notice should be developed in order to inform the token holders of the activation of the redemption plan upon the competent authority’s decision with a view to redeem ing the tokens in an orderly, timely and equitable manner without imposing undue economic harm and in accordance with the terms set out in the crypto-asset white paper.

With a view to reaching the general public and the maximum number of token holders, the redemption plan should indicate the media channels where the notice should be published. In doing so, the issuer should privilege those normally used by the issuer to communicate to the public and to the market and to advertise its products and services.

The draft public notice should describe in clear and non-technical language the main steps of the redemption process and the actions that token holders are expected to undertake within the indicated timeframe to have their token redeemed.

For these purposes the draft public notice should include at least:

• a) the exact date and time when the redemption plan has been activated based on a decision of the competent authority;
• b) the minimum content of the redemption claim as set out in paragraph 56 of these Guidelines;
• c) the timeframe, as of the publication of such a notice, within which the token holders are required to file their redemption claim with the issuer or (where applicable) the third-party service providers, in accordance with what is indicated in the white paper; and 24
• d) the modality, technical support and location where the token holders should file their redemption claim, e.g. the exact portal of the issuer or – where applicable – of a third party. The solution(s) adopted should not discriminate against token holders, e.g. because of their place of residence.

Issuance of the same ART or EMT by multiple issuers

When an ART is issued by multiple issuers, or when a significant EMT is issued by multiple issuers other than credit institutions, Regulation (EU) 2023/1114 provides that a single reserve of assets has to be set up to ensure a proper stabilisation mechanism of the token.

In the light of this, the redemption plan should be articulated in two sections: the first common to all issuers and agreed upon by all issuers, the second specific to each issuer.

Issuers should coordinate to develop and agree on the common section of the redemption plan, which should contain at least the following parts:

• i. the general principles and objectives governing the redemption plan as stated in the ‘ General principles and objectives of the redemption plan’ section of these Guidelines;
• ii. the ‘ Critical activities and contractual arrangements ’ section of these Guidelines with a view to identifying the critical activities under the control of which issuer should be operational for the effective implementation of the common redemption plan;
• iii. the ‘ Process for the orderly redemption of token holders’ claims’ section ;
• iv. the ‘ Communication plan ’ section ;
• v. the effective coordination between the issuers for the development, review and update of the redemption plan;
• vi. the effective coordination between the issuers for the orderly implementation of the plan upon its activation by decision of the competent authority; and
• vii. the commitment of all issuers to fully and faithfully comply with the terms of the redemption plan commonly agreed upon.

To ensure proper coordination, the issuers in the redemption plan should appoint one of them as coordinator without prejudice to the respective accountability of each issuer. The latter could be selected having regard to the comparative experience of the different issuers in the business and the level of maturity of their internal organisation, to the role in the interaction with the custodians and other third-party providers or intermediaries, and to the materiality of their participation in the issuance. Coordination tasks could include the development, review and update of the redemption plan, the implementation of the section on the communication plan, and the coordination of the management and execution of the redemption plan.

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The second section of the redemption plan should be specifically tailored to the internal organisation of each issuer. In particular, issuers should lay down appropriate measures aimed at ensuring the application of:

• i. the ‘ Governance principles’ section of these Guidelines; and
• ii. the ‘ Critical activities and contractual arrangements ’ section , having regard to the critical activities within the issuer ’s organisation or provided by third parties that need to be operational for the effective implementation of the redemption plan.

Competent authorities of each issuer participating in the issuance should in timely fashion consult each other and cooperate on the assessment of the redemption plan submitted by the issuers.

Competent authorities should consult each other and cooperate to assess whether any grounds for triggering the redemption plan are met. Competent authorities should avoid activating the redemption plan whenever the adverse effects on the outstanding ART or EMT deriving from the inability or likely inability of one issuer to fulfil its obligations are remedied without delay by one or more other issuers, in a manner that avoids a negative impact on the confidence of the token holders, on the rights of the token holders or on the stability of the markets.

Interaction of the redemption plan with other proceedings

The issuer should take into account that, whilst the recovery plan, developed in accordance with Article 46 of Regulation (EU) 2023/1114, and the redemption plan are two separate documents addressing two different phases and situations of the issuer’s potential crisis, they should be consistent in particular as regards internal governance and risk management arrangements, processes and identification of IT systems and critical activities.

When the issuer is a credit institution or an entity within the scope of application of Directive 2014/59/EU¹² or is a central counterparty subject to Regulation (EU) 2021/23¹³ , the issuer should develop the redemption plan consistently with its resolution plan and resolvability requirements. To this end, the issuer should take into account the entity’s resolution strategy, the identified critical functions and service level arrangements that are instrumental to the entity’s operational continuity, and should endeavour to ensure smooth operation of the resolution strategy and of the redemption plan at the same time.

12 Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council (OJ L 173, 12.6.2014,

• p. 190).

13 Regulation (EU) 2021/23 of the European Parliament and of the Council of 16 December 2020 on a framework for the recovery and resolution of central counterparties and amending Regulations (EU) No 1095/2010, (EU) No 648/2012, (EU) No 600/2014, (EU) No 806/2014 and (EU) 2015/2365 and Directives 2002/47/EC, 2004/25/EC, 2007/36/EC, 2014/59/EU and (EU) 2017/1132 (OJ L 22, 22.1.2021, p. 1). 26

In the event that the actions, contractual arrangements, procedures and systems envisaged by the issuer in the redemption p lan would be likely to have any adverse impact on the entity’s resolvability, the issuer should bring them to the attention of the resolution authority in a note as an annex to the redemption plan. This is without prejudice to the resolution authority ’s review of the redemption plan having regard to the entity’s resolvability and to its power to address recommendations to the competent authority in accordance with Article 47(4) of Regulation (EU) 2023/1114.

Considering that the resolution plan is developed by the resolution authority and that the redemption plan is developed by the issuer, the two plans will be separate documents.