CZECH REPUBLIC Law and Practice Contributed by: Stanislav Šimek, Vojtěch Mlynář and Jakub Dostál, BADOKH
large series, they may slide back within MiCA’s scope. Similarly, an NFT that represents rights in an underly - ing asset may do so in a manner that qualifies it as a financial instrument. 10.13 Stablecoins Stablecoins are regulated under MiCA, which estab - lishes EMTs and ARTs. EMTs reference a single official currency to stabilise their value. They may only be issued by licensed credit institutions or e-money institutions. Holders have a direct claim against the issuer for redemption in fiat currency. Issuers must maintain reserve assets cover - ing the full outstanding value, of which at least 30% must be held in deposits at a credit institution. The remainder may be invested in highly liquid, low-risk financial instruments with appropriate concentration limits. Paying interest to holders is prohibited. ARTs reference a basket of assets, currencies or com - modities. Issuers must obtain prior authorisation from the CNB, unless they are a credit institution or a de minimis exemption applies. Reserve assets must be segregated, held in safe custody and invested exclu - sively in highly liquid, low-risk financial instruments. Holders have a right of redemption against the issuer. Paying interest to holders is prohibited. In both cases, issuers must publish a white paper and notify it to the CNB prior to issuance. Issuers of EMTs/ARTs exceeding ten million holders or EUR5 billion in outstanding value, fall under enhanced direct supervision by the European Banking Authority (EBA). Algorithmic stablecoins that maintain their value sole - ly through algorithmic mechanisms, without backing reserve assets, are prohibited.
client may either grant access to their balance and transaction data, or authorise the service provider to initiate a payment transaction on their behalf. Banks must not create any obstacles to third-party provider access to payment accounts. In view of the continuing problems associated with the practical functioning of open banking, the forthcoming EU Payment Services Regulation will further strength - en these rules, directly addressing Europe’s structural dependence on non-European card schemes and supporting the development of a competitive domes - tic payment alternative. 11.2 Concerns Raised by Open Banking Open banking inherently involves the processing of personal financial data, making privacy and security a central concern. However, banks and technology providers operate within a tightly regulated framework. They are required to hold a licence from the CNB and must maintain robust organisational and technical security measures as a condition of that licence. The forthcoming new EU payment services framework (PSD3/PSR) will tighten these requirements further, introducing stricter standards for application program - ming interface (API) security. Fraud in financial services is primarily governed by the Criminal Code. Determination of fraud requires that a deliberate act of deception or concealment of material facts was committed, causing another person to act to their own detriment, resulting in damage to property. In the world of financial services, fraud increasingly manifests through sophisticated digital methods. Current trends monitored by the CNB and the police show that the prevalent tactics involve phishing, smishing and vishing. These methods create a false sense of legitimacy, with fraudsters mimicking the 12. Fraud 12.1 Elements of Fraud
11. Open Banking 11.1 Regulation of Open Banking
Banks are obliged to grant third parties who are author - ised to provide payment services access to a client’s payment account, subject to the client’s consent. The
212 CHAMBERS.COM
Powered by FlippingBook