Reserve reporting for asset-referenced and electronic money tokens.

The reserve obligation

Article 36 of Regulation (EU) 2023/1114 requires issuers of asset-referenced tokens to constitute and at all times maintain a reserve of assets, composed and managed so that the risks associated with the referenced assets are covered and redemption rights can be met. Two structural rules sit alongside it: issuance and redemption must always be matched by a corresponding increase or decrease in the reserve, and an issuer offering more than one asset-referenced token maintains and manages a separate reserve pool for each. Where different issuers offer the same token, one reserve is maintained for it.

Electronic money tokens are governed by Title IV, with their own composition requirements. The reserve concept is the same; the constraints on what it may hold differ.

Composition

For asset-referenced tokens the reserve is required to be composed of assets with minimal market, credit and concentration risk and high liquidity, so that redemption can be met without a fire sale. For electronic money tokens the composition rules are tighter, with a defined minimum proportion required to be held as deposits with credit institutions and the remainder in highly liquid, low-risk instruments, and a higher minimum applying to tokens designated as significant.

Own funds sit alongside the reserve rather than within it: issuers of asset-referenced tokens are subject to their own funds requirement under Article 35, expressed as the higher of a fixed floor and a proportion of the average reserve. A reserve that is adequate does not discharge the own funds obligation.

Segregation and custody

The reserve must be legally segregated from the issuer’s estate and from the reserves of other tokens, in the interests of holders, so that the issuer’s creditors have no recourse to it — particularly in insolvency. It must also be operationally segregated, which is a systems and process question rather than a legal one, and it is held in custody under a custody policy by a qualifying custodian.

The reporting consequence is that evidence has to exist at two levels: the legal arrangements that establish segregation, and the operational records showing it was maintained continuously rather than at month end.

The public disclosure

Article 30 requires issuers of asset-referenced tokens to disclose publicly the amount of tokens in circulation and the value and composition of the reserve of assets, updated at least monthly, together with the audit report summary and the full audit report as soon as available.

This is a public statement of solvency for the token. It is read by holders, counterparties and supervisors, and it is the number against which every other record is checked.

The operating model behind the number

1. One source for tokens in circulation. Issuance and redemption events, reconciled to on-chain supply, with a documented treatment for burned, locked and unclaimed tokens.
2. Reserve valuation on a fixed basis and a fixed timing convention, applied identically each period and recorded with the figure.
3. Matching evidenced continuously. The obligation is that issuance and redemption are always matched, so the control is a continuous reconciliation with an exception process, not a month-end comparison.
4. Custody records structured for review, so a supervisor can trace a disclosed composition figure to the holdings behind it.
5. Documented exception handling for mismatches and late adjustments — the absence of any recorded exception over a long period is itself a finding.
6. One dataset, several outputs. The public disclosure, the supervisory reporting and the audit evidence should be different views of the same figures, not three preparations.

What a supervisor will ask

• Can you evidence legal and operational segregation, separately?
• Can you show how a specific redemption event moved the reserve?
• Can you produce the path behind one disclosed composition figure, quickly?
• Where the reserve and tokens in circulation diverged intraperiod, what happened and who was told?
• For multiple tokens, can you demonstrate the pools were managed separately rather than reported separately?

REGREP is an independent software provider. This record explains a reporting framework in plain language and is not legal, tax or regulatory advice. Confirm scope, thresholds and submission dates with your competent authority before you file.