This post first appeared as Blog post at FIN LAW.
As early as June 30, 2024, Titles III and IV of the Markets in Crypto Assets Regulation (MiCA) legally effective in the European Union. From this date, issuers of asset-referenced tokens (ARTs) and e-money tokens (EMT) will require approval from BaFin or the supervisory authority responsible in their country of residence to issue corresponding tokens. But what types of tokens actually qualify as ART under MiCA?
While for electronic money tokens, the definition anchored in MiCA requires that the value of the token must be linked to the value of an official currency, interpreting the MiCA definition for asset-referenced tokens is much more difficult. According to this, those crypto assets should represent asset-referenced tokens that are not electronic money tokens and whose value stability should be maintained by reference to other values, rights or currencies or combinations thereof. What is particularly problematic about the definition is the requirement for value stability, because it remains unclear what specific requirements will have to be made for value stability.
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When does a token have stable value?
According to the definition in MiCA, the decisive factor for the qualification of a token as ART is the question of whether the token is intended to create value stability. Basically, many types of tokens could be described as asset-referencing, because assets of all kinds would be considered here. This could also include, for example, tokens that are used to digitally represent objects from the real world. Examples would be tokenized trading cards or other funglible collectibles.
However, the definition of asset-referenced tokens also requires that value stability should be maintained. Unfortunately, the MiCA does not contain any specification of the concept of value stability, so it is questionable when value stability in the required sense is given. In any case, it will not be sufficient in this context if the value of a token is simply linked to the value of an object in the real world. In such cases, the value of the token can always be determined based on the value of the reference item. However, the value cannot necessarily be described as stable.
Regulation for asset-referenced tokens targets parallel currencies
Historically, the regulation of both e-money tokens and asset-referenced tokens stems from the regulator’s intention to strictly regulate the creation of parallel currencies in token form. The reason for the inclusion of the regulations on ARTs and e-money tokens was the Metagroup’s now abandoned project to create the replacement currency “Diem”.
Taking this legislative goal into account, the value stability required in the definition for ARTs must at least be suitable for keeping the value of the tokens in question so stable that they can be used as a parallel currency. Nevertheless, the contours of the characteristic of value stability remain unclear. However, reliable interpretation assistance can be expected in the form of the technical regulatory standards on ARTs that are still to be developed by ESMA.
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