This post first appeared as Blog post at FIN LAW.
In just over three months, the regulations of the Markets in Crypto Assets Regulation (MiCA) to asset-referenced tokens (ART) and e-money tokens (EMT). MiCA will then ensure strict rules for the creation and offering of so-called stablecoins in the EU. Issuers of stablecoins then have to fulfill numerous obligations that ensure the stability of the value of the stablecoins and provide investors with the highest level of security. This alone shows that the emission of ART in the EU will be a highly complex undertaking in the future.
In the case of asset-referenced tokens, the value stability of the tokens, as defined in MiCA, is derived from another value or right or a combination thereof. The reference value can therefore be put together very differently. As soon as the compilation leads to a stable value of the ART, the MiCA regulations must be observed by the issuer, but also by other types of providers such as trading platforms offering ART. But who will actually be allowed to issue asset-referenced tokens in the EU from June 30, 2024?
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Issuers of asset-referenced tokens (ART) require MiCA approval
Issuer status is central to the existence of stablecoins under the new regulation. Without an issuer – according to the approach of the MiCA regulator – there is no stablecoin. Therefore, from June 30, 2024 in Europe, the public offering of asset-referenced tokens will generally only be carried out by the issuer of the relevant ART itself. The same applies to an application for approval of an ART for trading. In addition, issuers of asset-referenced tokens must generally obtain approval under MiCA before they can begin the public offering of their ART.
The application for authorization is comprehensive and must include, among other things, a detailed business plan and detailed descriptions of the business organization of the future issuer. In addition, the management bodies must be professionally qualified and reliable and the owners of significant shareholdings must successfully complete an ownership control procedure. A detailed crypto white paper on the planned ART must also be created. However, if the future issuer is a credit institution, no application for approval as an issuer needs to be submitted. It is then sufficient for the credit institution to provide the responsible authority – in Germany, BaFin – with specific information about the project and compliance with the MiCA compliance requirements ninety days before the initial issue.
No MiCA approval for ART issuers in certain exceptional cases
MiCA does not impose an obligation to apply for authorization for issuers of asset-referenced tokens who have only issued ART with an average equivalent value of no more than 5,000,000 euros over a period of twelve months. In such cases, the regulator did not consider the strict regulations for issuers of asset-referenced tokens to be appropriate. There is also an exception for issuers of ART, which can only be held by qualified investors and the public offer of this ART is aimed exclusively at such qualified investors.
In these cases, MiCA assumes that investors have sufficient knowledge to be able to assess for themselves the professionalism of the issuer and the soundness of the asset-referenced tokens it issues. In both exceptional cases, however, the issuer must nevertheless prepare a crypto white paper in accordance with the MiCA regulations and submit it to the competent authority of its home member state.
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