MiCAR defines crypto-assets as a digital representation of value or rights which may be transferred and stored electronically using distributed ledger technology or similar technology (point 2 of Article 3(1) of MiCAR).

MiCAR does not apply to crypto-assets which are classified under Article 2(4) of MiCAR as follows:

1. financial instruments as defined in point 15 of Article 4(1) of Directive 2014/65/EU (MiFID 2);
2. electronic money (e-money) as defined in point 2 of Article 2 of Directive 2009/110/EC (EMD 2), except where they qualify as electronic money tokens under MiCAR;
3. deposits as defined in point 3 of Article 2(1) of Directive 2014/49/EU (Deposit Guarantee Directive) of the European Parliament and of the Council;
4. structured deposits as defined in point 43 of Article 4(1) of Directive 2014/65/EU (MiFID 2);
5. securitisation as defined in point 1 of Article 2 of Regulation (EU) 2017/2402 (Securitisation Regulation) of the European Parliament and of the Council

MiCAR defines and provides requirements for the issuance and trading of the following crypto-assets:

• asset-referenced tokens (ARTs),
• money tokens (EMTs) and
• crypto-assets that are neither ARTs nor EMTs and also do not fall under the exemptions provided for in MiCAR (see question “Which crypto-assets do not fall under the scope of MiCAR?”).

An asset-referenced token (ART) is a type of crypto asset that is not an e-money token and that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies (point 6 of Article 3(1) of MiCAR).

An e-money token (EMT) is a type of crypto asset that purports to maintain a stable value by referencing the value of one official currency (point 7 of Article 3(1) of MiCAR).

For those ARTs that are not financial instruments as defined by currently applicable supervisory legislation, MiCAR stipulates authorisation requirements and ongoing issuer obligations. The offering of ARTs to the public and their admission to trading on a trading platform for crypto-assets generally requires authorisation by the competent supervisory authority (Article 16 in conjunction with Article 20 of MiCAR). Furthermore, the regulation stipulates that only legal entities that have a registered office in the European Union (EU) can be granted an authorisation. MiCAR also requires issuers to publish a white paper, which must first be notified to the competent authorities as part of the application for authorisation. If authorisation is granted, the white paper is deemed to be approved (Article 21(1) of MiCAR).

Under Article 16, the issuance of ARTs is exempted from the authorisation requirement if:

• over a period of 12 months, calculated at the end of each calendar day, the average outstanding amount of ARTs does not exceed EUR 5,000,000, or the equivalent amount in another currency;
• the offer to the public of the ARTs is solely addressed to qualified investors and the ARTs can only be held by such qualified investors.

Furthermore, MiCAR provides for simplified requirements in the case of credit institutions within the meaning of point 28 of Article 3(1) of MiCAR. Notwithstanding the exemptions from the authorisation requirement, issuers of ARTs must draw up a crypto asset white paper in accordance with Article 16(2) of MiCAR and notify this white paper to the competent authority of their home Member State for approval. The content and form of the white paper are governed by Article 19 of MiCAR.

MiCAR provides for a number of obligations and requirements for issuers of ARTs (Article 16 et seq. of MiCAR). In addition to various obligations regarding communication with clients, publication, marketing communications, complaint handling, disclosure, governance and business organisation, MiCAR stipulates that issuers of ARTs must hold a sufficient level of own funds, create a recovery plan and a redemption plan and hold a reserve in the amount of their commitments arising from the issuance of tokens. In addition, the Regulation stipulates how the reserve assets are to be held in custody and invested.

Where ARTs are classified as significant by the European Banking Authority (EBA) based on some of the criteria defined in Article 43 of MiCAR (size, volume, interconnectedness, etc.), issuers must fulfil additional obligations set out in Article 45 of MiCAR. In this case, the EBA becomes the supervisory authority responsible.

Authorisation to issue EMTs is not granted to just anyone or any company. No electronic money tokens are to be offered to the public in the EU or admitted to trading on a trading platform for crypto-assets unless the issuer of such EMTs

1. is authorised as a credit institution or e-money institution and
2. has notified a crypto asset white paper to the competent authority and published this crypto asset white paper in accordance with Article 51 of MiCAR.

It is thus not possible to apply for separate authorisation to issue EMTs; existing authorisation for credit institutions or e-money institutions constitutes the prerequisite for additionally issuing EMTs.

Since e-money tokens, as their name implies, are closely related to e-money, EMTs are explicitly to be regarded as e-money. In addition, EMT issuers are expected to comply with the provisions of the second E-Money Directive (EMD2) to a large extent, with only a few specific adjustments. Key aspects include the token holder’s right to the reimbursement of the EMTs at par value at any moment and compliance with the security requirements under EMD2.