MiCA’s Stablecoin Regime: Key Differences Between ARTs and EMTs

In
the
evolving
landscape
of
cryptocurrency
regulation,
the
European
Union’s
Markets
in
Crypto-Assets
(MiCA)
framework
has
introduced
significant
guidelines
for
stablecoin
issuers.
According
to

Chainalysis,
the
MiCA
regime
distinguishes
between
two
types
of
stablecoins:
E-money
Tokens
(EMTs)
and
Asset-Referenced
Tokens
(ARTs),
each
with
specific
regulatory
requirements
and
implications.

Stablecoins
in
the
EU

Stablecoins
have
become
a
pivotal
use
case
in
the
digital
asset
markets.
Circle,
the
issuer
of
USDC
and
EUROC,
headquartered
in
Paris,
stands
as
the
first
and
currently
only
MiCA-licensed
issuer
of
EMTs
in
Europe.
Data
from
2023
shows
substantial
on-chain
stablecoin
inflows
and
outflows
to
and
from
the
EU,
highlighting
the
significant
role
these
assets
play
in
the
financial
ecosystem.

EMTs
vs.
ARTs

Under
MiCA,
both
EMT
and
ART
issuers
must
submit
a
detailed
whitepaper
for
regulatory
approval,
covering
aspects
such
as
issuer
information,
token
specifics,
reserve
asset
management,
and
associated
risks.
Both
are
subject
to
prudential
rules,
governance
requirements,
and
marketing
regulations.
However,
they
differ
fundamentally
in
their
nature
and
regulatory
treatment.

EMTs

EMTs
can
only
be
issued
by
authorized
e-money
institutions
(EMIs)
and
credit
institutions
(CIs).
These
tokens
are
issued
at
par
value
upon
receipt
of
funds,
and
holders
have
a
direct
claim
against
the
issuer
for
redemption
at
any
time
without
fees.
EMTs
are
considered
both
a
crypto
asset
and
e-money,
making
them
legally
equivalent
to
funds
usable
as
payment
means.

ARTs

ARTs,
on
the
other
hand,
are
a
novel
exchange
instrument,
not
regarded
as
funds
and
thus
not
usable
as
a
payment
means.
ART
holders
can
redeem
their
tokens
at
market
value
or
receive
the
referenced
assets.
ART
issuers
face
additional
requirements,
including
issuance
reporting,
public
disclosures,
and
mandatory
audits.
These
measures
aim
to
prevent
ARTs
from
becoming
overly
dominant
in
the
market.

Reporting
and
Regulatory
Requirements

MiCA
mandates
comprehensive
reporting
for
ARTs
and
non-EU
currency-denominated
EMTs,
particularly
for
issuers
with
global
issuance
values
exceeding
EUR
100
million.
These
reports
must
include
details
on
underlying
assets,
transaction
volumes,
and
holder
demographics.
The
European
Banking
Authority
(EBA)
has
outlined
specific
reporting
standards
to
assist
regulators
in
market
oversight
and
risk
mitigation.

Issuance
Restrictions

MiCA
imposes
issuance
restrictions
on
ARTs
and
non-EU
currency-denominated
EMTs
to
prevent
market
saturation.
Issuers
must
halt
token
issuance
if
they
exceed
a
specified
transaction
value
or
volume
within
the
EU,
and
submit
a
compliance
plan
to
their
national
regulator.

Significant
ARTs
and
EMTs

Tokens
classified
as
significant
under
MiCA
face
stricter
regulations
due
to
their
potential
impact
on
financial
stability.
Criteria
for
significance
include
the
number
of
holders,
transaction
volumes,
and
market
capitalization.
Significant
tokens
are
subject
to
enhanced
oversight
and
higher
capital
requirements.

Opportunities
for
Ecosystem
Monitoring

MiCA’s
framework
enables
detailed
monitoring
of
the
crypto
ecosystem,
offering
transparency
and
insights
into
token
usage
and
ownership
patterns.
This
data
supports
both
issuers
and
regulators
in
ensuring
compliance
and
mitigating
risks
associated
with
illicit
activities.

This
material
is
for
informational
purposes
only
and
does
not
constitute
legal,
tax,
financial,
or
investment
advice.

Image
source:
Shutterstock