Stablecoins in the EU: What Has Changed?
The Markets in Crypto-Assets Regulation’s (MiCA) stablecoin regime has been live since June 2024. Since its enforcement, Titles III (ARTs) and IV (EMTs), as well as any public offering or admission to trading of these tokens in the EU, are now subject to a strict regulatory regime akin to the requirements applicable to financial instruments.
This blog provides a high-level overview of how MiCA classifies crypto assets, regulates EMTs and ARTs, as well as other notable updates.
The information provided here is a high-level summary of MiCA’s EMT and ART requirements. It does not constitute legal advice. For a full interpretation tailored to your organisation’s activities, you should consult a qualified MiCA legal expert.
Stablecoins Are No More under MiCA
Under MiCA, the term “stablecoin” does not have an official meaning. Instead, crypto assets have been defined as a digital representation of value or rights that can be electronically stored and transferred using DLT or similar technology.
Within this framework, MiCA distinguishes 3 main categories of crypto assets:
Electronic money tokens (EMTs): “a type of crypto asset that purports to maintain a stable value by referencing the value of one official currency.” [Article 3(1)(7)] (e.g. USDT).
Asset-referenced tokens (ARTs): “a type of crypto asset that is not an electronic 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.” [Article 3(1)(6)] (e.g. Tether Gold).
Other crypto assets: utility tokens and ‘other’ crypto assets that are neither EMTs nor ARTs, nor otherwise excluded from MiCA, such as BTC and ETH.
As of 30 June 2024, the provisions on EMTs and ARTs became applicable, triggering a significant shift for issuers operating in the EU.
Read Stablecoins Are No More: MiCA’s EMTs and ARTs Explained
How Will EMTs Function under MiCA?
Under MiCA, EMTs are supervised by the EBA, and only credit institutions or electronic money institutions are permitted to issue EMTs [Article 48]. This distinguishes EMTs from ARTs, whose issuers may include other EU-established legal persons.
To operate, EMT issuers must meet the following requirements:
the token must reference at least 1 official currency,
at least 30% of funds received must be held in a separate account with a credit institution, while the remainder must be invested in secure, low-risk, and highly liquid financial instruments with minimal market and credit risk [Article 54],
issuers must have redemption and recovery plans in place, which must be submitted to the competent authority [Article 55].
These rules align EMTs closely with traditional e-money frameworks while extending them to the digital asset environment.
Read The Ultimate Guide to MiCA's Electronic Money Tokens (EMTS) for an in-depth look at EMTs.
How Will ARTs Function under MiCA?
Under MiCA, only EU-established legal persons are allowed to issue ARTs. Supervision is split between ESMA, which oversees ARTs, and the EBA, which supervises all significant ARTs.
To operate, issuers must have a registered office within the European Union and submit a crypto-asset white paper to the competent authority as part of the authorisation process.
However, should the ARTs be exclusive to qualified investors or where the public offering is under EUR 5 million, this authorisation does not apply. In these cases, issuers are not required to undergo the full authorisation process; however, they must still submit a crypto-asset white paper that warns of the potential risks involved and notify the competent authorities before publicly releasing the ART.
Additionally, to be eligible to issue ARTs, the following requirements must be met:
issuers must maintain diversified, high-quality reserve assets,
a monitoring system must be established,
strong governance, conflict-of-interest management, fair marketing practices, and robust complaints handling must be ensured, and
supervisory requirements, which depend on whether the ART is deemed significant, must be adhered to.
Non-bank ART issuers must undergo a full authorisation process, including:
fit-and-proper assessments for management,
shareholder vetting,
governance and own-funds requirements,
establishment and management of a reserve of assets,
ongoing prudential oversight.
Once authorised, issuers benefit from EU passporting, enabling cross-border activity across all Member States. Credit institutions issuing ARTs do not need a second authorisation under MiCA, but must comply with notification and ongoing obligations.
Read The Ultimate Guide to MiCA's Asset-referenced Tokens (ARTs) for an in-depth look at ARTs and an understanding of what makes an asset significant.
What Else Has Changed Since 2022?
In 2022, 21 Analytics published its first blog on stablecoins under MiCA. Since then, MiCA has gone into effect (30 June 2024). Following its enforcement, any public offering or admission to trading EMTs and ARTs is subject to a strict regulatory regime. Key updates include:
Caps on Non-EU Currency Stablecoins
To preserve EU monetary sovereignty, MiCA restricts the issuance and use of non-EU-currency-referencing ARTs and EMTs. This policy was introduced in 2022 but is now enforceable. Now, all usage thresholds apply to non-EU currency EMTs.
ARTs referencing non-EU currencies are subject to strict caps, and non-EU currency tokens deemed “widely used” may face restrictions or prohibitions. The Council explicitly stated that non-euro ARTs used as a means of payment “will be constrained” to protect monetary sovereignty.
Algorithmic Stablecoins Are Effectively Excluded
MiCA does not ban algorithmic stablecoins outright, but makes compliance virtually impossible. For example, tokens must reference actual assets; algorithms cannot replace reserve backing; and tokens cannot be marketed as “stable” or “value-referencing” unless they are backed by assets.
Since the enforcement of EMT/ART began, algorithmic tokens have faced widespread delistings and rebrands in the EU.
Parting Thoughts
MiCA has reshaped the EU’s approach to stablecoins, replacing an informal market label with a formal regulatory framework centred on EMTs and ARTs. Since June 2024, issuers face stringent requirements covering governance, reserve management, authorisation, supervision, and cross-border activity. These rules aim to enhance consumer protection, reduce systemic risk, and preserve EU monetary sovereignty, while bringing much-needed clarity to the market.
For CASPs, issuers, and compliance teams, understanding the differences between EMTs and ARTs, as well as the obligations associated with each, is essential. As the regulatory landscape continues to evolve, staying informed and monitoring future guidance from ESMA and EBA will be crucial to navigating MiCA successfully.
To find out more about MiCA or the TFR, reach out to us today.
The information provided here is a high-level summary of MiCA’s EMT and ART requirements. It does not constitute legal advice. For a full interpretation tailored to your organisation’s activities, you should consult a qualified MiCA legal expert.
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