MiCA Stablecoin Rules: ART and EMT Regulation Explained

MiCA Stablecoin Rules: How the EU Regulates Asset-Referenced and E-Money Tokens

MiCA’s stablecoin provisions — Titles III and IV of the regulation — represent the most detailed stablecoin regulatory framework in the world. They were the first provisions of the broader MiCA regulation to take effect (June 30, 2024), reflecting the EU’s assessment that stablecoins pose the most immediate systemic risk among crypto-assets due to their potential to function as a parallel monetary system.

The framework distinguishes between two categories of stablecoins: asset-referenced tokens (ARTs), which reference multiple assets or currencies, and e-money tokens (EMTs), which reference a single fiat currency. Each category has distinct requirements for authorization, reserves, redemption, and governance — and both are subject to enhanced oversight when designated as “significant” by the European Banking Authority.

Asset-Referenced Tokens (ARTs)

Definition and Scope

An asset-referenced token is a crypto-asset that is not an EMT and that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies. This broad definition captures:

• Multi-currency stablecoins (e.g., a token backed by a basket of EUR, USD, and GBP)
• Commodity-backed tokens (e.g., gold-backed tokens, though the classification depends on whether the token is primarily used as a medium of exchange)
• Hybrid-backed tokens (e.g., a token backed by a combination of currencies and crypto-assets)
• Any token that maintains price stability through reference to external values

Authorization Requirements

ART issuers must obtain authorization from their home member state’s NCA before offering ARTs to the public or seeking admission to trading. The authorization application must include:

• A detailed white paper meeting MiCA content requirements
• A description of the governance arrangements
• A reserve management policy
• A custody policy for the reserve assets
• An investment policy for the reserve assets
• A description of the stabilization mechanism
• A business continuity plan
• Internal control mechanisms
• An AML/CFT compliance program

Reserve Asset Requirements

ART issuers must maintain a reserve of assets that:

• Covers the value of outstanding ARTs at all times: The reserve must be at least equal to the aggregate claim value of all outstanding ARTs
• Composition requirements: Reserve assets must be composed of:
  • Cash deposits with credit institutions (maximum 30% of the reserve)
  • Highly liquid financial instruments with minimal market and credit risk
  • The assets or rights referenced by the ART
• Segregation: Reserve assets must be legally and operationally segregated from the issuer’s own assets
• No rehypothecation: Reserve assets cannot be encumbered or pledged
• Third-party custody: Reserve assets must be entrusted to credit institutions or authorized CASPs providing custody, with a custody policy ensuring diversification across multiple custodians for reserves exceeding certain thresholds

Own Funds Requirements

ART issuers must maintain own funds equal to at least the higher of:

• EUR 350,000
• 2% of the average amount of the reserve assets (calculated over the previous 6 months)

For significant ARTs, the own funds requirement increases to 3% of the average reserve assets.

Redemption Rights

ART holders must have a permanent right of redemption against the issuer:

• Redemption at the market value of the referenced assets, OR at the delivery of the referenced assets
• Redemption requests must be processed promptly
• The issuer may charge a reasonable fee for redemption, proportionate to actual costs
• The white paper must clearly describe the redemption policy

Restrictions on ARTs

MiCA imposes significant restrictions on ARTs when they become widely used as a means of payment:

• If an ART is used as a means of payment in a volume exceeding 1 million transactions per day or EUR 200 million in transaction value per day (within a single currency area), the issuer must:
  • Cease issuing additional ARTs
  • Present a plan to reduce usage below the thresholds
  • Submit regular reports to the competent authority

These restrictions reflect the EU’s concern about monetary sovereignty — ARTs that function as parallel currencies could undermine the ECB’s monetary policy.

E-Money Tokens (EMTs)

Definition and Scope

An e-money token is a crypto-asset that purports to maintain a stable value by referencing the value of one official currency. EMTs are the digital asset equivalent of electronic money and include:

• Single-currency stablecoins (e.g., USDC referenced to EUR, Circle’s EURC)
• Tokenized bank deposits referenced to a single currency
• Any token that maintains a 1:1 peg to a single fiat currency

Authorization Requirements

EMTs can only be issued by:

1. Credit institutions authorized under the Capital Requirements Directive (CRD)
2. Electronic money institutions authorized under the Electronic Money Directive (EMD2)

No separate MiCA authorization is required for EMT issuance beyond the credit institution or e-money institution authorization. However, EMT issuers must:

• Publish and notify a white paper to the NCA at least 40 working days before the EMT is offered to the public
• Comply with MiCA-specific requirements for EMT governance, reserves, and redemption

Reserve and Funds Safeguarding

EMT issuers must safeguard funds received in exchange for EMTs by either:

1. Depositing the funds in a separate account at a credit institution
2. Investing the funds in secure, low-risk assets as defined in EMD2

At least 30% of funds received must always be deposited in separate accounts at credit institutions (diversified across multiple credit institutions if the total exceeds certain thresholds).

Redemption Rights

EMT holders have a statutory right to redeem the EMT at par value at any time:

• Redemption is at the nominal value, NOT market value — the holder receives exactly 1 EUR for each EUR-denominated EMT
• The issuer may not charge a fee for redemption (a significant difference from ARTs)
• Redemption must be in the official currency referenced by the EMT or through a credit transfer
• The right of redemption applies even after the EMT is transferred to a secondary holder

Prohibition on Interest

EMT issuers may NOT:

• Grant interest or any benefit related to the length of time a holder holds the EMT
• This prohibition prevents EMTs from functioning as deposit accounts, which would require a full banking license
• Third parties (such as exchanges or DeFi protocols) may offer returns on EMT holdings, but the issuer itself cannot

Significant Token Designation

Criteria for Significance

The EBA may designate an ART or EMT as “significant” based on criteria including:

1. Customer base: Number of holders exceeding 10 million
2. Market capitalization: Outstanding value exceeding EUR 5 billion
3. Transaction volume: Number and value of transactions exceeding 2.5 million transactions and EUR 500 million per day
4. Interconnectedness: Significance of cross-border activities and interconnectedness with the financial system
5. Issuer significance: The issuer provides other crypto-asset services or issues other crypto-assets

Enhanced Requirements for Significant Tokens

Significant ARTs and EMTs face:

• Enhanced own funds: 3% of average reserve assets (instead of 2% for ARTs)
• Liquidity stress testing: Regular stress testing of the reserve and redemption capacity
• Recovery plan: A detailed plan for restoring compliance if the reserve falls below requirements
• Interoperability requirements: Ensuring compatibility with other payment systems
• Direct EBA supervision: The EBA becomes the direct supervisor (instead of the national authority)
• Higher governance standards: Enhanced requirements for the management body

Voluntary Classification

Issuers may voluntarily request that their ART or EMT be classified as significant. This may be strategically beneficial for issuers that want to signal regulatory quality and institutional credibility.

Impact on Major Stablecoins in Europe

USDT (Tether)

Tether faces significant challenges under MiCA. As a non-EU entity, Tether would need to establish an authorized credit institution or e-money institution within the EU to continue offering USDT to European customers. Additionally, Tether’s reserve composition (which has historically included commercial paper and other non-qualifying assets) would need to meet MiCA’s strict requirements. Several EU exchanges have delisted or restricted USDT trading due to MiCA compliance concerns.

USDC (Circle)

Circle has been proactive in MiCA compliance, as highlighted in our CASP licensing guide, obtaining an EMI (Electronic Money Institution) license in France through its subsidiary Circle France. EURC (Circle’s euro-denominated stablecoin) is positioned as a MiCA-compliant EMT. Circle’s approach — establishing EU-licensed entities and complying with reserve requirements — demonstrates the compliance pathway for major stablecoin issuers.

Euro-Denominated Stablecoins

MiCA is expected to catalyze the growth of euro-denominated stablecoins, as EU-based issuers with EMI or credit institution authorization can offer compliant EMTs. Several European banks and fintechs have launched or announced euro stablecoins under the MiCA framework.

What This Means for Your Business

For stablecoin issuers: MiCA’s stablecoin provisions are the most detailed in any jurisdiction. If you issue a stablecoin used by EU customers, you must comply — and compliance requires either a credit institution or EMI authorization in the EU. Start the authorization process immediately if you have not already.

For exchanges listing stablecoins: Only list stablecoins whose issuers comply with MiCA. The risks of listing non-compliant stablecoins include regulatory enforcement, customer harm liability, and potential loss of your CASP authorization. Conduct due diligence on every stablecoin issuer’s MiCA compliance status.

For DeFi protocols using stablecoins: The availability of specific stablecoins in the EU market will change under MiCA. Protocols should ensure they support MiCA-compliant stablecoins and consider the regulatory implications of integrating non-compliant stablecoins.

For institutional participants: MiCA-compliant stablecoins — particularly those issued by authorized credit institutions — provide the regulatory certainty that institutional participants require. The framework creates a clear hierarchy of regulatory quality among stablecoins, enabling informed counterparty assessment. For a US-EU comparison, see the MiCA vs. US crypto regulation analysis.