MiCA is now applicable for e-money tokens and asset referenced tokens, next steps?

MiCA is now applicable for e-money tokens and asset referenced tokens, next steps?

The European Union’s Markets in Crypto-Assets Regulation (MiCA) has now entered into force, specifically covering e-money tokens and asset-referenced tokens. This regulation marks a significant milestone in the cryptocurrency landscape, providing a clear legal framework for these digital assets. 

With the implementation of MiCA, strict requirements are established for the issuance and supervision of these tokens, seeking to promote market security and consumer protection. Crucial next steps include the adaptation of issuers to the new regulations, effective oversight by regulatory authorities, and the continuous evaluation of MiCA’s impact on the crypto ecosystem to ensure its effectiveness and promote sustainable innovation.

MiCA introduces a specific definition for these two types of tokens: e-money tokens and asset-referenced tokens in its Article 3. 

• E-money tokens: a type of crypto-asset that, in order to maintain a stable value, refers to the value of an official currency. Or put another way, e-money tokens are a digital form of fiat money, designed to maintain a stable value by being backed by an official currency, such as the euro, and can be used as a means of payment similar to traditional money.
• Asset-referenced tokens, a type of crypto-asset that is not an electronic money token and that aims to maintain a stable value referenced to another security or right, or a combination of both, including one or more official currencies. That is, they are crypto assets whose value is pegged to a basket of assets, which can include fiat currencies, commodities, or even other cryptocurrencies, thus providing a more diversified and less volatile form of value.

These two figures have been developed by MiCA in its titles III and IV, which precisely had an early application of the rest of the provisions of the MiCA Regulation. What does the entry into application of these two titles mean? From June 30, issuers of this type of token must comply with the obligations imposed on them by MiCA, this implies:

Well, this means that as next steps and imminently , all issuers of these two token figures will have to comply, among others, with the following obligations:

Obligations of issuers of asset-referenced tokens

• It must be a legal person or company based in the European Union.
• You must be authorised under the Regulation in your home EU Member State or be a credit institution.
• They must publish a white paper, commonly known as  a whitepaper, which in turn must be approved by the competent national authority, in the case of Spain.They will also be liable for any damages caused if they provide incorrect information in the Whitepaper.
• Issuers shall redeem asset-referenced tokens at the request of holders at the market value of the referenced assets or by delivering the referenced assets.
• Like all other subjects of the financial markets, they will be required to act honestly, fairly and professionally, and to communicate in a fair, clear and non-misleading manner.
• The obligation to act in the best interests of the holders of the tokens and to treat them on an equal footing is imposed.
• Issuers must also establish effective and transparent procedures for the prompt, fair and consistent management of complaints.
• Identify, prevent, manage, and disclose all  potential conflicts of interest.
• Issuers are also required to have a reserve of assets and own funds, in such a way as to cover liabilities to holders and have own funds equivalent to the greater of the following amounts: €350,000, 2% of the average amount of reserve assets, or a quarter of the fixed overheads of the previous year.
• In addition, they must establish recovery and reimbursement plans for their use if they do not meet their obligations.

Obligations of issuers of electronic money tokens

• Be authorised as a credit or electronic money institution.
• They must also comply with the publication of a Whitepaper and will be responsible for what it stipulates.
• Comply with the rules regarding issuance, reimbursement and marketing.
• Issue the tokens at their face value upon receipt of the funds and redeem the tokens at the request of the holder at any time and at their face value.
• Obligation to invest the funds received in safe and low-risk assets in the same currency, depositing them in an account independent of a credit institution.
• Establish recovery and reimbursement plans for use if they do not meet their obligations.

MiCA provides a solid legal framework that seeks to protect consumers and promote market stability. The requirements of transparency, professional conduct, management of conflicts of interest and responsibility for information are fundamental pillars to generate trust. In addition, the classification of “significant” tokens and additional supervision by the European Banking Authority reinforce the EU’s commitment to protecting the financial market and its participants. 

If you have a project in this environment, at Letslaw we can help you comply with the new MiCA Regulation. Now we only have to wait and see how the different players adapt to these requirements and if regulation finally helps to evolve the market in Europe or if, on the contrary, it slows it down.