Asset referenced tokens

An e-money token references a single official currency, as EURC or EURAU reference the euro. An ART references several currencies, a commodity, other crypto assets or a mix, as 21 Analytics summarizes the MiCA definition. A gold token or a token tied to a basket of currencies is an ART. The page on e-money tokens covers the other category.

The line is not always obvious. DLA Piper describes how BaFin looked at the reserve of USDe from Ethena: the token references the US dollar, but its reserve held only crypto assets such as bitcoin and ether. BaFin treated USDe as an ART that needed an authorization and ordered Ethena GmbH to stop offering it to the public.

An issuer needs a registered office in the EU, an authorization from its national authority and an approved crypto-asset white paper. Credit institutions need no separate authorization, though the ART rules still apply to them. An offer only to qualified investors, or a public offer below 5 million euros, needs no authorization, but the white paper is still due.

The reserve must at least equal the tokens in circulation, sit apart from the issuer's own assets and stay with a custodian such as a credit institution or a CASP. Own funds are at least 350,000 euros or 2 percent of the average reserve, whichever is higher, according to the glossary from Spark. Holders can redeem at any time, and the issuer may pay no interest for holding the token.

MiCA steps in once an ART works as money. Article 23 of the MiCA regulation limits an ART that people use as a means of exchange within a single currency area: above an estimated 1 million transactions and 200 million euros per day, the issuer must stop issuing and present a plan to bring the use back below the threshold. Issuers with more than 100 million euros in issue report these figures every quarter under Article 22.

For a bank or a payment firm this is the main difference to an e-money token. A euro e-money token can grow into a payment instrument, while an ART that becomes popular for payments in the euro area runs into a hard stop. An ART that meets at least three of the significance criteria, which include more than 10 million holders and more than 5 billion euros in value, moves to supervision by the European Banking Authority.

Finance Loop is the meeting place for people at banks, payment firms and crypto firms who build or use stablecoins. Finance Loop is a partner of the Digital Euro Association and was a partner of the Digital Euro Conference. The Bybit EU x Circle Roadshow in Frankfurt had two panels on stablecoins, USDC and EURC.

An asset-referenced token is a crypto asset that keeps a stable value by referencing another value or right, or a combination of them, such as several currencies, gold or other crypto assets. A token that references one official currency is an e-money token instead.

A token that references gold or another commodity is an ART under MiCA. The issuer needs an authorization, a reserve that covers the tokens in circulation and an approved white paper.

MiCA bars the issuer from granting interest or any other benefit tied to how long a holder keeps the token, and the same ban applies to e-money tokens.