Types of crypto assets regulated by MiCA

The MiCA (Markets in Crypto-Assets) Regulation is the first European Union legal act that comprehensively regulates the rights and obligations of issuers and service providers related to crypto-assets. The aim of MiCA is to ensure a high level of investor protection, particularly for retail investors, to increase the transparency of the crypto-asset market and to harmonise the rules governing this market across the European Union. Thanks to MiCA, the crypto-asset market is gaining clear rules, which promotes investment security and the development of the industry.

Types of crypto assets regulated by MiCA

Types of crypto assets regulated by MiCA include digital representations of value or rights stored electronically using distributed ledger technology (DLT) or similar technologies.

The MiCA Regulation distinguishes between three main types of crypto assets, which differ in terms of their characteristics and level of risk. This distinction is crucial as it determines the regulatory obligations of companies issuing crypto assets or offering crypto assets to investors. Thanks to the clear definitions in MiCA, companies can align their activities with legal requirements and investors are better protected in the crypto asset market.

Categories of crypto assets:

Asset-Referenced Tokens (ART)

Asset-Referenced Tokens (ART) are cryptoassets whose purpose is to maintain a stable value by being linked to another value, right or combination thereof, including at least one fiat currency.

ARTs are not considered electronic money tokens (EMTs). The key difference is that the value of an ART cannot be determined solely by a single fiat currency. If a cryptoasset bases its value on more than one measure or on a combination of assets, including at least one official currency, it will be classified as an ART.

The issuer of an ART token is required to enable its redemption, either by paying cash other than electronic money corresponding to the market value of the assets associated with the token, or by delivering those assets.

• MiCA allows some flexibility in determining the ART value measure, but redemption must be possible in cash or through the delivery of the underlying asset.
• In particular, the issuer should always ensure that redemption is possible in cash (other than electronic money) denominated in the same official currency that was accepted at the time of sale of the token.

E-Money Tokens (EMT)

EMT tokens are linked to a single official currency (e.g. the euro) and serve as a digital equivalent of traditional money. Their key feature is a guaranteed redemption at face value.

Only credit institutions or electronic money institutions may issue e-money tokens. These entities must ensure that token holders can exercise their redemption right at any time, at face value and in the currency to which the token is linked.

An example of such a token is stablecoins linked to the euro, which aim to maintain a 1:1 parity with the euro. Under MiCA, issuers of such tokens will have to meet strict regulatory requirements, including having the appropriate legal status and ensuring a real possibility of redemption of tokens at their nominal value.

Other crypto assets

This category includes cryptocurrencies that are not classified as asset-backed tokens, such as Bitcoin (BTC) and Ethereum (ETH), which do not have a value stabilisation mechanism. This group also includes utility tokens, which provide access to services or goods offered by the issuer.

This category also includes utility tokens, which give holders access to specific services or goods offered by the issuer. Such a token can be compared to a digital voucher or ticket entitling the holder to use a specific service or purchase a specific good.

Crypto assets excluded from MiCA regulation

MiCA does not cover all digital assets. The Regulation excludes from its scope certain categories of digital assets that are either already regulated by other EU legal acts or do not meet the definition of crypto assets within the meaning of MiCA. In particular, the provisions exclude financial instruments and financial products that are subject to MiFID II.

In accordance with Article 2(4) of the Regulation, the following are also excluded from the scope of MiCA:

• deposits, including structured deposits,
• cash (unless they meet the definition of e-money tokens),
• insurance, pension products and schemes.

Non-fungible tokens (NFTs)

The MiCA Regulation also does not regulate non-fungible tokens (NFTs), provided that they are truly unique and non-fungible. This applies, for example, to digital artworks or unique collectibles in computer games.

However, it is important to note a significant distinction: if crypto assets are issued as non-fungible tokens as part of a large series or collection, this may be considered an indicator of their actual fungibility, which would result in them being subject to MiCA regulations. Furthermore, fractional parts of a unique and non-fungible crypto asset are not considered unique and non-fungible, so they will also be subject to MiCA regulations.

Crypto assets limited to internal networks

The MiCA Regulation also does not cover crypto assets used in closed networks, such as loyalty points or vouchers accepted only by their issuer. This exception applies to digital assets that operate within a limited ecosystem and are not intended for wider trading on the market.

Conclusions and Recommendations

We encourage you to contact a lawyer for comprehensive legal support in determining the classification of crypto assets and ensuring compliance with regulations governing the crypto asset and financial instrument markets.