Titles III and IV of the Markets in Crypto Assets Regulation (MiCAR) will become legally effective in the European Union on June 30, 2024. From this date, issuers of Asset-Referenced Tokens (ARTs) and E-Money Tokens (EMTs) will require authorization from BaFin or the competent supervisory authority in their country of domicile to issue such tokens. But what types of tokens will actually qualify as ARTs under MiCAR? While the MiCAR definition of E-Money Tokens requires the value of the token to be pegged to the value of an official currency, the interpretation of the MiCAR definition for Asset- Referenced Tokens is much more difficult. According to this definition, those crypto assets that are not E-Money Tokens and that purport to maintain value stability by reference to other values, rights or currencies or combinations thereof are to constitute Asset-Related Tokens. A particular problem with the definition is the requirement of stability of value, as it remains unclear what specific requirements will be placed in this regard.
When Does a Token Have a Stable Value?
According to the definition in MiCAR, the decisive factor for the qualification of a token as an ART is, in particular, the question of whether the token is intended to create a stable value. In principle, many types of tokens could be described as referencing assets, as assets of all kinds could be considered here. This could also include, for example, tokens that are used to digitally represent objects from the real world. Examples would be tokenized collectible playing cards or other fungible collectibles. However, the definition of Asset-Referenced Tokens also presupposes that value stability is to be maintained. Unfortunately, the MiCAR does not specify the term “stable value”, so that it is questionable when a stable value is given in the required sense. In any case, it will not be sufficient in this context if the value of a token is merely linked to the value of an object in the real world. In such cases, the value of the token can always be determined on the basis of the value of the reference object. However, the value cannot then necessarily be described as stable.
Regulation for Asset-Referenced Tokens Targets Parallel Currencies
Historically, the regulation of both E-Money Tokens and Asset-Referenced Tokens goes back to the intention of the legislator to strictly regulate the creation of parallel currencies in the form of tokens. The reason for the inclusion of the regulations on ART and E-Money Tokens was the now abandoned plan of the Meta Group to create the substitute currency “Diem”. Taking this legislative objective into account, the value stability required in the definition of ART must at least be suitable for keeping the value of the relevant tokens stable enough to allow them to be used as a parallel currency. Nevertheless, the contours of the characteristic of value stability remain blurred. However, a reliable interpretation aid can be expected in the form of the technical regulatory standards on ART still to be developed by ESMA.
Attorney Lutz Auffenberg, LL.M. (London)
The competent lawyer for questions regarding a BaFin license under MiCAR and advice on Asset-Referenced Tokens (ART) in our law firm is Attorney Lutz Auffenberg, LL.M. (London).
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