In just over three months, the provisions of the Markets in Crypto Assets Regulation (MiCAR) on Asset Referenced Tokens (ART) and Electronic Money Tokens (EMT) will come into force. MiCAR will then ensure strict rules for the creation and offering of so-called stable coins in the EU. Issuers of stable coins will then have to fulfill numerous obligations designed to ensure the stable value of stable coins and provide investors with the highest level of security. This already shows that issuing ARTs in the EU will be a highly complex undertaking in the future. In the case of Asset Referenced Tokens, the stable value of the token is derived from another value or right or a combination thereof, as defined in the MiCAR. The reference value can therefore be composed very differently. As long as the composition leads to a stable value of the ART, the MiCAR regulations must be observed by the issuer, but also by other types of providers such as trading platforms offering ART. But who will actually be allowed to issue Asset Referenced Tokens in the EU from June 30, 2024?

Issuer of Asset Referenced Tokens (ART) Requires a MiCAR License

The issuer status is of central importance for the existence of stablecoins under the new regulation. Without an issuer – according to the MiCAR legislator’s approach – there is no stable coin. Therefore, from June 30, 2024, the public offering of Asset Referenced Tokens in Europe will in principle only be possible to be carried out by the issuer of the relevant ART itself. The same applies to an application for authorization of an ART for trading. In addition, issuers of Asset Referenced Tokens must generally obtain a license under MiCAR prior to commencing the public offering of their ART. The application for approval is comprehensive and must include a detailed business plan and detailed descriptions of the future issuer’s business organization. In addition, the management bodies must be professionally suitable and reliable and the owners of significant shareholdings must have successfully completed an acquisition approval procedure. A detailed crypto whitepaper on the planned ART must also be prepared. However, if the future issuer is a credit institution, no application for authorization as an issuer is required. It is then sufficient for the credit institution to provide the competent authority – BaFin in Germany – with specific information on the project and compliance with the MiCAR compliance requirements ninety days prior to the first issue.

No Need for a MiCAR License for ART Issuers in Certain Exceptional Cases

MiCAR does not require issuers of Asset Referenced Tokens who have only issued ARTs with an average value of not more than EUR 5,000,000 over a period of twelve months to apply for a license. In such cases, the legislator did not consider the strict rules for issuers of Asset Referenced Tokens to be appropriate. There is also an exception for issuers of ARTs that can only be held by qualified investors and the public offering of these ARTs is also aimed exclusively at such qualified investors. In these cases, MiCAR assumes that the investors have sufficient knowledge to be able to assess the professionalism of the issuer and the financial soundness of the Asset Referenced Tokens issued by the issuer. In both exceptional cases, however, the issuer must nevertheless prepare a crypto whitepaper in accordance with MiCAR regulations and submit it to the competent authority in its home Member State.

Attorney Lutz Auffenberg, LL.M. (London)

I.  https://fin-law.de

E. info@fin-law.de

The competent lawyer for the application of a MiCAR license and advice on issuances of stable coins in our law firm is Attorney Lutz Auffenberg, LL.M. (London).