Stablecoin Issuers Under MiCA: The Authorisation Requirements for EMT and ART Issuers

MiCA's Two-Track Stablecoin Framework

Regulation (EU) 2023/1114 — the Markets in Crypto-Assets Regulation — divides stablecoins into two distinct regulatory categories, each with its own authorisation pathway, reserve requirements, and supervisory architecture. The stablecoin-specific provisions of MiCA applied from 30 June 2024, six months before the full regulation came into force.

Understanding the distinction between e-money tokens (EMTs) and asset-referenced tokens (ARTs) is the first and most consequential decision for any stablecoin issuer targeting the EU market.

E-Money Tokens: Definition and Requirements

An e-money token (EMT) is defined in Article 3(1)(7) of MiCA as a type of crypto-asset that purports to maintain a stable value by referencing the value of one official currency. A euro-pegged stablecoin, a dollar-pegged stablecoin, or a sterling-pegged stablecoin would each constitute an EMT.

EMTs are treated as a form of electronic money under MiCA, and accordingly:

Authorisation requirement Only entities authorised as a credit institution under Directive 2013/36/EU (CRD IV) or as an electronic money institution under Directive 2009/110/EC (EMD2) may issue EMTs in the EU. This means that a stablecoin issuer must either hold a banking licence or an EMI licence.

There is no separate EMT-specific licence. The regulatory gateway is through existing financial services licensing.

White paper obligation EMT issuers must draw up a crypto-asset white paper in accordance with Article 51 of MiCA and notify the competent authority at least 40 working days before publication. The white paper must contain:

• A detailed description of the issuer and the EMT
• The stabilisation mechanism and reserve composition
• The rights and obligations attached to the EMT
• Information on the underlying technology
• Risk disclosures

Reserve requirements EMT issuers must maintain funds received in exchange for EMTs in secure, low-risk assets. Specifically:

• At least 30% of funds must be deposited in separate accounts at credit institutions, with no more than one institution holding more than a specified proportion
• The remaining funds must be invested in secure, low-risk assets as defined by delegated acts under MiCA
• Reserve assets must be segregated from the issuer's own assets and must not be encumbered, pledged, or used as collateral

Redemption at par EMT holders have the right to redeem their tokens at par value at any time. The issuer must redeem EMTs in funds at the nominal value of the tokens, either in cash or by credit transfer, without charging any fee for redemption (other than those explicitly specified in the white paper).

Asset-Referenced Tokens: Definition and Requirements

An asset-referenced token (ART) is defined in Article 3(1)(6) as a crypto-asset that purports to maintain a stable value by referencing any other value or right or combination thereof, including one or more official currencies. An ART references a basket of assets — which could include fiat currencies, commodities, other crypto-assets, or any combination.

The regulatory treatment of ARTs is distinct from EMTs and more demanding in several respects:

Specific MiCA authorisation Unlike EMTs, which piggyback on existing EMI or credit institution authorisation, ART issuers require specific authorisation under MiCA from the competent authority of their home member state. Credit institutions may issue ARTs after notifying the competent authority, but all other entities must apply for and obtain dedicated ART authorisation.

The authorisation application must include:

• A programme of operations describing the business model
• A legal opinion confirming the token qualifies as an ART
• A detailed description of the governance arrangements
• The reserve management policy
• The custody arrangements for reserve assets
• Business continuity and wind-down procedures
• AML/CFT compliance arrangements

Own funds requirements ART issuers must maintain own funds equal to the higher of:

• €350,000, or
• 2% of the average amount of reserve assets

For issuers of significant ARTs (see below), the own funds requirement increases to 3% of average reserve assets.

Reserve of assets ART issuers must constitute and maintain a reserve of assets that:

• Covers the value of all outstanding ARTs at all times
• Is segregated from the issuer's own assets
• Is entrusted for custody to credit institutions and/or authorised CASPs
• Is invested in secure, low-risk, highly liquid assets
• Is diversified to avoid excessive concentration

Governance of the reserve The reserve management policy must address:

• Composition and allocation of reserve assets
• Risk management procedures for the reserve
• Valuation methodology and frequency
• Procedures for the creation and destruction of ARTs in conjunction with reserve asset movements
• Liquidity management to ensure redemption capability

Significant EMTs and ARTs

MiCA introduces a "significance" classification for both EMTs and ARTs. A stablecoin is classified as significant when it exceeds any of the following thresholds:

• The customer base of the issuer exceeds 10 million holders
• The value of issued tokens exceeds €5 billion
• The number and value of daily transactions exceeds prescribed thresholds
• The significance of the issuer's cross-border activities
• The interconnectedness with the financial system

Consequences of significance:

• Direct supervision transfers from the national competent authority to the European Banking Authority (EBA)
• Enhanced own funds requirements (3% of average reserve assets for ARTs)
• Enhanced liquidity requirements
• Enhanced governance and risk management standards
• The requirement to establish a remuneration policy that promotes sound risk management
• Mandatory wind-down and recovery planning

Practical Considerations for Stablecoin Issuers

Choosing the Right Structure

The choice between EMT and ART depends on the token's design:

• Single fiat currency peg: This is an EMT. The issuer needs an EMI or credit institution licence. This is the simpler pathway
• Multi-currency basket: This is an ART. The issuer needs specific MiCA authorisation. The regulatory burden is heavier
• Commodity-backed (e.g., gold-backed stablecoin): This is an ART. Full ART authorisation is required
• Algorithmic stabilisation: Tokens that maintain stability through algorithmic mechanisms rather than asset reserves present classification challenges. If there is no reserve of assets, the token may not qualify as either an EMT or an ART, and may instead be classified as a utility token or other crypto-asset

Jurisdiction Selection for EU Market Access

Stablecoin issuers must select an EU home member state for their authorisation. Key considerations include:

• France: The AMF has existing experience with crypto regulation through the PSAN framework. Paris offers strong banking infrastructure for reserve management
• Ireland: The Central Bank of Ireland is an experienced financial services regulator with English-language proceedings
• Luxembourg: CSSF offers deep expertise in investment fund regulation, relevant for reserve asset management
• Lithuania: The Bank of Lithuania offers faster processing but may lack depth of experience for complex stablecoin structures
• Germany: BaFin provides a rigorous regulatory environment with strong credibility

Reserve Management

The practical challenge of maintaining MiCA-compliant reserves is substantial:

• Banking relationships: Issuers must secure accounts at multiple credit institutions for reserve asset diversification
• Asset selection: Reserve assets must be "secure, low-risk" — this effectively limits investments to government bonds, money market instruments, and bank deposits
• Custody arrangements: Reserve assets held in crypto-assets (for ARTs with crypto in the basket) require custody by authorised CASPs
• Audit and reporting: Regular valuation and reporting of reserve composition to the competent authority

Cost Estimates

The cost of establishing a compliant stablecoin issuance operation under MiCA varies significantly depending on the token type:

EMT issuance (via EMI licence):

• EMI licence application: €150,000-€350,000 (advisory costs)
• Capital requirement: €350,000
• Reserve infrastructure: €50,000-€100,000
• Ongoing compliance: €150,000-€300,000 per annum

ART issuance (specific MiCA authorisation):

• Application and advisory costs: €250,000-€600,000
• Capital requirement: €350,000 minimum (or 2-3% of reserves)
• Reserve management infrastructure: €100,000-€250,000
• Ongoing compliance: €250,000-€500,000 per annum

The Impact on Existing Stablecoin Issuers

Existing stablecoin issuers without EU authorisation face a binary choice: obtain MiCA-compliant authorisation or withdraw from the EU market. Several notable developments:

• Circle (USDC issuer) has obtained an EMI licence in France through Circle France SAS
• Tether (USDT) has faced challenges in meeting MiCA requirements, particularly regarding reserve transparency and redemption obligations
• Smaller stablecoin issuers must assess whether the cost of MiCA compliance is justified by their EU market share

Key Takeaways

• MiCA divides stablecoins into EMTs (single fiat currency peg) and ARTs (multi-asset reference), each with distinct authorisation requirements
• EMT issuers must be authorised as credit institutions or EMIs — there is no standalone EMT licence
• ART issuers require specific MiCA authorisation, which imposes higher capital requirements and more demanding reserve management obligations
• Significant stablecoins (exceeding defined thresholds) are subject to direct EBA supervision and enhanced regulatory requirements
• The total cost of establishing a MiCA-compliant stablecoin operation ranges from €500,000 to over €1 million, depending on the token type and complexity
• Reserve management is the most operationally challenging aspect of compliance, requiring diversified custody arrangements and conservative asset allocation
• Non-EU stablecoin issuers without EU authorisation will be progressively restricted from EU markets as enforcement increases