The European MiCA regulation was designed to regulate crypto assets and service providers throughout the European Union, thereby creating a more stable and secure crypto asset market. Below, we’ll learn which crypto assets are covered by the European MiCA regulation.
Electronic Money Tokens (EMTs)
Electronic Money Tokens (EMTs) are a type of crypto asset that has been designed as a Stablecoin, which links its value to a single fiat currency, generally functioning as a digital representation of electronic money.
MiCA regulates EMTs with the aim of preventing manipulation in their issuance and use, which allows for guaranteeing fair practices and protecting users against any type of risk related to non-compliance by the issuer or the loss of the link of the tokens, which can be achieved through established regulations.
Asset Referenced Tokens (ARTs)
Asset-Referenced Tokens (ARTs) are crypto assets that are characterized by having their value tied to other assets or a combination of assets, such as commodities, fiat currencies, and even other crypto assets. This distinguishes them from EMTs, which are tied to only one fiat currency.
MiCA regulates ARTs to ensure a safe and transparent market, similar to what happens with EMTs. However, it’s important to highlight that, by regulating ARTs, MiCA also promotes financial stability in the market, especially in the event that mass adoption of this type of crypto asset causes its value to deviate from the assets that originally determined its initial value.
Other crypto assets
The MiCA regulation defines “other crypto assets” as crypto assets not classified as EMTs or ARTs. Therefore, it should be noted that the “other cryptoassets” category is quite broad and tends to be more unstable, as they lack the stabilization mechanisms of EMTs and ARTs. It is important to note that crypto assets such as non-fungible tokens (NFTs), security tokens, and central bank digital currencies (CBDCs) are excluded from this category .
By regulating “other crypto assets” MiCA is assured of creating a comprehensive framework that allows regulating the crypto market that includes Utility Tokens (a token that grants access to a decentralized application or platform), Cryptocurrencies (Bitcoin or Ethereum), and Non-Stable Tokens, which are characterized by being decentralized crypto assets and whose value is not linked to any underlying asset and therefore, can be volatile, since it depends on market supply and demand.
Importantly, MiCA requires issuers and providers to disclose detailed information about crypto assets in white papers, in addition to establishing standards and protocols that reduce the risk of fraud or deceptive practices in issuance or promotion, ensuring consistency of regulations across the European Union and standardizing the crypto market, which provides security and confidence to potential crypto asset investors.
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