MiCA Explained: The EU Markets in Crypto-Assets Regulation
Europe's landmark crypto regulation and what it means for stablecoin issuers and users globally.
Key Takeaways
- MiCA creates the world's first comprehensive regulatory framework for crypto assets.
- E-money tokens (EMTs) face the strictest requirements, including 1:1 fiat backing.
- Non-EU issuers serving EU customers must comply β MiCA has global reach.
Markets in Crypto-Assets Regulation (MiCA)
MiCA entered into force in June 2023 and became fully applicable in December 2024. It is the most comprehensive stablecoin regulatory framework in the world, and its extraterritorial reach makes it relevant globally.
Three Categories of Tokens Under MiCA
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Asset-Referenced Tokens (ARTs) β tokens that reference multiple assets (currencies, commodities, or crypto). Subject to authorization by the European Banking Authority (EBA).
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E-Money Tokens (EMTs) β tokens pegged to a single fiat currency. Must be issued by an EU-licensed e-money institution or credit institution. USDC EUR and EURC fall here.
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Other Crypto-Assets β general category covering utility tokens and most cryptocurrencies.
Requirements for Stablecoin Issuers
- 1:1 reserve backing β each token must be backed by an equivalent value of low-risk assets.
- Segregation of reserves β reserves must be held separately from company assets.
- Monthly attestations β independent verification of reserves.
- Redemption rights β holders can redeem at par within 1 business day.
- Volume limits for non-Euro EMTs β transactions exceeding 200 million euros per day are subject to additional restrictions (the "significant" threshold).
Impact on USDT and USDC
Tether (USDT) has not obtained EU authorization and effectively cannot operate as an EMT in the EU. Several EU exchanges delisted USDT in Q4 2024. Circle obtained EU authorization for USDC, making it MiCA-compliant.