Cryptocurrency Regulation in the EU: How MiCA Classifies Crypto-Assets

Cryptocurrency regulation is a hot topic in the digital currency world, especially in the European Union (EU), where a new regulation called the Markets in Crypto-Assets (MiCA) Regulation is set to provide a clear and harmonized framework for crypto-asset markets. MiCA covers crypto assets that are not already regulated as financial instruments under existing EU legislation, such as the Markets in Financial Instruments Directive (MiFID II). MiCA also introduces new rules for crypto-asset service providers, issuers, and stablecoin operators. 

One of the key aspects of cryptocurrency regulation under MiCA is the classification of crypto assets into different categories, based on their characteristics and functions. MiCA defines four main types of crypto-assets: asset-referenced tokens, e-money tokens, utility tokens, and other crypto-assets. 

• Asset-referenced tokens are tokens that aim to maintain a stable value by referring to the value of several fiat currencies, one or several commodities or one or several crypto-assets, or a combination of such assets. These tokens are also known as stablecoins (that are not e-money) or basket-backed tokens. Asset-referenced tokens are subject to strict requirements under MiCA, such as capital, governance, risk management, disclosure, and supervision.  
   
• E-money tokens are tokens that are electronically stored monetary value as represented by a claim on the issuer which is issued on receipt of funds for the purpose of making payment transactions and which is accepted by a natural or legal person other than the electronic money issuer. These tokens are also known as fiat-backed stablecoins or e-money tokens. E-money tokens are regulated under MiCA in a similar way to electronic money under the Electronic Money Directive (EMD), with some additional rules specific to crypto assets.  
   
• Utility tokens are tokens that are intended to provide digital access to a good or service, available on a distributed ledger technology platform or network. These tokens are also known as access tokens or service tokens. Utility tokens are subject to lighter requirements under MiCA, such as registration, disclosure, and anti-money laundering.  
   
• Other crypto-assets are tokens that do not qualify as asset-referenced tokens, e-money tokens, or utility tokens. These tokens are also known as payment tokens or exchange tokens. Other crypto assets are regulated under MiCA in a similar way to utility tokens, with some additional rules on market abuse and orderly trading. 

There are also crypto-assets which are not regulated by MiCA – Security Tokens. Security Tokens are a digital representation of financial instruments such as bonds, profit participation rights, shares, or any other type of security. MiCA explicitly states that Security Tokens are regulated under MiFID II (Markets in Financial Instruments Directive II).  If you want to learn more about Security Tokens, read our recent article What is a Security token.

The classification of crypto assets according to MiCA is important for both issuers and users of crypto assets, as it determines the applicable regulatory regime and obligations for each type of token. MiCA aims to create a level playing field for crypto-asset markets in the EU, while ensuring consumer protection, financial stability, and innovation. 

Cryptocurrency regulation in the EU is not only relevant for EU-based entities, but also for those operating in other jurisdictions that would like to offer their services to Europeans. Additionally, cryptocurrency regulation in Switzerland is based on a principle-based approach that classifies crypto-assets into payment tokens, utility tokens, and asset tokens. Therefore, it is essential for anyone involved in the crypto-asset industry to be aware of the different regulatory landscapes and comply with the relevant laws and regulations. If you want to learn more about cryptocurrency regulations in the DACH region, make sure to visit our main website at cryptix.ag and book an appointment with our team.  

Tokenlaunchpad.eu can also help you with navigating in cryptocurrency legal and regulatory landscape when it comes to tokenizing your assets into different token classes.  

We hope you enjoyed this article and learned something new about cryptocurrency regulation in the European Union. If you want to learn which asset classes have been shaping the industry lately, read our recent article: Tokenization in 2023: 5 Asset Classes Reshaping DeFi. You’ll discover how tokenization is transforming the world of finance and creating new opportunities for investors and entrepreneurs. Thank you for reading and stay tuned for more updates from us!  

Sources:  

1. Crypto-asset markets: Agreement reached on the European Crypto-Assets regulation (MiCA) | AMF (amf-france.org)  
2. Digital Finance: European Parliament adopts MiCA Regulation, paving the way for an innovation-friendly crypto regulation (deloitte.com)
3. Markets in Crypto-Assets Regulation (MiCA) (europa.eu)  
4. EUR-Lex – 32023R1114 – EN – EUR-Lex (europa.eu)  
5. EUR-Lex – 52020PC0593 – EN – EUR-Lex (europa.eu)