MiCA (Markets in Crypto-Assets Regulation)

Article 2(4) decides whether MiCA applies at all

MiCA's scope article is short and exhaustive. The regulation "does not apply to crypto-assets that qualify as one or more of the following: (a) financial instruments; (b) deposits, including structured deposits; (c) funds, except if they qualify as e-money tokens; (d) securitisation positions," followed by insurance, pension and social security products.¹ A tokenised bond, a tokenised fund unit and a tokenised equity all land in that first limb and stay under MiFID II and the existing EU securities stack.

That boundary is not self-executing from the text. Article 2(5) required ESMA to issue guidelines on the conditions and criteria for qualifying a crypto-asset as a financial instrument, and ESMA published its final report on them under reference ESMA75453128700-1323.³ The practical dividing line therefore lives in a guidance layer sitting on top of the article. The joint ESAs consumer factsheet states the same exclusion plainly: crypto-assets "that qualify as MiFID financial instruments (e.g. derivatives contracts, transferable securities)" already fall under existing financial services legislation.²

Getting this wrong costs money in both directions. Build a crypto-asset white paper and a service-provider relationship for something that was a transferable security all along and you bought the wrong compliance stack. Bolt prospectus machinery onto a residual crypto-asset and you priced your own product out of the market you were trying to reach.

Three classes, separated by what the token references

Inside scope, MiCA recognises three types. An e-money token is "a type of crypto-asset that purports to maintain a stable value by referencing the value of one official currency." An asset-referenced token is "a type of crypto-asset that is not an electronic money token and that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies." Everything else, including utility tokens, which Article 3(1)(9) defines as tokens "only intended to provide access to a good or a service supplied by its issuer," falls into the residual class.¹

The three European supervisory authorities describe the same taxonomy for consumers: MiCA "covers three types of crypto-assets: Electronic money tokens (EMTs)... Asset-referenced tokens (ARTs)... Crypto-assets other than EMTs and ARTs: utility tokens and 'other' crypto-assets."² The residual class carries the lightest load, mainly a crypto-asset white paper before a public offer. The two stable-value classes carry almost everything else in the regulation.

Who may issue, and how long the paperwork runs

For e-money tokens the gate is narrow. Article 48(1) permits an offer to the public or admission to trading only where the person is the issuer and "is authorised as a credit institution or as an electronic money institution" and has notified a crypto-asset white paper.¹ There is no third door.

For asset-referenced tokens the issuer applies to the national competent authority in its home member state. Article 21(1) requires that authority to take "a fully reasoned decision granting or refusing authorisation" within 25 working days of receiving the opinions referred to in Article 20(5), and where authorisation is granted the white paper "shall be deemed to be approved" with it.¹

Service providers run a separate clock. Article 63 gives competent authorities 5 working days to acknowledge receipt, 25 working days to assess completeness, and 40 working days from a complete application to a reasoned decision.¹ The Central Bank of Ireland, one of the authorities running that process, is direct about what actually drives the calendar: completeness of the application and the firm's ability to engage in detailed discussion have "a critical impact on the authorisation timelines."⁴

One authorisation, twenty-seven markets

Passporting is the commercial reason to do any of this. A service provider intending to operate in more than one member state files with its home authority "a list of the Member States in which the crypto-asset service provider intends to provide crypto-asset services," the services concerned, the starting date, and a list of all other activities not covered by the Regulation.¹ No second licence, no second supervisor for the same activity.

Supervision is split three ways. National competent authorities authorise and supervise service providers and most issuers. The European Banking Authority takes direct supervision of issuers of significant asset-referenced and e-money tokens.⁵ ESMA carries the market-side mandates and the financial-instrument boundary guidance. Two EU-level bodies and 27 national ones is the architecture a founder is entering, and the home-state choice decides which of them reads your file first.

Reserve, redemption and the ban that reshapes the model

Issuers of asset-referenced tokens must "constitute and at all times maintain a reserve of assets," legally segregated from the issuer's estate and from other tokens' reserves, "so that creditors of the issuers have no recourse to the reserve of assets, in particular in the event of insolvency." Holders get a right of redemption at all times, paid either in funds equivalent to the market value of the referenced assets or by delivery of those assets, and "the redemption of asset-referenced tokens shall not be subject to a fee."¹

E-money tokens run on the par rail instead. Issuers "issue e-money tokens at par value and on the receipt of funds" and must redeem "at any time and at par value" in funds, again with no fee. Both classes are barred from paying holders interest, by Article 40(1) for ARTs and Article 50(1) for EMTs.¹

That interest ban is the most consequential line in the regulation for a business plan. Whatever the reserve earns belongs to the issuer, not the holder, so fee income and distribution have to carry the whole P&L. A stable-value design that needs to pay holders in order to attract float does not work in the EU, and no amount of structuring changes that.

A worked example: one token, three cost lines

Take a token referencing 50% euro and 50% US dollar, with 200 million units outstanding at one unit of reference each. It does not reference a single official currency, so it is an asset-referenced token rather than an e-money token. The reserve is 200 million of referenced value, split 100 million per currency leg.

Article 36(4) requires the EBA technical standards to set minimum amounts held as deposits in credit institutions, and those minimums "cannot be lower than 30% of the amount referenced in each official currency." On the euro leg that is at least 30 million euro parked in bank deposits. If the token is designated significant, Article 45 lifts that floor to 60%, taking the same leg to 60 million, and own funds rise to 3% of average reserve assets, or 6 million against a 200 million book.¹

Then add the duties that never show up on a balance sheet. Article 46 requires a recovery plan notified within six months of authorisation, covering liquidity fees on redemptions, redemption limits and suspension of redemptions as options. Article 47 requires a separate orderly redemption plan for the insolvency and withdrawal-of-authorisation case.¹ Two documents, two governance processes. Meanwhile half the euro leg is sitting in low-yield deposits and the yield on the rest cannot legally reach a holder.

What is settled, and what is still moving

The law itself is settled. Titles III and IV covering ARTs and EMTs applied from 30 June 2024, and the rest of the regulation from 30 December 2024. Article 143(3) let existing service providers keep operating "until 1 July 2026 or until they are granted or refused an authorisation pursuant to Article 63, whichever is sooner."¹ That backstop date has passed, so the grandfathering argument is gone.

The practice around the law is not finished. The EBA was still writing to the Commission about amendments to the regulatory technical standards for authorising ART issuers in February 2025, months after full application, and signed a supervisory cooperation memorandum with the New York Department of Financial Services on stablecoin activities on 2 June 2026.⁶ ESMA has meanwhile been issuing MiCA guidelines in packages rather than in one book, so the operating detail keeps arriving after the deadline that was supposed to close it.

National layers keep landing on top. Ireland's revised Consumer Protection Code took effect on 24 March 2026 and applies to all activities regulated under MiCAR, which means a passported provider meets a second, member-state rulebook in each market it enters.⁴ Read MiCA as settled law with unsettled practice. In our view the firms taking damage right now are the ones that read December 2024 as the finish line.

What we tell founders to settle first

Four decisions, in this order, before any contract or white paper work starts. Whether the instrument is a MiFID financial instrument, because that answer removes MiCA from the picture. If it is in scope, which of the three classes it lands in, judged on what it references rather than what the deck calls it. Which entity in which member state holds the authorisation, since that fixes your home supervisor and your passporting base. And what the reserve, redemption and own-funds numbers do to the model at your target float.

Reverse that order and the pattern is familiar: a token designed to a target user experience, an entity picked for tax reasons, and a classification argued backwards from both. MiCA classification follows function. The regulation does not read your positioning.

One caution across all of it. Whether a specific token qualifies as a financial instrument, an ART, an EMT or a residual crypto-asset is fact-specific and member-state-specific, and that call belongs to your counsel and the relevant national competent authority. This page is reference material for design work. It is not legal advice, and it is not a recommendation to buy, sell or hold any asset.