_crypto subcategories- mica
Firstly, it is essential to determine what ‘crypto-asset’ means. It is a digital representation of value or rights which may be transferred and stored electronically using distributed ledger technology or similar technology.
Article 3 of MiCA sets out the definitions of the three main sub-categories of crypto-assets:
(1) ‘asset-referenced token’ (“ART” – often described as stablecoins) means a type of crypto-asset that purports to maintain a stable value by referring to the value of several fiat currencies that are legal tender, one or several commodities or one or several crypto-assets, or a combination of such assets.
In other words, asset-referenced tokens aim at stabilising their value by reference to several fiat currencies, to one or more commodities, to one or more other crypto-assets, or a basket of such assets. Users could widely adopt them to transfer value or as a means of payment and thus pose increased risks in consumer protection and market integrity compared to other crypto-assets. Issuers of asset-referenced tokens should therefore be subject to more stringent requirements than issuers of other crypto-assets. They are designed to track the underlying asset’s price movements. ARTs are designed to make trade, store, and track digital assets more accessible. They can also enable fractional ownership of an asset by allowing users to buy and sell portions of the asset.
(2) ‘electronic money token’ (often described as stable coins) or ‘e-money token’ means a type of crypto-asset, the primary purpose of which is to be used as a means of exchange and that purports to maintain a stable value by referring to the value of a fiat currency that is legal tender.
In other words, e-money tokens aim to stabilise their value by referencing one fiat currency. It facilitates peer-to-peer payments, just like other digital currencies such as Bitcoin. E-money token is a secure and fast way to transfer money, and it is designed to be used for online purchases and payments. It is issued by an electronic money institution and is backed by an electronic record of the customer’s funds.
(3) ‘utility token’ means a type of crypto-asset intended to provide digital access to a good or service available on DLT and is only accepted by the issuer of that token.
In other words, a utility token is a type of cryptocurrency that provides users access to a product or service. Utility tokens are sometimes called app, user, or app tokens. These tokens are designed to be used within a specific blockchain-based application or platform. They typically do not provide ownership or voting rights in the token-issuing company.
In the following posts, we will analyse separately the requirements and rules for issuing, trading or offering to the public each category of crypto-asset.
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Christiana Antoniou, Lawyer and Partner