What are E-Money Tokens (EMTs) under MiCA?

Article to Article 3(1)(7) MiCA defines an Electronic Money Token (EMT) as “a type of crypto-asset that purports to maintain a stable value by referencing the value of one official currency”. By way of extension, official currency refers to “an official currency of a country that is issued by a central bank or other monetary authority”.

The definition of an EMT encompasses any crypto-assets purporting to maintain a stable value by reference to an official currency. As outlined in Recital 41, the definition does not differentiate EMTs depending on how they purport to maintain a stable value, meaning EMTs can be collateralised or based on an algorithmic mechanism. Furthermore, the definition expressly captures any crypto-assets that purport to maintain a stable value, not only those that effectively manage to maintain a stable value. Any crypto-asset aiming to maintain a stable value by referencing the value of an official currency regardless of the reserve or stabilisation mechanism falls under the definition of EMTs. [PG1]

It is important to note that Electronic Money Tokens or EMTs should not be confused with electronic money. Electronic money is defined in Article 2(2) of the E-Money Directive (Directive 2009/110/EC) as “electronically, including magnetically, 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 as defined in point 5 of Article 4 of Directive 2007/64/EC [Payment Services Directive], and which is accepted by a natural or legal person other than the electronic money issuer”.

Following closely this reasoning, electronic money and EMTs are two different types of assets: electronic money that is not stored electronically using distributed ledger technology is regulated under the E-Money Directive, while electronic money which is stored or uses distributed ledger technology (ergo EMTs) is regulated under MiCA.

This being said, things tend to become more complicated when considering the provisions of Title IV of MiCA related to EMTs. The title starts with Article 48, which explicitly states that “E-money tokens shall be deemed to be electronic money” and that “Titles II and III of Directive 2009/110/EC shall apply with respect to e-money tokens unless otherwise stated [in this Title]”. [PG2] If EMTs are reputed to be electronic money and the dispositions regulating electronic money apply to EMTs, one may argue that EMTs and electronic money are most likely the same thing. Albeit, EMTs and electronic money are similar but not the same. Notably, the modalities of issuance of EMTs differ from the modalities of issuance of electronic money, in particular by virtue of Article 49 which stipulates that only the specific requirements set forth shall apply to issuers of EMTs . Moreover, EMTs can also be offered to the public in a similar fashion to traditional financial products, which is not the case for electronic money.