Comprehensive

MiCA

Legislation

Regulation (EU) 2023/1114

Authority

ESMA · EBA · National NCAs

Effective

June 30, 2024

Overview

Single rulebook for 27 member states

The big picture: MiCA is the world's first comprehensive crypto-asset regulation, creating a single rulebook across all 27 EU member states plus EEA.

  • Unified framework replacing 27 fragmented national regimes with one regulation
  • Two stablecoin classes: Electronic Money Tokens (EMTs) and Asset-Referenced Tokens (ARTs), each with distinct requirements
  • Passporting: a single authorization in any member state grants access to all 27 markets
  • Effective June 30, 2024 — stablecoin provisions applied first, full CASP rules followed December 30, 2024

Why it matters: Before MiCA, a stablecoin issuer licensed in France had no automatic right to operate in Germany. Each country applied its own interpretation of existing financial law — or none at all.

Classification

EMT vs. ART — two distinct regimes

Category

Electronic Money Tokens

  • Definition: pegged to a single fiat currency
  • Regulatory basis: regulated as e-money under EMD2
  • Authorization: issuer must be an authorized EMI or credit institution
  • Redemption: holders can redeem at par at any time, no minimum threshold
  • Examples: USDC, EURC

Category

Asset-Referenced Tokens

  • Definition: backed by multiple assets, currencies, or commodities
  • Regulatory basis: separate CASP authorization regime
  • Authorization: requires specific ART authorization with higher capital requirements
  • Governance: mandatory conflict-of-interest policy, complaint handling, wind-down plan
  • Examples: hypothetical basket-backed tokens, commodity-linked stablecoins

Significance

When a token becomes "significant"

The trigger: MiCA designates a stablecoin as significant when it crosses any of three thresholds.

>€5B

Issuance value

>10M

Token holders

>€500M

Daily transaction volume

What significance triggers:

  • EBA takes over supervision from the national NCA — direct European-level oversight
  • Higher capital requirements — own funds must increase to reflect systemic importance
  • Liquidity stress testing — regular scenario analysis of reserve drawdown
  • ECB involvement — European Central Bank issues binding opinions on monetary policy impact
  • Mandatory wind-down plan — detailed orderly resolution plan filed with EBA

Between the lines: These thresholds are designed to capture USDT and USDC. Both exceed the issuance threshold. The significance regime ensures the largest stablecoins face bank-grade prudential supervision.

Reserves

What backs every token

The standard: MiCA mandates granular rules on reserve composition, custody, and prohibitions.

  • 1:1 backing with safe, low-risk assets at all times
  • ≥30% in bank deposits spread across at least 3 credit institutions — concentration limits apply
  • Remaining reserves in government bonds (≤5yr maturity) or equivalent high-quality liquid assets
  • Full segregation from the issuer's own funds — commingling prohibited
  • Independent custody at authorized credit institutions — issuer cannot self-custody
  • No lending, staking, or rehypothecation of reserves — yield generation from reserves is banned

Why it matters: The no-rehypothecation rule directly addresses the Tether transparency concern — MiCA reserves must be fully verifiable and never deployed for yield.

AML / Travel Rule

Every transfer, every time

The rule: The EU's Transfer of Funds Regulation (TFR) extends the Travel Rule to all crypto-asset transfers — with no minimum threshold.

  • No de minimis: applies to transfers of any amount — stricter than FATF's €1,000 recommendation
  • Originator data required: name, account number, address or national ID, date of birth
  • Beneficiary data required: name and account number at minimum
  • Hosted-to-hosted: full originator and beneficiary data transmitted between CASPs
  • Hosted-to-unhosted: CASP must perform enhanced due diligence — risk assessment on the self-hosted wallet
  • CASP-to-CASP: data must be transmitted immediately and securely alongside the transfer

Between the lines: The zero-threshold rule makes the EU the strictest Travel Rule jurisdiction globally. CASPs must build infrastructure to transmit counterparty data for every single transaction.

Market Impact

Winners and losers since June 2024

USDT

Delisted from regulated EU exchanges. Tether did not apply for EMI authorization. Existing holdings grandfathered — no new purchases on compliant venues.

USDC

First mover. Circle obtained a French EMI license, making USDC the first major stablecoin to achieve full MiCA compliance. Default USD stable on EU platforms.

EURC

Rising share. Circle's euro-denominated stablecoin gaining traction as the default EUR stable. Native euro settlement removes FX friction for European users.

New Entrants

Banking consortiums entering the market. SocGen's EURCV, Deutsche Bank partnerships, and other TradFi-native stablecoins leveraging existing EMI/credit institution licenses.

Continue

Back to the EU overview

MiCA is one piece of the EU's stablecoin regime. For the full regulatory landscape — key provisions, compliance impact, and related deep dives — return to the EU jurisdiction page.

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