MiCA Titles III & IV: the EU stablecoin regime, explained
Asset-referenced tokens (ARTs) and e-money tokens (EMTs) are now under prudential supervision across the EU. Here is what issuers, exchanges, and depositors need to understand about authorisation, reserve composition, redemption rights, and the volume caps.
The Markets in Crypto-Assets Regulation ("MiCA", Regulation (EU) 2023/1114) brought stablecoins under a unified EU framework. The two relevant titles are Title III (asset-referenced tokens — "ARTs", backed by a basket of currencies, commodities, or other crypto-assets) and Title IV (e-money tokens — "EMTs", pegged to a single fiat currency).
Who needs authorisation
- ART issuers must be authorised under MiCA Article 16 by a competent authority in their EU home state. Authorisation includes a white paper approval and capital requirements (the higher of €350,000, 2% of average reserve assets, or one quarter of fixed overheads).
- EMT issuers must be either a credit institution or a licensed electronic-money institution under the EMD2 framework. They publish a MiCA-compliant white paper but do not need a separate MiCA authorisation.
- A foreign issuer cannot offer its token to the EU public, or seek admission to trading on an EU venue, unless it satisfies the requirements above.
Reserve composition
Reserves backing both ARTs and EMTs must be:
- Held with credit institutions or central banks, segregated from the issuer's own assets.
- Invested only in high-quality liquid assets ("HQLA"): central-bank deposits, sovereign or covered bonds with the highest credit quality, and short-dated money-market instruments.
- Subject to daily mark-to-market, monthly attestation, and quarterly audit.
Redemption rights
Holders of any ART or EMT have a statutory right to redeem at par against the issuer. The redemption must be honoured at any time, at par, without fees (Article 49 for ARTs, Article 55 for EMTs). Issuers cannot waive or condition this right via terms of service.
Volume caps for "significant" tokens
If an ART or EMT denominated in a non-EU currency is used at a sufficiently large scale as a means of exchange, MiCA imposes caps:
- More than 1 million transactions per day and EUR 200 million in daily transaction value triggers Article 23 / Article 58 cessation requirements — the issuer must stop issuing new tokens until volumes fall back below the threshold.
The cap is the most economically consequential MiCA provision for USD-denominated stablecoin issuers serving EU users, because in practice it limits the EU footprint of non-EUR EMTs (USDC, USDT, PYUSD, etc.) regardless of issuer authorisation status.
Practical takeaways
- Issuers: confirm authorisation pathway (Title III vs Title IV) and home-state competent authority.
- Exchanges (CASPs): only list ARTs/EMTs whose issuer can produce evidence of authorisation and a MiCA-approved white paper.
- Treasuries / depositors: confirm redemption mechanics and reserve composition — the par redemption right is enforceable, but only against authorised issuers.
- Foreign issuers: a non-EU stablecoin offered to EU users without authorisation creates supervisory exposure for the offering platform, not just the issuer.
ESMA and the EBA continue to publish Level 2 technical standards refining reserve, governance, and white paper requirements. Treat MiCA as a living framework — verify against the latest delegated acts before any compliance decision.
Primary Sources
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