E-money tokens under MiCA — the Title IV rules for issuing an EMT as an EMI

An e-money token is electronic money. That sentence in Article 48(2) of MiCA is why an EMI can issue one at all — and why Title IV is an overlay on Directive 2009/110/EC rather than a replacement. Most of Regulation (EU) 2023/1114’s Title IV tightens something an e-money institution already does: issuance at par, redemption on demand, safeguarding. Two provisions — the reserve composition rule and the treatment of tokens denominated in a non-EU currency — have no equivalent in the e-money directive at all. This is what a licensed issuer has to build.

1. Who may issue an EMT, and what it is deemed to be

Article 48(1) states the perimeter as a prohibition: a person shall not offer an e-money token to the public in the Union, or seek its admission to trading, unless that person is the issuer and is authorised as a credit institution or an electronic money institution, and has notified a crypto-asset white paper to its competent authority and published it under Article 51. Both limbs are cumulative, and there is no standalone token-issuer authorisation for this asset class — the entry ticket is a banking or e-money licence.

A second subparagraph allows other persons to offer the token or seek its admission to trading, but only upon the written consent of the issuer, and those persons must themselves comply with Article 50 (no interest) and Article 53 (marketing). A distribution arrangement is a documented consent plus two live obligations on the distributor, not a commercial contract alone.

Article 48(2) then does the heavy lifting: e-money tokens shall be deemed to be electronic money, and an EMT referencing an official currency of a member state is deemed to be offered to the public in the Union. Article 48(3) confirms the consequence — Titles II and III of Directive 2009/110/EC apply unless Title IV says otherwise. Authorisation, own funds, safeguarding, agents and redemption all remain in force; Title IV amends specific pieces and leaves the rest standing.

2. Two notification clocks, and neither is an approval

Two separate deadlines run in parallel before a token can go live, and they are easy to conflate. Article 48(6) requires issuers to notify the competent authority of their intention at least 40 working days before the date on which they intend to offer the tokens or seek admission to trading. Article 51(11) requires the white paper itself to be notified at least 20 working days before the date of its publication — and states in the same paragraph that competent authorities shall not require prior approval. Article 51(13) then requires publication on the issuer’s website before the offer or admission.

A registry step runs alongside: under Article 51(14) the issuer supplies the Article 109(4) information with the notification, and the authority passes it to ESMA within five working days for publication in the register by the offer’s starting date. Two drafting details belong in the project plan. Both clocks are in working days, which makes 40 working days closer to eight calendar weeks than six. And the absence of prior approval is not the absence of scrutiny: Article 51(12) requires any significant new factor, material mistake or material inaccuracy capable of affecting the assessment of the token to be described in a modified white paper, notified and published — a duty running for as long as the token is offered.

3. Issuance, redemption and the interest prohibition

Article 49(1) is a derogation: on issuance and redeemability, only Article 49 applies, displacing Article 11 of Directive 2009/110/EC. Holders have a claim against the issuer. Tokens are issued at par value and on the receipt of funds. On request the issuer redeems at any time and at par value, in funds other than electronic money, with the conditions stated prominently in the white paper. And Article 49(6) removes a flexibility the e-money directive allowed: redemption shall not be subject to a fee.

That is the sharpest divergence from the baseline. Under Article 11 of Directive 2009/110/EC a redemption fee is permissible in defined cases — early redemption, termination before an agreed date, redemption more than a year after termination — and national law reproduces them, as § 33(3) ZAG does in Germany. For a token the carve-out is gone, so a firm running both products off one ledger cannot run one fee schedule across both.

Article 50 prohibits interest, on issuers and on crypto-asset service providers alike, and Article 50(3) defines it functionally: any remuneration or benefit related to the length of time a holder holds the token is treated as interest, including net compensation or discounts with an equivalent effect, from the issuer or from third parties, whether attached to the token or arising from the pricing of other products.

Facts: an EMI plans a rewards tier — card fee rebates that scale with the average token balance held over a month. Rule: the benefit is a discount whose size depends on the length and size of holding, delivered through the pricing of another product. What the team does: Article 50(3) captures it on both limbs, so the tier is redesigned to reward transaction count rather than balance duration. Outcome: the mechanic survives; the balance-linked version would not have.

4. The 30% rule — where Title IV goes beyond the e-money directive

Article 54 is the provision most likely to change a treasury operating model. Funds received in exchange for tokens and safeguarded under Article 7(1) of Directive 2009/110/EC must meet two conditions:

• at least 30% of the funds received is always deposited in separate accounts in credit institutions; and
• the remaining funds are invested in secure, low-risk assets qualifying as highly liquid financial instruments with minimal market risk, credit risk and concentration risk, in accordance with Article 38(1) of MiCA, denominated in the same official currency as the one referenced by the token.

Three things follow. The 30% is a permanent floor, not an average — the word is “always”. The remainder is subject not to the e-money directive’s asset test but to Article 38(1) MiCA, which requires investments capable of being liquidated rapidly with minimal adverse price effect. And currency-matching removes the option of holding backing in a different currency from the one referenced, however well hedged.

Article 55 applies Title III, Chapter 6 — recovery and redemption plans — to EMT issuers mutatis mutandis, on a bespoke timetable: by derogation from Articles 46(2) and 47(3), both must be notified within six months of the offer to the public or admission to trading. They are post-launch deliverables with a hard date, routinely missed because the launch checklist closes at go-live.

5. Significant tokens: three criteria out of seven, and a change of supervisor

Article 56(1) makes EBA classify a token as significant where at least three of the criteria in Article 43(1) are met, either in the period covered by the first information report after launch or in the periods covered by two consecutive reports. Article 43(1) lists seven:

Criterion (g) is the one a mid-sized firm can meet without scale: an issuer running two tokens that also provides custody or an exchange service already holds one of the three needed. Article 56(2) aggregates data across issuers of the same token.

The process is deliberately slow: authorities report to EBA and the ECB at least twice a year; EBA notifies a draft decision and allows 20 working days for comments; EBA decides within 60 working days; and supervision then transfers to EBA within 20 working days (Article 56(3) to (6)). Article 57 lets an issuer volunteer by showing through a programme of operations that it is likely to meet three criteria; Article 56(8) requires annual reassessment and Articles 56(9) and (10) run the reverse. Under Article 56(7) supervision does not transfer for tokens denominated in a member-state currency other than the euro where at least 80% of holders and of transaction volume sit in the home member state.

Article 58(1) then swaps the prudential rulebook. An EMI issuing a significant EMT is subject to Articles 36, 37, 38 and 45(1) to (4) of MiCA instead of Article 7 of Directive 2009/110/EC, and to Articles 35(2), (3) and (5) and 45(5) instead of Article 5. Safeguarding is replaced by the reserve-of-assets regime — legally and operationally segregated from the issuer’s estate under Article 36(2) and (3) — and own funds move onto the Article 35 basis: the higher of EUR 350,000, 2% of the average amount of the reserve of assets and a quarter of the preceding year’s fixed overheads. The independent audit of the reserve is mandated every six months from the significance decision, by derogation from Article 36(9).

6. The non-EU-currency trap in Article 58(3)

Article 58(3) is one sentence and it is the provision most often missed in a token design review: Articles 22, 23 and 24(3) shall apply to e-money tokens denominated in a currency that is not an official currency of a member state.

Those articles were written for asset-referenced tokens. Article 22 requires, for each token with an issue value above EUR 100,000,000, quarterly reporting of the number of holders, the value issued and size of the reserve, the average number and average aggregate value of transactions per day, and — separately — an estimate of those transactions associated with use as a means of exchange within a single currency area. “Transaction” means any change of the person entitled to the token resulting from a transfer between distributed ledger addresses or accounts, and Article 22(3) obliges crypto-asset service providers to feed the issuer the data needed, including transactions off the ledger. Article 22(2) lets the authority impose the same reporting below EUR 100 million.

Article 23 is the hard stop. Where that estimated quarterly average exceeds 1 million transactions and EUR 200,000,000 per day, the issuer shall stop issuing the token and, within 40 working days, submit a plan to bring the figures back below the limits. The authority approves the plan and may require modifications — Article 23(4) names a minimum denomination amount as an example — and Article 23(5) allows issuance to resume only on evidence the figures are back below the thresholds.

Facts: an EU e-money institution issues a euro-referenced EMT and, eighteen months later, adds a US-dollar-referenced one for its cross-border corporate customers. Rule: the dollar token is denominated in a currency that is not an official currency of a member state, so Article 58(3) switches on Articles 22 and 23 for that token only. What the team does: the reporting build has to separate means-of-exchange transactions from exchanges for funds or other crypto-assets (Article 22(1) excludes the latter absent evidence of settlement use), and ingest off-chain transfers reported by service providers — data the firm does not hold itself. Outcome: the euro token stays outside Articles 22 and 23; the dollar token carries a reporting pipeline and a growth ceiling the commercial plan has to acknowledge from day one.

7. What changes against the e-money baseline

The practical way to scope an EMT project is as a delta against what the institution already does.

8. Questions we get asked

9. What to do, today

• Confirm the issuing entity is the licensed entity. The token is deemed to be electronic money, so it sits inside the credit-institution or EMI perimeter.
• Put both clocks on the launch plan — 40 working days for the Article 48(6) notification of intention, 20 working days for the Article 51(11) white-paper notification.
• Zero the redemption fee (Article 49(6)) and test every incentive against Article 50(3), including cross-product pricing that varies with holding period.
• Rebuild the treasury policy around Article 54: a permanent 30% floor in credit-institution accounts, the balance in currency-matched Article 38(1) instruments.
• Diarise the recovery and redemption plans for six months after launch (Article 55), and run the Article 43(1) criteria as a live monitor — criterion (g) is reachable without scale.
• For a non-EU-currency token, build the Article 22 pipeline first, including off-chain data, and alert well below the Article 23 thresholds.

Related: Drafting a MiCA white paper · Safeguarding compared across the EU · Own funds and initial capital