German Legal Advice on Asset-Referenced Token (ART) 

The conception and public offering of asset-referenced tokens (ART) have been regulated by the Markets in Crypto-Assets Regulation (MiCAR) and, as far as the German market is concerned, supervised by BaFin since mid-2024. The European regulation defines the tokens as a type of crypto-asset that is not an electronic money token and that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies. An example of this would be Tether Gold (XAUT), although Tether is, insofar, not subject to MiCAR regulations. In addition to e-money tokens, asset-referenced tokens belong to a group of tokens that are also known as ‘stablecoins’.

MiCAR's main focus is on ensuring the stability of the value of the tokens. Firstly, this is to be achieved by restricting the group of possible issuers to CRR credit institutions and authorised (licensed) companies. As part of the formalised authorisation procedure, it is, roughly speaking, necessary to convince BaFin that the issuer is in a position to fulfil its regulatory obligations by submitting comprehensive documentation. A central element of value stability is the mandatory formation of an asset reserve, which must be secured against the insolvency of the issuer and deposited with a custodian. The asset reserve must essentially consist of or relate to the assets to which the asset- referenced token refers, and market, credit and concentration risks must be minimised in accordance with certain requirements.

In addition, the public offering of asset-backed tokens requires, among other things, a whitepaper, which must be approved by BaFin. It serves to inform potential investors about the features, functions and risks of the tokens. In functional terms, it therefore serves the same purpose as the prospectus for securities, shares in collective investment undertakings or other investments. The structure and content of the whitepaper are also regulated in MiCAR in a familiar manner.