Stablecoins under MiCA: what regulated institutions need to know

MiCA, the Markets in Crypto-Assets regulation, is the European Union framework that governs crypto-assets and the firms that provide crypto-asset services. For institutions, it means stablecoins can now be used within a single, harmonised regulatory framework across the EU, provided the services are delivered by an authorised crypto-asset service provider, known as a CASP.

What MiCA is

MiCA (Regulation EU 2023/1114) sets EU-wide rules for issuing crypto-assets and for providing services around them, such as custody, exchange and transfers. Before MiCA, firms navigated a patchwork of national regimes. MiCA replaces much of that with one framework that applies across member states.

What a CASP is

A CASP is a crypto-asset service provider authorised under MiCA to carry out specific regulated activities. Authorisation is granted by a national regulator and lists exactly which services the firm may provide, such as custody and administration of crypto-assets, exchange of crypto-assets for funds, execution of orders, and transfer services.

Damex Digital Ltd is authorised and regulated by the Malta Financial Services Authority as a CASP under MiCA to provide custody and administration of crypto-assets, exchange of crypto-assets for funds, exchange of crypto-assets for other crypto-assets, execution of orders for crypto-assets, and transfer services for crypto-assets.

How MiCA treats stablecoins

MiCA does not use the word "stablecoin" as a legal category. Instead it defines two token types that cover most stablecoins:

• E-money tokens (EMTs): tokens that reference a single official currency, such as the euro or the US dollar.
• Asset-referenced tokens (ARTs): tokens that reference a basket of assets, several currencies, or other references.

This distinction matters because the rules on issuance, reserves and redemption differ between the two.

Why the crypto and payment sides stay separate

A point institutions often miss: crypto-asset services and traditional payment services fall under different frameworks, even when the same group provides both. Crypto-asset services sit under MiCA. Payment and e-money services sit under the Payment Services Directive and related regimes. When a provider offers both, it does so through different authorisations and, often, different entities.

Damex Digital Ltd is also authorised by the Malta Financial Services Authority as a Financial Institution under the Financial Institutions Act, enabling the provision of payment services under the PSD in relation to e-money tokens. The crypto-asset services and the payment services are provided under separate regulatory frameworks.

Can banks and institutions in the EU use stablecoins?

Yes. Under MiCA, institutions can adopt stablecoins by working with providers such as an Authorised Crypto-Asset Service Provider (CASP) provided the provider holds the necessary additional permissions (such as an EMI, PI, or Limited PI status) to handle Electronic Money Tokens (EMTs) or by leveraging their own applicable regulatory license. MiCA delivers a defined set of rules, named regulators, and clear permitted services, giving risk and compliance functions the certainty required to approve new rails.

What this changes in practice

For institutions evaluating stablecoin rails, MiCA moves the question from "is this allowed?" to "which authorised provider covers the services we need, and in which jurisdictions?" It brings crypto-asset services closer to the governance standards institutions already apply to traditional finance.

Frequently asked questions

What is MiCA?

MiCA is the EU Markets in Crypto-Assets regulation (EU 2023/1114). It sets harmonised rules across the European Union for issuing crypto-assets and for providing crypto-asset services such as custody, exchange and transfers.

What is a CASP under MiCA?

A CASP is a crypto-asset service provider authorised under MiCA by a national regulator to carry out specific regulated activities. The authorisation defines exactly which services the firm may provide.

How does MiCA classify stablecoins?

MiCA does not define "stablecoin" directly. Most stablecoins fall under e-money tokens, which reference a single official currency, or asset-referenced tokens, which reference a basket or multiple references.

Can EU institutions use stablecoins under MiCA?

Yes, when working with providers such as an authorised CASP and operating within the framework. MiCA provides the defined rules and regulatory oversight that regulated institutions need before adopting a new settlement rail.

Disclaimer

This article is for information purposes only and does not constitute financial, investment, tax or legal advice. Crypto-assets and stablecoins are high risk. Their value can go down as well as up and you may lose the full value. Stablecoins, including e-money tokens and asset-referenced tokens, may lose their peg, and redemption rights are generally against the issuer, not Damex. Crypto-asset services are not covered by deposit guarantee or investor compensation schemes. In the EEA, crypto-asset services are provided by Damex Digital Ltd, authorised by the Malta Financial Services Authority as a CASP under MiCA (EU) 2023/1114. Crypto-asset services and payment services are provided under separate regulatory frameworks. Availability depends on your jurisdiction and is set out in the relevant terms and conditions.