How an asset-backed token works
An issuer takes in money or assets, places them in a reserve and issues tokens against it. A holder's protection comes from three things: what is in the reserve, who keeps it apart from the issuer's own property, and whether a token can be handed back for the assets or their value.
Gold tokens and tokens tied to a basket of currencies fit the everyday meaning. Stablecoins backed by one currency do too, though EU law gives those a category of their own, the e-money token.
What MiCA asks of an asset-referenced token
- Issuer: an EU-established firm authorised for it, or a credit institution (Article 16)
- Reserve: kept at all times and legally segregated from the issuer's estate (Article 36)
- Custody: reserve assets held by a custodian that is a legal person different from the issuer (Article 37)
- Redemption: a right at all times, at the market value of the referenced assets or by delivering them, free of charge (Article 39)
Not every asset-backed token is an asset-referenced token. A token that qualifies as a financial instrument, such as a tokenised bond, falls outside MiCA, and so does one that is unique and not fungible.
Why the category of an asset-backed token matters
A platform that lists, holds or accepts a backed token checks which regime the token sits in before anything else. The issuer's licence, the holder's redemption right and the platform's own permissions all follow from it.
Asset-backed token, e-money token or tokenised security?
- E-money token
- References one official currency, is deemed electronic money and is redeemed at par. An asset-referenced token is redeemed at the market value of what it references.
- Tokenised security
- A share, bond or fund unit recorded on a ledger. It remains a financial instrument and is regulated as one.
- Utility token
- Gives access to a good or a service supplied by its issuer, with no reserve behind it.
Where an asset-backed token shows up in a platform
Modules that do the work
- Custody & walletsWallets on every major chain, with MPC custody from leading providers or your own keys.
- LedgerThe double-entry book of record behind every balance, fee and transfer.
- PortfoliosHoldings, performance and statements for investors, across stocks and ETFs.
Platforms that need it
Guides that go deeper
Where it is written
The laws and standards this page's facts come from.
General information, not legal advice: what applies to you depends on your services and your market.