Crypto-assets - what are they?

Crypto-assets are digital representations of values or rights that can be transferred and stored electronically using distributed ledger technology or similar technology.

Before buying any type of crypto-asset or using any crypto-asset services, make sure you understand the associated risks.

Types of crypto-assets

Depending on the type of crypto-asset or crypto-asset services (whether or not they are covered by the Markets in Crypto-Assets Regulation), you might face higher risks and varying levels of protection.

Crypto-assets covered

Crypto-assets regulated in the European Union by the Markets in Crypto-Assets Regulation (MiCA) are:

e-money tokens (EMTs): crypto-assets that purport to maintain a stable value by referencing the value of one official currency;
asset-referenced tokens (ARTs): crypto-assets that are not EMTs and that purport to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies;
crypto-assets that are neither ARTs nor EMTs: crypto-assets that do not fall into any of the previous categories, covering a wide variety of crypto-assets, such as utility tokens intended to provide access to goods or services.

Crypto-assets not covered

Crypto-assets excluded from the Markets in Crypto-Assets Regulation (MiCA) are:

financial instruments regulated by Directive 2014/65/EU on markets in financial instruments (MiFID);
non-fungible tokens (NFTs) representing unique assets (e.g. digital art or collectibles), unless they are issued in a fractional manner and those fractional parts are fungible with each other;
tokens with limited purposes, accepted only in a limited group of merchants or for specific services (e.g. loyalty schemes);
central bank digital currencies;
crypto-assets issued by public entities, such as States or public sector entities.

More information can be found here in the explanatory document on crypto-assets, prepared by the European Supervisory Authorities.

Risks associated with crypto-assets

Crypto-assets are complex products that can be difficult to understand and have many associated risks.

Crypto-assets are highly volatile and exposed to technological, operational and cybersecurity risks.

Holders of crypto-assets may lose all invested capital.

More information can be found here, in the European Supervisory Authorities’ joint warning on the risks of crypto-assets.

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Crypto-assets - what are they?

Types of crypto-assets

Crypto-assets covered

Crypto-assets not covered

Risks associated with crypto-assets