Issuing a Stablecoin in Ireland: Things to Consider

For those looking to issue what the market colloquially calls a “stablecoin,” the path to compliance is nuanced. MiCA introduces strict definitions and high bars for capital, governance, and transparency. This article explores the regulatory considerations for issuing stablecoins in Ireland, clarifying the specific asset classifications under MiCA and detailing the operational substance required to succeed.

The Regulatory Framework: Ireland and MiCA

Ireland is widely recognised as a global hub for FinTech and international finance. With the implementation of MiCA, the country has solidified its position as a “safe harbour” for crypto-asset issuers. Unlike jurisdictions that are currently scrambling to adapt to the new European standards, Ireland has integrated the MiCA framework through the European Union (Markets in Crypto-Assets) Regulations 2024, designating the Central Bank of Ireland as the competent authority responsible for supervision.

The primary advantage of choosing Ireland for token issuance is the “passporting” right. Once a token is authorised by the CBI, it can be legally offered to the entire European crypto market, comprising over 450 million consumers, without the need for further licensing in other EU member states. This creates a massive efficiency for issuers who wish to scale their operations across the continent while maintaining a single regulatory home.

MiCA was designed to support innovation and fair competition while ensuring a high level of protection for retail holders and the integrity of crypto-asset markets. For issuers in Ireland, this means navigating a system that demands transparency, robust governance, and demonstrable financial health.

For a broader understanding of how this regulation applies across the continent, you can review our general guide on MiCA Token Issuance.

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“Stablecoin” is Not a Legal Term: Understanding MiCA Classifications

A critical starting point for any prospective issuer is understanding that “stablecoin” is not a formally recognised asset class under MiCA regulations. Instead, the legislation breaks down crypto-assets into three distinct categories to address different risks and functions. If your project intends to issue a token that purports to maintain a stable value, it will almost certainly fall into one of two specific categories: Asset-Referenced Tokens (ARTs) or Electronic Money Tokens (EMTs).

Understanding the difference between these two is vital, as the authorisation requirements, capital obligations, and permissible issuers differ significantly.

1. Electronic Money Tokens (EMTs)

An E-Money Token is a crypto-asset that purports to maintain a stable value by referencing the value of one official currency. This is what most market participants would recognise as a standard fiat-backed stablecoin (e.g., a token pegged 1:1 to the Euro or the US Dollar).

Because the function of an EMT is very similar to electronic money, serving as an electronic surrogate for coins and banknotes and used for making payments, MiCA treats them as such. Consequently, EMTs can only be issued by entities that are already authorised as Credit Institutions (Banks) or Electronic Money Institutions (EMIs).

If you plan to issue a token pegged to a single fiat currency in Ireland, you generally cannot do so as a standalone crypto project; you must effectively become a bank or a licensed e-money institution first, complying with the relevant directives (EMD2) in addition to MiCA Title IV requirements.

2. Asset-Referenced Tokens (ARTs)

Asset-Referenced Tokens differ from EMTs in how they maintain stability. An ART purports to maintain a stable value by referencing another value or right, or a combination thereof, including one or more official currencies.

This category covers crypto-assets backed by a basket of currencies (e.g., a token backed by a mix of EUR, USD, and GBP), commodities (like gold), or other crypto-assets. Because ARTs can be widely adopted for transferring value or as a means of exchange, they pose specific risks to market integrity and financial stability. Therefore, issuers of ARTs are subject to stringent requirements under Title III of MiCA.

Unlike EMTs, issuers of ARTs do not necessarily need to be banks or EMIs, but they must be legal persons established in the EU and must obtain specific authorisation from the competent authority (in this case, the CBI).

3. Other Crypto-Assets

It is worth noting that if your token does not aim to stabilise its value, such as a utility token intended only to provide access to a good or service supplied by the issuer, it falls under “Other Crypto-Assets” (Title II). These tokens have a lighter compliance burden, requiring a notified White Paper but no ex-ante authorisation.

Related reading: List of Popular Crypto Projects in Ireland and How to Launch Your Own

For specific details on how these distinctions apply within the Irish jurisdiction, please visit our dedicated service on MiCA Token Issuance in Ireland.

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Requirements for Issuing a Stablecoin in Ireland

Issuing an ART or EMT in Ireland is a rigorous process. The Central Bank of Ireland maintains high standards to prevent “brass-plate” operations (companies that exist only on paper) and to ensure that issuers can meet their obligations to token holders. Below are the primary considerations and requirements for issuance.

1. Authorisation and Corporate Structure

To issue an ART or EMT, the issuer must be a legal entity established in the Union. In Ireland, this typically involves incorporating a Private Limited Company (LTD) or a Designated Activity Company (DAC).

• For EMTs: The entity must be authorised as a Credit Institution or an Electronic Money Institution;
• For ARTs: The entity must apply for specific authorisation under Article 16 of MiCA, unless they are already a credit institution.

The authorisation process in Ireland is thorough. It generally involves a pre-application phase, followed by a formal application that assesses the business model, governance, and technical infrastructure. For ARTs and EMTs, this process can span 6 to 12 months, involving bilateral meetings with the CBI and substantive assessment periods.

2. The Crypto-Asset White Paper

The White Paper is the cornerstone of MiCA compliance. It is not merely a marketing document; it is a legal disclosure document carrying significant liability for the issuer.

For stablecoins (ARTs and EMTs), the White Paper must include:

• Issuer Information: Detailed identity of the issuer, its governance, and financial condition;
• Token Details: Information on the rights and obligations attached to the tokens, including redemption rights;
• Underlying Technology: Details on the distributed ledger technology (DLT) and consensus mechanisms used;
• Reserve Assets: Comprehensive disclosure regarding the composition and management of the reserve assets backing the token;
• Risks: A fair, clear, and not misleading description of the risks associated with the issuer, the token, and the technology;
• Environmental Impact: Disclosures regarding the adverse climate impacts of the consensus mechanism.

Crucially, for ARTs, this White Paper must be formally approved by the CBI as part of the authorisation process.

3. Prudential Requirements and Own Funds

Financial stability is a core pillar of MiCA. Issuers are required to maintain a buffer of “own funds” (capital) to ensure they can absorb losses and continue operations.

• For ARTs: Issuers must maintain own funds equal to the highest of the following: €350,000, 2% of the average amount of the reserve assets, or a quarter of the fixed overheads of the preceding year;
• For EMTs: Issuers must comply with the capital requirements applicable to Electronic Money Institutions or credit institutions, which are similarly rigorous.

These funds must consist of sound financial instruments and cannot be used for speculative purposes. The CBI will scrutinise the source of these funds and the issuer’s ongoing solvency.

4. Reserve of Assets and Custody

To maintain the stable value of the token and ensure public confidence, issuers must constitute and maintain a reserve of assets.

• Composition: The reserve must be composed and managed to cover the risks associated with the referenced assets. For EMTs, at least 30% of funds received must be deposited in separate accounts in credit institutions, with the remainder invested in secure, low-risk assets denominated in the same currency as the token;
• Segregation: The reserve assets must be legally and operationally segregated from the issuer’s own estate. This ensures that in the event of the issuer’s insolvency, the reserve assets are protected for the benefit of the token holders;
• Custody: Issuers must establish custody policies ensuring that reserve assets are held by authorised Crypto-Asset Service Providers (CASPs), credit institutions, or investment firms. Crucially, there must be no concentration of custody that could pose a systemic risk.

5. Redemption Rights

MiCA mandates that holders of stablecoins must have a permanent right of redemption.

• For ARTs: Holders have a right of redemption at all times against the issuer, typically for the market value of the referenced assets or by delivery of the assets;
• For EMTs: Holders must be granted a right of redemption at par value (e.g., 1 Token = 1 Euro) at any time.

Redemption must generally be fee-free, though strictly defined costs may be applied in specific redemption scenarios provided they are commensurate with actual costs incurred. The issuance of interest to token holders is strictly prohibited for both ARTs and EMTs to prevent these tokens from being treated as investment instruments rather than a means of exchange.

6. Governance and Substance

The Central Bank of Ireland requires significant “substance” in the jurisdiction. You cannot operate a “shell” company.

• Mind and Management: The real decision-making power must reside in Ireland. This implies a local physical office and resident directors or senior managers;
• Fit and Proper: Members of the management body and shareholders with qualifying holdings must pass the CBI’s “Fit and Proper” assessments. They must demonstrate sufficient good repute, lack of criminal records (specifically regarding money laundering or terrorist financing), and appropriate knowledge and experience;
• Conflict of Interest: Issuers must implement effective policies to identify, prevent, manage, and disclose conflicts of interest between themselves, their shareholders, and token holders.

Related reading: How to Register a Poland CASP Remotely for Non Resident

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Procedure and Timeline in Ireland

The journey to issuing a stablecoin in Ireland is structured and requires careful planning.

1. Preparation: This phase involves classifying the token (ART vs. EMT), incorporating the Irish legal entity, and preparing the detailed “Programme of Operations” and the White Paper;
2. Pre-Application Engagement: For ARTs and EMTs, engagement with the CBI begins before the formal application. This involves discussing the project scope and business model to ensure alignment with regulatory expectations;
3. Application and Assessment: Once the formal application is submitted, the CBI assesses it for completeness (typically within 25 working days) and then conducts a substantive assessment (up to 60 working days, though often extended by requests for further information);
4. Authorisation: If the CBI is satisfied that all prudential, governance, and technical requirements are met, authorisation is granted. The White Paper is approved, and the issuer is added to the ESMA register.

While utility tokens may see a turnaround of 2-3 months, the full authorisation required for stablecoins typically necessitates a timeline of 6 to 12 months.

The Role of Crypto-Asset Service Providers (CASPs)

It is important to note that issuers often interact with Crypto-Asset Service Providers (CASPs). Under MiCA, CASPs are entities authorised to provide services such as custody, trading platform operation, and exchange services.

If you are an issuer, you may need to engage CASPs for the custody of your reserve assets. Furthermore, if you plan to list your stablecoin on an exchange, that exchange (a CASP) is obligated to ensure that your token has a compliant White Paper and that you have the necessary authorisation.

Read also: our dedicated service about compliance with the MiCA regulations

Getting Ready to Issue a Stablecoin in Ireland under MiCA?

Issuing a stablecoin in Ireland offers a gateway to the European market backed by the credibility of a tier-one regulatory environment. However, the distinction between Asset-Referenced Tokens and E-Money Tokens, combined with the rigorous requirements for reserves, capital, and governance, makes this a complex undertaking.

Compliance is not just about drafting a document; it involves building a robust financial institution capable of protecting user funds and maintaining market stability.

At LegalBison, we are legal experts specialised in the FinTech industry. We understand the intricacies of the MiCA framework and the specific expectations of the Central Bank of Ireland. We can assist entrepreneurs and companies with the whole process, including:

• Classification: accurately determining whether your project is an ART, EMT, or other crypto-asset;
• Registration and Incorporation: Handling the setup of your Irish legal entity and ensuring local substance requirements are met;
• White Paper Drafting: Creating fully compliant technical and legal documentation;
• Regulatory Liaison: Managing the application and communication process with the Central Bank of Ireland.

Also read: 5 Reasons Why Ireland is the Top ICO Country in the ESMA Register

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