Austria -- Stablecoin Regulations Regulatory Overview

The regulatory framework for stablecoins in Austria is primarily shaped by the EU's Markets in Crypto-Assets Regulation (MiCA) (Regulation (EU) 2023/1114), which came into force on 29 June 2023. As an EU member state, Austria is directly subject to MiCA, and the Financial Market Authority (FMA) (Finanzmarktaufsichtsbehörde) is the competent national authority responsible for its supervision and enforcement in Austria.

MiCA introduces a harmonized regime for crypto-assets, including specific rules for stablecoins, which it categorizes as Asset-Referenced Tokens (ARTs) and E-money Tokens (EMTs).

Important Dates for MiCA Application:

• Titles III (ARTs) and IV (EMTs) of MiCA, covering stablecoins, will apply from 30 June 2024.
• The remaining provisions of MiCA for other crypto-assets and crypto-asset service providers will apply from 30 December 2024.

Before MiCA's full application, the FMA has assessed crypto-assets on a case-by-case basis under existing Austrian financial services legislation (e.g., Austrian Securities Supervision Act (WAG 2018), Capital Market Act (KMG), E-Money Act (E-Geldgesetz 2010), Payment Services Act (ZaDiG 2018)). However, MiCA now provides the definitive framework for stablecoins.

Here's a breakdown based on your requested aspects under MiCA:

Regulatory Framework for Stablecoins in Austria (under MiCA)

1. Classification of Stablecoins

MiCA distinguishes between two types of stablecoins, explicitly defining their legal status:

• E-money Tokens (EMTs) (Title IV of MiCA):

  • Defined as a type of crypto-asset that purports to maintain a stable value by referencing the value of one single fiat currency (e.g., a Euro-backed stablecoin like EURC).
  • EMTs are considered e-money under the E-Money Directive (2009/110/EC) and its Austrian implementation, the E-Geldgesetz 2010. MiCA effectively extends the existing e-money framework to crypto-assets.
  • Regulatory Reference: MiCA, Article 3(1)(5) and Title IV.

• Asset-Referenced Tokens (ARTs) (Title III of MiCA):

  • Defined as a type of crypto-asset that is not an EMT and purports to maintain a stable value by referencing any other value or right or combination thereof, including one or several official currencies that are not legal tender, one or several commodities, or one or several crypto-assets, or a combination of such assets (e.g., a stablecoin backed by a basket of fiat currencies, gold, or other crypto-assets).
  • ARTs are a new category specifically created by MiCA.
  • Regulatory Reference: MiCA, Article 3(1)(4) and Title III.

Are they classified as securities/payment tokens?

• MiCA aims to create a specific framework for ARTs and EMTs, meaning that if a token falls under these MiCA definitions, it will primarily be regulated as such, rather than as a "security" under the traditional WAG 2018/KMG, or merely as a "payment token" (which is not a formal legal classification but a functional description).
• However, if a crypto-asset (even if attempting to be stable) does not meet MiCA's definitions for ARTs or EMTs and exhibits characteristics of a financial instrument, it could still be regulated under existing Austrian securities law (e.g., WAG 2018) or capital market law (KMG). MiCA has a clear scope exclusion for financial instruments already regulated under existing EU legislation like MiFID II.

2. Reserve Requirements

• E-money Tokens (EMTs):

  • Issuers of EMTs must always issue them at par value upon receipt of funds and are required to redeem them at par value upon request.
  • Funds received in exchange for EMTs must be protected and held by the issuer in a credit institution or invested in secure, low-risk assets (e.g., deposits with central banks or credit institutions, highly liquid government bonds).
  • Issuers must ensure that the reserve assets are at all times equal to or greater than the amount of EMTs in circulation (1:1 backing).
  • The reserve assets must be segregated from the issuer's own assets.
  • Regulatory Reference: MiCA, Article 52-56.

• Asset-Referenced Tokens (ARTs):

  • Issuers must establish and maintain a reserve of assets that is fully segregated, separate from the issuer's own assets, and held in custody by a third party.
  • The reserve assets must be managed to ensure that the value of the reserve is at all times equal to or greater than the value of the ARTs in circulation.
  • Rules on the composition of the reserve assets:
    • Must be adequately diversified and held in low-risk assets.
    • Detailed rules on liquidity management (at least 30% in highly liquid assets, daily redemption for stable ARTs).
    • Regulatory Reference: MiCA, Article 32-38.

3. Issuer Licensing

• E-money Tokens (EMTs):

  • Issuers of EMTs must be authorized as a credit institution (under the EU Capital Requirements Directive/Regulation) or as an e-money institution (under the EU E-Money Directive/Austrian E-Geldgesetz 2010).
  • They also need to publish a crypto-asset white paper and obtain approval from the FMA.
  • Regulatory Reference: MiCA, Article 48 & 49.

• Asset-Referenced Tokens (ARTs):

  • Issuers of ARTs must be authorized by the FMA (or another competent national authority in the EU) before offering ARTs to the public or seeking admission to trading on a crypto-asset exchange.
  • The authorization process is extensive, requiring a detailed application including a business plan, governance arrangements, risk management, internal control mechanisms, capital requirements, and a crypto-asset white paper.
  • Capital Requirements: Issuers must maintain own funds that are at least the higher of: (a) EUR 350,000, (b) 2% of the average amount of the reserve assets, or (c) 25% of the fixed overheads of the preceding year.
  • Regulatory Reference: MiCA, Article 16-21.

4. Redemption Rights

• E-money Tokens (EMTs):

  • Holders of EMTs have a direct claim against the issuer and must be able to redeem their EMTs at any time at par value, for the fiat currency they represent, free of charge (unless explicitly disclosed fees apply, which must be proportionate).
  • Regulatory Reference: MiCA, Article 58.

• Asset-Referenced Tokens (ARTs):

  • Holders of ARTs have a direct claim against the issuer and a proportionate claim on the reserve assets.
  • Issuers must establish and disclose clear redemption policies, including conditions, fees, and procedures for redeeming ARTs for the assets in the reserve.
  • Regulatory Reference: MiCA, Article 39.

5. Algorithmic Stablecoin Rules

MiCA does not explicitly ban "algorithmic stablecoins" by name. However, its stringent requirements for reserve assets, particularly for ARTs and EMTs, effectively make purely unbacked or under-backed algorithmic stablecoins non-compliant.

• For a crypto-asset to qualify as an ART or EMT, it must maintain a stable value by referencing actual assets held in reserve (for ARTs) or fiat currency (for EMTs) with specific backing and liquidity requirements.
• An algorithmic stablecoin that relies solely on a smart contract and arbitrage mechanisms without physical backing to maintain its peg would fail to meet the reserve requirements of MiCA Titles III and IV.
• If an algorithmic token does manage to maintain a stable value through mechanisms that include sufficient, liquid, and segregated reserve assets as required by MiCA, then it could theoretically fall under ARTs/EMTs, but this design would be fundamentally different from typical unbacked algorithmic stablecoins.
• Regulatory Reference: The implicit prohibition stems from the strict definitions and reserve requirements in MiCA, especially Articles 32-38 (ARTs) and 52-56 (EMTs).

6. CBDC Interaction

• MiCA acknowledges the potential future for a digital euro (a Central Bank Digital Currency or CBDC) issued by the European Central Bank (ECB).
• MiCA states that ARTs and EMTs should not be designed to substitute a CBDC if and when it becomes available.
• The Oesterreichische Nationalbank (OeNB), as Austria's central bank and part of the Eurosystem, is actively involved in the ECB's ongoing exploratory work and preparation phase for a digital euro.
• Currently, there is no specific Austrian legislation regulating the interaction between private stablecoins and a CBDC, as the digital euro is still in development. However, MiCA lays the groundwork for ensuring that private stablecoins do not undermine monetary sovereignty or financial stability in a future CBDC environment.
• Regulatory Reference: MiCA, Recital 84 and 85, Articles 21(5), 51(3), and 60(3) touch upon macro-prudential safeguards related to issuance volumes and the potential impact on monetary policy. The ECB and OeNB are the primary sources for CBDC developments.

Key Austrian Regulatory References and URLs:

1. Markets in Crypto-Assets Regulation (MiCA) (Regulation (EU) 2023/1114):

   • https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32023R1114

2. Austrian Financial Market Authority (FMA) – Crypto Assets Information:

   • The FMA is the primary competent authority in Austria for supervising MiCA.
   • General information on crypto-assets: https://www.fma.gv.at/en/cross-sector/crypto-assets-and-tokenisation/
   • FMA's MiCA information: https://www.fma.gv.at/en/cross-sector/crypto-assets-and-tokenisation/mica-markets-in-crypto-assets/

3. Austrian E-Money Act (E-Geldgesetz 2010 – E-GG 2010):

   • Relevant for EMTs and pre-MiCA e-money classifications.
   • Generally available through legal information systems like Rechtsinformationssystem des Bundes (RIS) – search for "E-Geldgesetz 2010".
   • Example (German): https://www.ris.bka.gv.at/GeltendeFassung.wxe?Abfrage=Bundesnormen&Gesetzesnummer=20006763

4. Austrian Securities Supervision Act (Wertpapieraufsichtsgesetz 2018 – WAG 2018):

   • Relevant for assessing if a token falls outside MiCA's scope and qualifies as a security.
   • Generally available through RIS – search for "WAG 2018".
   • Example (German): https://www.ris.bka.gv.at/GeltendeFassung.wxe?Abfrage=Bundesnormen&Gesetzesnummer=20010077

5. Oesterreichische Nationalbank (OeNB) – Digital Euro Information:

   • Information on Austria's central bank stance on the digital euro.
   • https://www.oenb.at/en/monetary-policy/digital-euro.html

Conclusion: With the staggered application of MiCA, particularly from June 2024 for stablecoins, the Austrian regulatory landscape for ARTs and EMTs will be largely harmonized with the rest of the EU. The FMA will play a crucial role in authorizing and supervising stablecoin issuers in Austria, ensuring compliance with MiCA's robust requirements for reserves, governance, and consumer protection. Existing national laws will continue to apply for crypto-assets falling outside MiCA's scope or where MiCA explicitly refers to them (e.g., e-money institutions).

Disclaimer: This information is for general informational purposes only and does not constitute legal, financial, or investment advice. Specific situations should be discussed with qualified legal professionals.