Introduction
The emergence and rapid evolution of digital assets have prompted regulators across the European Union to develop comprehensive legal frameworks to ensure investor protection, financial stability, and market integrity. In response to this growing need, the EU introduced the Markets in Crypto-Assets Regulation (MiCA), which aims to create a unified regulatory environment for crypto-assets within the single market. MiCA is designed to provide legal clarity and harmonization across member states by establishing consistent rules for the issuance, trading, and supervision of various types of crypto-assets.
This report seeks to explore the regulatory and tax implications arising from the implementation of MiCA, focusing specifically on how different categories of tokens are treated under the new framework. It examines the classification of tokens such as e-money tokens, asset-referenced tokens, and utility tokens, and analyzes the legal and fiscal consequences associated with each. Additionally, the report addresses the accounting and technological challenges businesses may face as they adapt to this new regulatory landscape. The impact on business models and financial reporting practices is also considered, offering practical insights for enterprises, regulators, and researchers navigating this transformative period in digital finance.
E-Money Tokens (EMT)
E-money tokens (EMTs) represent a category of crypto-assets that are intended to maintain a stable value by being fully backed by fiat currency reserves. These tokens are typically issued on a blockchain and are designed to function as a digital representation of traditional currency, such as the euro or U.S. dollar. Under the MiCA Regulation, EMTs must be issued only by entities that hold an appropriate license from either a national competent authority or the European Central Bank, in alignment with the existing legal framework for electronic money institutions. Their legal classification falls under the scope of Directive 2009/110/EC, which governs electronic money, thereby affording EMTs the same regulatory treatment as traditional e-money instruments.
From a tax perspective, EMTs are treated similarly to fiat currency in that their issuance and exchange are exempt from Value Added Tax (VAT), in accordance with Article 135 of Directive 2006/112/EC. This exemption stems from their function as a medium of exchange rather than a tradable good or service. Transactions involving EMTs are therefore not subject to VAT, as they are considered equivalent to monetary operations. However, businesses must still maintain rigorous transaction records and ensure compliance with anti-money laundering (AML) obligations. Given their quasi-fiat nature, EMTs may also impact accounting practices, particularly in how they are recorded on balance sheets—often being recognized as cash or cash equivalents depending on the circumstances and applicable national accounting standards.(1)
Asset-Referenced Tokens (ART)
Asset-referenced tokens (ARTs) are a distinct class of crypto-assets defined under MiCA as tokens that aim to maintain a stable value by referencing a basket of assets. These assets can include one or more fiat currencies, commodities, or other crypto-assets. Unlike e-money tokens, which are pegged to a single official currency, ARTs are generally backed by a diversified reserve portfolio, making them more complex in terms of valuation and risk management. Due to their broader backing, ARTs may serve various functions, including as a means of payment, a store of value, or even as investment instruments. As such, their issuance is subject to stricter regulatory scrutiny, including licensing and ongoing supervision by the European Securities and Markets Authority (ESMA) in cooperation with national authorities.
From a legal and tax standpoint, ARTs are treated similarly to financial instruments under the Markets in Financial Instruments Directive II (MiFID II), particularly when they exhibit characteristics of securities or units in collective investment undertakings. For VAT purposes, transactions involving ARTs are exempt under Article 135 of Directive 2006/112/EC, as they are considered financial operations rather than the sale of goods or services. However, their classification may trigger additional tax obligations in the context of capital gains or losses when exchanged or sold, depending on national tax rules. The complexity of ARTs also requires more sophisticated accounting practices, especially regarding how reserves are audited, how fair value is assessed, and how risks from underlying assets are disclosed in financial statements.(2)
Third Category Tokens
The third category of tokens under the MiCA framework includes all crypto-assets that do not qualify as either e-money tokens or asset-referenced tokens. These tokens typically serve functions beyond payment or value stabilization and often grant access to specific services, products, or platform functionalities. A prominent example is the utility token, which provides holders with rights to use a digital platform or access a service. For instance, Basic Attention Token (BAT) is used within the Brave browser ecosystem to reward users and pay for advertising, while Filecoin (FIL) grants users access to decentralized storage services. These tokens are not designed to maintain a stable value or function as investment instruments, which sets them apart from EMTs and ARTs.
Legally, utility tokens and similar crypto-assets fall into a more ambiguous category. They are not recognized as electronic money or financial instruments per se but may still be subject to certain regulatory requirements, particularly those relating to transparency, consumer protection, and market abuse. MiCA mandates that issuers of such tokens publish a detailed white paper containing essential information about the project, the rights granted by the token, and the associated risks. Depending on their specific structure, some tokens may also be reclassified as financial instruments under MiFID II if they exhibit investment-like characteristics. This reclassification would trigger more stringent regulatory and reporting obligations, especially for issuers operating across multiple EU jurisdictions.
From a taxation perspective, these tokens are typically subject to VAT when linked to the provision of goods or services. For example, the issuance of an NFT (non-fungible token) representing a piece of digital artwork or a restaurant voucher may be treated as a taxable event, depending on the underlying transaction. If a utility token is used to purchase a meal or access a subscription service, the transaction is generally taxable based on the value of the good or service received. This complexity requires businesses to assess the functional nature of each token and apply tax rules accordingly. Moreover, accounting for third-category tokens may involve treating them as intangible assets or deferred revenue, depending on whether they represent future obligations or access rights.(3)
Taxes on E-Money Tokens (EMT) and Asset-Referenced Tokens (ART)
Under the MiCA framework, both EMTs and ARTs are treated as financial instruments for tax purposes, which has significant implications for their VAT treatment and broader fiscal classification. Specifically, the issuance, transfer, and exchange of EMTs and ARTs are exempt from Value Added Tax under Article 135 of Directive 2006/112/EC, as these activities are considered financial services. EMTs, being pegged to fiat currencies and functioning as digital equivalents of traditional money, are treated as cash payments rather than barter transactions. Consequently, when EMTs are used in commercial exchanges, such transactions are not subject to VAT, reinforcing their role as fiat substitutes in a digital context.
In contrast, ARTs—though also VAT-exempt—are subject to more complex fiscal implications, particularly when exchanged for other assets. The exchange of ARTs may be interpreted as a swap of securities, potentially triggering capital gains or losses depending on the relative values of the tokens involved. These tax events must be documented and reported according to national legislation on capital income. Moreover, when ARTs are traded in secondary markets or used in investment-like structures, they may fall under capital markets regulations, including those governing withholding tax or reporting of financial transactions. Businesses and individuals involved in ART transactions must therefore implement robust accounting and compliance practices to meet their reporting obligations.(4)
Taxes on Third Category Tokens
Taxation of third-category tokens—such as utility tokens and NFTs—depends largely on the nature of the underlying transaction and the function of the token. Unlike EMTs and ARTs, these tokens are not inherently exempt from VAT. When a token grants access to a digital product, service, or physical good, the transaction may be classified as a taxable supply. For instance, if a token is used to purchase a subscription to a streaming platform or to redeem a physical item like a t-shirt or meal, VAT is generally due based on the fair market value of the good or service provided. NFTs linked to digital art or event access are similarly subject to VAT if they represent a concrete product or service. This VAT liability arises even if the token itself fluctuates in value or is resold in secondary markets.
An illustrative example is the sale of a utility token in a restaurant setting. Suppose a customer purchases a token representing a specific dish, such as a croissant. In this case, the transaction would likely be subject to VAT, as it constitutes the sale of a food item, not a financial service. However, ambiguity may arise when tokens serve mixed purposes—such as granting access to both services and potential rewards—necessitating a functional and contextual assessment. Tax authorities may evaluate the primary purpose of the token, the contractual terms, and the associated documentation when determining taxability. This nuanced treatment highlights the importance of precise token classification, clear invoicing, and detailed record-keeping for tax compliance.(5)
Salary Payments in Crypto-Assets
The use of crypto-assets for salary payments introduces complex legal and tax considerations that depend largely on the classification of the token used. When salaries are paid in e-money tokens (EMTs), these payments are generally treated as equivalent to traditional fiat remuneration. Given that EMTs are fully backed by fiat and regulated under the same principles as electronic money, tax authorities may accept such payments as legitimate wage transfers. As a result, standard payroll taxes, income tax withholdings, and social security contributions apply just as they would for euro- or dollar-denominated salaries. Employers must still comply with employment law requirements, including minimum wage thresholds, and ensure that employees have clear access to the real-world value of their earnings.
In contrast, paying salaries in asset-referenced tokens (ARTs) or tokens from the third category introduces greater uncertainty. ARTs, due to their basket-backed nature and potential price volatility, may not be viewed as stable or predictable enough for salary purposes unless additional safeguards are implemented. When compensation is provided in utility tokens, NFTs, or tokens that fall outside the regulatory perimeter of MiCA, tax authorities may treat such payments as non-cash compensation, similar to in-kind benefits or bonuses. This could trigger the application of fringe benefit tax rules and necessitate the valuation of the token at the time of payment. Employers would need to report the market value of the tokens and apply standard income tax and social contributions accordingly, creating potential administrative burdens.(6)
Intercompany Payments and Revenue Recognition
In the context of business-to-business transactions, the nature of the crypto-asset used significantly affects how payments are treated for accounting and tax purposes. If a company settles an invoice using EMTs, the transaction is generally regarded as a monetary payment. This means the payment is treated as equivalent to a bank transfer in fiat currency, and standard revenue recognition principles apply. The receiving company would recognize the revenue at the invoiced amount in its functional currency, and the EMT would be recorded on the balance sheet as cash or a cash equivalent, assuming sufficient liquidity and price stability.
On the other hand, payments made in ARTs, NFTs, or utility tokens are more likely to be classified as non-monetary settlements. These transactions may be treated as barters, requiring both parties to assess and agree upon the fair market value of the crypto-assets exchanged. For accounting purposes, the tokens received would be recorded as intangible assets or inventory, depending on the nature of the business. Revenue recognition becomes more complex, especially if the token’s market value is volatile or not readily determinable. Furthermore, such transactions could trigger tax implications in the form of VAT (if applicable) or capital gains/losses if the token has appreciated or depreciated since acquisition.(7)
Expected Changes in Accounting Practices
The implementation of MiCA introduces new accounting challenges that require organizations to reassess how they record and present transactions involving crypto-assets. One of the key implications is the differentiation in how various types of tokens—EMTs, ARTs, and third-category tokens—are classified in financial statements. EMTs, due to their stable value and backing by fiat currency, may be treated as cash or cash equivalents, especially when they are readily convertible to traditional currency and used as a medium of exchange. This approach simplifies the accounting process and aligns EMTs with existing standards for monetary instruments. In contrast, ARTs and utility tokens are more likely to be categorized as intangible assets or financial assets, depending on their use and economic substance. This requires periodic fair value assessment and potentially complex disclosures regarding volatility, impairment, or revaluation adjustments.
Additionally, the need for real-time blockchain-based transactions introduces technical demands on accounting systems. Organizations dealing with high volumes of crypto transactions—particularly those involving tokens with large decimal precision or operating on platforms like Ethereum—must adopt software that supports high numerical accuracy, often up to 18 decimal places. Furthermore, integration with blockchain explorers or smart contract interfaces is becoming increasingly necessary to ensure auditability and traceability. Automated reconciliation tools and real-time data feeds will likely become standard in accounting platforms that serve crypto-intensive businesses. These changes reflect not just a technological shift, but also a broader need for accounting policy updates, internal controls, and staff training to ensure accurate and compliant reporting of crypto-asset transactions under MiCA and IFRS frameworks.(8)
Role of Accountants
As the regulatory framework under MiCA reshapes the classification and treatment of crypto-assets, accountants are taking on an increasingly strategic role in ensuring compliance, transparency, and financial integrity. One of their key responsibilities will be the verification of regulatory status of tokens used or held by the business. Since MiCA imposes different requirements depending on whether a token is classified as an EMT, ART, or a utility token, accountants must ensure that each asset’s classification is properly documented and supported by the issuer’s whitepaper, licensing status, and market behavior. This due diligence is essential not only for correct financial reporting but also for determining applicable tax treatments and disclosure obligations. Moreover, in cross-border operations, the role of accountants expands to include monitoring divergences in national tax interpretations and adapting reporting accordingly.
The lack of standardized accounting frameworks for crypto-assets across jurisdictions also introduces a higher degree of risk and professional judgment. Accountants must navigate untested regulatory boundaries, evolving industry practices, and market volatility, all of which complicate valuation and audit readiness. As a result, there is a growing demand for specialized knowledge in blockchain technology, digital asset flows, and smart contract analysis. Mistakes in classification or valuation can lead to underreported taxes, misstated financials, or even regulatory penalties. To address these risks, accounting professionals will need to collaborate closely with legal advisors, IT departments, and external auditors, while also advocating for internal policy updates and staff training on crypto-asset handling.(9)
Business Implications: Case Study – A Bakery Utilizing Utility Tokens
Imagine a small artisanal bakery that introduces a proprietary utility token, “BakeCoin,” which customers can purchase and redeem for baked goods such as bread, pastries, or seasonal items. The bakery implements this model to foster customer loyalty and streamline digital payments. From a regulatory perspective, “BakeCoin” would most likely fall into the third category of tokens under MiCA, as it provides access to goods without being directly backed by fiat currency or other financial assets. Since these tokens represent a right to receive a product or service, the transaction is viewed as a prepayment or voucher. Accordingly, when customers purchase BakeCoins, the bakery may be obligated to account for VAT at the moment of redemption, depending on local VAT treatment of advance payments and the nature of the token’s functionality.
If, however, the token were to evolve and become backed by a basket of commodities—such as wheat, sugar, or eggs—it could be reclassified as an asset-referenced token (ART) under MiCA. In such a case, the bakery would face stricter licensing requirements from regulatory authorities like ESMA or the national financial regulator. Additionally, under this ART classification, transactions involving the token could benefit from VAT exemptions, similar to the treatment of securities. This shift, while potentially offering tax efficiencies, would also increase the compliance burden and necessitate registration, whitepaper issuance, and ongoing disclosures. The bakery would need to evaluate whether the administrative and legal obligations outweigh the benefits of such a token model.
Alternatively, if the bakery were to issue a fully fiat-backed EMT, where each token represents €1 worth of store credit, the implications would change significantly. EMTs are treated as electronic money and fall under the scope of the EU’s e-money directive. Payments using these tokens would be considered fiat-equivalent, likely qualifying for VAT exemption upon issuance, with tax obligations arising only upon actual consumption of goods. While this model may offer legal clarity and broader consumer trust, it would also require the bakery to obtain an e-money license, either directly or through a partnership with a regulated institution. For a small business, this could present both technological and regulatory barriers. Thus, the choice of token classification directly influences not only the tax treatment but also the overall feasibility and scalability of the bakery’s business model.(10)
Business Implications: Case Study – Real Estate Transaction Using USDC
Consider an individual who wishes to sell their apartment in exchange for USDC (USD Coin), a widely used fiat-backed stablecoin categorized as an e-money token (EMT) under MiCA. Since USDC is pegged 1:1 to the US dollar and fully backed by fiat reserves, the transaction is functionally equivalent to a cash sale, provided the stablecoin is issued by an authorized entity under MiCA. In such a case, the use of USDC in the sale does not fundamentally change the nature of the transaction from a legal or financial perspective. The seller would still be subject to capital gains tax on any profit from the sale of the property, and the buyer would still be responsible for notary, registration, and property transfer taxes—just as in a fiat-based transaction.
However, the use of USDC introduces new considerations in terms of payment processing, legal enforceability, and compliance. For example, although USDC may be considered cash-equivalent in some jurisdictions, real estate transactions typically require anti-money laundering (AML) checks, source of funds verification, and clear audit trails. The parties would need to ensure that the USDC wallet used is linked to a verified identity and that the funds can be converted into euros or another official currency for tax and legal purposes. Furthermore, if either party operates through a legal entity, accounting treatment of the USDC received or paid must reflect its status as an EMT—meaning it could be booked as a cash equivalent, reducing complexity in financial reporting.
If the transaction instead used a non-fiat-backed crypto-asset or an ART, the situation would become much more complex. For example, using an ART or utility token for payment might trigger a barter-like interpretation under VAT and property tax regulations, potentially requiring both a valuation of the crypto-asset and a secondary assessment for capital gains if the token’s value fluctuated. Moreover, since property law generally favors fiat settlement for registration and title transfer, using anything other than an EMT like USDC might necessitate an intermediate conversion step or even face rejection by public registries. Therefore, while USDC provides a streamlined and legally viable payment alternative, especially under MiCA’s clarified framework, all parties must still comply with existing property and tax laws.(11)
Changes in Accounting Policies and Classification of Tokens
With the introduction of MiCA, businesses will need to make significant updates to their accounting policies to ensure compliance with the new regulatory framework for crypto-assets. One of the primary changes involves the classification of tokens in the financial statements. EMTs, as stablecoins backed by fiat currencies, will likely be treated as cash equivalents due to their stable value and use as a medium of exchange.
This simplification allows for traditional accounting methods to apply, with EMTs recorded in the balance sheet as liquid assets. However, businesses must be prepared to review the legal and regulatory status of the issuer to ensure the tokens meet the necessary criteria for this classification. For ARTs and third-category tokens, which may exhibit more volatility or have intrinsic value linked to specific goods or services, businesses will need to categorize them as financial assets or intangible assets, and adjust their reporting accordingly to reflect their evolving value.
The differentiation of token classifications under MiCA is particularly crucial for tax reporting and revenue recognition. For example, while EMT transactions may be exempt from VAT in some cases, ARTs and utility tokens might require more complex tax treatment due to their potential for appreciation or their connection to specific goods or services. This could result in the need for a more detailed approach to income recognition and tax calculation, particularly for businesses engaged in the sale or exchange of such assets. Furthermore, as MiCA’s regulations evolve, businesses may need to make periodic adjustments to their accounting policies to accommodate new rules and market conditions. This calls for constant updates to both the financial reporting framework and the systems used to monitor, track, and assess the value of crypto-assets, ensuring that accounting remains accurate and compliant.(12)
Conclusion and Recommendations
For Businesses
As MiCA ushers in a new regulatory landscape for crypto-assets, businesses that engage in the issuance, use, or exchange of these digital assets must adopt a proactive approach to compliance and adaptation. For companies involved in crypto-token transactions—whether using EMTs, ARTs, or third-category tokens—it is essential to stay informed about the latest updates and interpretations of MiCA to ensure they are classifying and treating their tokens appropriately. Regular reviews of their accounting policies and tax reporting will be necessary, as token classifications directly influence financial statements and tax liabilities. Additionally, businesses should invest in systems and software that can seamlessly integrate with blockchain networks and crypto-asset tracking, helping to automate compliance with reporting requirements. In particular, businesses should ensure they have clear documentation for AML/KYC procedures and token legitimacy, ensuring both the stability of operations and trust with stakeholders.
Furthermore, businesses that plan to leverage crypto-assets should develop a robust internal framework for navigating the potential risks associated with volatility, tax obligations, and regulatory scrutiny. Educating employees, especially accounting and legal teams, on the evolving landscape of crypto regulations is crucial. It might also be worthwhile for businesses to explore strategic partnerships with regulatory-compliant crypto platforms or custodians that can simplify the management and conversion of tokens into traditional currencies. By remaining flexible and diligent in their approach, businesses can unlock opportunities for innovation while safeguarding themselves against regulatory pitfalls. In the long term, businesses that master crypto-compliance will likely have a competitive advantage in this rapidly evolving market.
For Regulators
For regulators, the introduction of MiCA marks a pivotal shift in how the EU approaches the regulation of crypto-assets. It is crucial for regulators to maintain an ongoing dialogue with businesses and the broader crypto community to refine the regulatory framework. Given the fast-paced evolution of blockchain technology and crypto markets, regulators must stay adaptable to ensure that the rules remain relevant and robust enough to handle new developments like decentralized finance (DeFi), NFTs, and emerging token models. One recommendation is for regulators to develop clear, detailed guidelines on how to treat less conventional tokens, ensuring that businesses have a consistent, predictable regulatory environment in which to operate. Providing clearer definitions around the use of utility tokens in specific sectors, such as real estate or retail, would reduce confusion and support broader adoption.
At the same time, regulators need to balance protection with innovation, ensuring that the regulation doesn’t stifle the development of new, potentially transformative technologies. A cooperative approach with international regulatory bodies will be key in managing cross-border issues, especially given the decentralized nature of many blockchain projects. Global harmonization of crypto regulations could help avoid fragmentation of the regulatory landscape and foster a level playing field. The ongoing review of MiCA and related regulations should involve consultations with industry stakeholders, academics, and legal experts to adapt the regulatory framework as technology advances. With the proper regulatory oversight, crypto-assets can be integrated into the financial system in a way that maximizes innovation while mitigating systemic risk.
For Future Research
Looking ahead, future research in the field of crypto-assets and their regulatory impact remains essential. There is a growing need for studies focused on how crypto regulation, particularly MiCA, affects the broader financial system, with a special focus on decentralized exchanges (DEX) and tokenization of traditional assets like real estate. Researchers could explore the impact of tokenization on liquidity, market volatility, and investor behavior, as well as the challenges of incorporating digital assets into existing financial infrastructure. A deeper understanding of how MiCA will interact with the ongoing development of smart contracts and DeFi platforms is also crucial. It is likely that the broader impact of MiCA will evolve as more use cases emerge for crypto-assets, particularly in sectors such as healthcare, supply chain, and even governance.
Moreover, scholars should examine the socio-economic implications of a more crypto-integrated society, including its potential to democratize finance and create more inclusive financial systems. The regulatory treatment of central bank digital currencies (CBDCs) in comparison to private crypto-assets could also be an exciting area of exploration, as governments around the world continue to explore their own digital currencies. As crypto-assets continue to gain acceptance and influence in the global economy, this type of research will be vital in shaping policies that foster stability, innovation, and public confidence in the digital economy. By bridging the gap between regulation, technology, and market trends, researchers will play an indispensable role in navigating the future of crypto-assets and their regulation.
Personal Reflection
As we look towards the future of digital finance, it’s exciting to think about the endless possibilities that innovations like blockchain and crypto-assets can bring to traditional industries. MiCA offers an important first step in providing a framework that balances innovation with safety, but there’s still much to explore. It’s fascinating how this space evolves so rapidly—while the regulatory framework is catching up, we’re already seeing entire new sectors emerge. For businesses, especially those that are flexible and tech-savvy, there’s immense opportunity to lead in this evolving market. As someone who enjoys exploring new technologies and their societal impact, it’s clear that the intersection of finance, law, and technology will continue to be a rich field for innovation, requiring both creativity and caution in equal measure.
Footnotes
1. Regulation (EU) 2023/1114 (MiCA); Directive 2009/110/EC on the taking up, pursuit and prudential supervision of the business of electronic money institutions; Directive 2006/112/EC on the common system of value added tax.
2. Directive 2006/112/EC on the common system of value added tax; Directive 2014/65/EU (MiFID II).
3. Regulation (EU) 2023/1114 (MiCA); Directive 2006/112/EC on VAT; MiFID II (Directive 2014/65/EU); ESMA crypto-assets guidelines.
4. Directive 2006/112/EC on the common system of VAT; Regulation (EU) 2023/1114 (MiCA); MiFID II – Directive 2014/65/EU.
5. European Commission VAT Committee Guidelines; OECD Guidance on the Tax Treatment of Crypto-Assets.
6. European Commission, MiCA Regulation (EU) 2023/1114; National tax authority guidelines on non-cash compensation.
7. Directive 2006/112/EC on VAT; IFRS Interpretations on crypto-assets; OECD Tax Guidance on Virtual Currencies.
8. IFRS Foundation: Accounting for Crypto-assets; Regulation (EU) 2023/1114 (MiCA); European Financial Reporting Advisory Group (EFRAG) discussions on digital assets.
9. MiCA Regulation (EU) 2023/1114; International Federation of Accountants (IFAC) guidance on crypto-assets; ESMA reporting frameworks for digital assets.
10. Regulation (EU) 2023/1114 (MiCA); Directive 2009/110/EC on e-money; European Commission VAT Guidelines.
11. EU Anti-Money Laundering Directives; National Real Estate Law and Property Tax Codes.
12. MiCA Regulation (EU) 2023/1114; IFRS Accounting Standards on Crypto-assets; European Commission Taxation and Digital Economy Guidelines.
“Structure inspired by a report on MiCA, with author’s analysis and interpretation.”
attorney-at-law
Svetlan Iliev