According to Article 36 (1) MiCAR issuers of asset-referenced tokens (ART) shall constitute and at all times maintain a reserve of assets in order to stabilise the value of the ART and to ensure liquidity in case the holders of ART exercise their redemption rights.

Article 36 (2) MiCAR prescribes that the reserve of assets shall be legally segregated from the issuers’ estate, as well as from the reserve of assets of other ART, in the interests of the holders of the ART in accordance with applicable law, so that other creditors of the issuers have no recourse to the reserve of assets, in particular in the event of insolvency.

An expression “legally segregated ….in accordance with applicable law” in Article 36 (2) MiCA rises a question whether the Level 1 legislation establishes a special type of collateral/security, whether it refers to application of already existing types of securities or the opposite – the appropriate way to segregate the respective assets under national law does not mean that these assets serve as collateral.

This question is of substantive importance with regard to resolution of credit institutions, investment firms and other entities under Article 1 of the BRRD. If the issuers’ liability to redeem the ART was secured in its very essence, this liability would be excluded from the write-down and conversion powers of the resolution authority. If this is the case the application of bail-in resolution tool regarding liability in question could not be possible. Furthermore, they would be non-eligible for MREL purposes.