Autore: Dott. Enea Franza

1. Introduction: Definition and Characteristics of EMTs

Regulation (EU) 2023/1114, known as MiCA (Markets in Crypto-Assets), represents a milestone in the regulation of crypto-assets in the European Union. It introduces a harmonised legal framework for the management, issuance and supervision of crypto assets, with a focus on investor protection and financial stability. Among the regulated categories of crypto-assets, electronic money tokens (EMTs) occupy a central position, as they aim to maintain a stable value pegged to a fiat currency and are intended to serve as an electronic means of payment.

According to Article 3(1)(7) of Regulation (EU) 2023/1114 of the European Parliament and of the Council (MiCA, an acronym for Markets in Crypto-Assets), electronic money tokens (EMTs) are defined as a particular category of crypto-assets designed to maintain a stable value by exclusive reference to an official currency (e.g. EUR, USD, GBP),  in order to be used as a digital means of payment.

According to the regulatory formulation, the qualifying feature of EMTs is precisely the stability of value pegged to a single fiat currency: this distinguishes EMT from so-called asset-referenced tokens (ART), which instead refer to baskets of assets (currencies, commodities, financial instruments), and from utility tokens, whose value derives from access to a specific service. The EMT token has a strictly monetary function and is neither a credit security nor an investment product.

1.2. Legal profile of EMT under EU law

MiCA, in art. 48 et seq., establishes that the issuance of EMTs can only take place by authorized parties, namely:

• credit institutions, pursuant to Directive 2013/36/EU (CRD IV),
• or electronic money institutions, authorized according to Directive 2009/110/EC (EMD2).

This link with EMD2 is not merely formal: it highlights how EMT is conceptually similar to “traditional” electronic money, defined by Article 2, point 2 of the same directive as a “monetary value stored electronically, representing a claim against the issuer, issued upon receipt of funds, used to carry out payment transactions”.

The EMT, despite being a distributed ledger token (DLT), meets similar requirements:

• stable value pegged to fiat money,
• reimbursement at the holder’s request at nominal value (Art. 49 MiCA),
• prohibition of remuneration/interest on tokens held, consistent with Article 12 of the EMD2.

1.2. Prudential profiles and hedging buffers

EMTs are subject to a particularly strict prudential regime, inspired by the logic of full reserve backing. Art. 50 of the MiCA requires the issuer to hold highly liquid and risk-free funds or assets (e.g. cash, bank deposits, short-term government bonds) for a value equal to that of the tokens issued. These assets must be deposited with one or more financial entities of high standing (central banks or authorised custodians).

In accounting terms (IFRS 9), the tokens issued generate a financial liability of the issuer. The hedging fund constitutes the counterpart in assets and must be separated from ordinary assets. Segregation is a key tool to ensure the solvency of the issuer and protect users.

1.3. Reimbursement and non-return: legal and accounting implications

One of the main conditions imposed by MiCA (art. 49) is that EMTs are redeemable in fiat currency at the simple request of the holder, at nominal value. This clause faithfully recalls the provisions of the EMD2 directive for electronic money (art. 11) and has profound consequences on accounting treatment and supervision.

From an accounting point of view:

•  reimbursement requires a recognition at the amortised cost of the liability (IFRS 9, par. 4.2.1),
• the lack of return excludes the classification as interest-bearing financial instruments or investments (it is not IFRS 9 Fair Value Through Profit or Loss – FVTPL).

This approach has also been confirmed at the supervisory level: the European Banking Authority (EBA), in its guidelines on the prudential treatment of crypto assets, highlights that EMTs should not be treated as capital instruments, let alone derivatives.

1.4. Comparison with the US (FinCEN) and UK (FCA) regulations

From a comparative point of view, EMTs find a partial parallel in “stablecoins” regulated in other jurisdictions.

• In the United States, the Financial Crimes Enforcement Network (FinCEN) considers dollar-pegged stablecoins to be electronic money under the Bank Secrecy Act. However, the absence of a harmonized federal law means that authorization may depend on the individual states. The Uniform Law Commission has proposed the Uniform Commercial Code (UCC) Article 12, which expressly defines the concept of controllable electronic record, which can include EMT-like stablecoins.
• In the UK, the Financial Conduct Authority (FCA) distinguishes between e-money tokens and security tokens. The former, which essentially correspond to EMTs, are subject to the Electronic Money Regulations 2011 (transposition of EMD2) and require a license from the FCA. In addition, the Bank of England has signalled that the issuance of stablecoins that can be used for systemic payments will require prudential requirements similar to those of banks.

This comparison highlights how the MiCA framework – while more restrictive – offers greater legal clarity and regulatory stability, strengthening confidence in the sector.

1.5. Final reflections on the legal nature and economic function of EMTs

E-money tokens are not simple digital representations of value. They constitute a form of regulated private money, which acts within a DLT ecosystem, but which recalls, by structure, the classic mechanisms of electronic banking money. They are not financial instruments (such as bonds or shares), they are not investment products, and not even “pure code” virtual currencies such as Bitcoin: they are digital fiduciary instruments, the value of which depends on the solvency and compliance of their issuer.

Their function is twofold:

• on the one hand, technical, as they facilitate transactions in DLT environments (e.g. smart contracts);
• on the other hand, systemic, as they could represent a new form of regulated private quasi-money, in competition/integration with official currencies and CBDCs (Central Bank Digital Currencies).

2. ALLOCATION OF EMTS IN THE BALANCE SHEET

a) Initial Recognition

When issuing electronic money tokens (EMTs), the issuing entity receives funds in fiat currency (e.g. euros) from the customer or user purchasing the EMTs. At the same time, the issuer creates a financial obligation to the token holder, consisting of a commitment to redeem the nominal value of the tokens upon request.

From an accounting point of view, this operation involves two fundamental transactions:

• Assets: there is an increase in cash and cash equivalents, typically in the form of an increase in the bank or cash balance, representative of the funds received. This reflects the concrete financial income linked to the subscription of tokens.
• Liabilities: a financial liability is recognized, as the issuer is obliged to return the funds received at the request of the holder. This liability represents, in essence, the debt assumed towards the customer holding the EMTs.

This approach has a solid regulatory basis in IFRS, in particular IFRS 9 – Financial instruments:

• The liability to the holder of the EMTs is classified as a “financial liability at amortised cost”, since the EMT is redeemable at nominal value without additional interest.
• The initial valuation takes place at the received value, which corresponds to the face value of the tokens issued.

This classification is consistent with the provisions of Article 3(1)(7) and Article 49 of the MiCA Regulation, which establish the repayment at nominal value and the prohibition of interest for the holder.

In addition, Directive 2009/110/EC (EMD2) defines electronic money as an electronically stored monetary value, representing a claim on the issuer, and this underlines the nature of the token as a financial liability.

Example of accounting entry:

Debit Account	Credit Account	Amount (€)	Description
Bank account (assets)	Payables to EMT holders	100.000	Issuance of 100,000 EMTs and receipt of fiat funds

b) Subsequent Evaluation

After initial recognition, the EMT must be periodically assessed in the financial statements.

Given that the EMT is stable and pegged to a fiat currency at a 1:1 ratio, its subsequent valuation remains at face value (amortized cost without interest). The reasons are:

• The absence of significant changes in market value, thanks to the mechanism of pegging to fiat currency.
• The absence of interest payments or other additional financial flows.
• The nature redeemable on request at nominal value.

Therefore, except for events that imply a deterioration in the solvency of the issuer (default or risk of default), there are no reasons to change the value of the liability.

In the event of a significant default or mismatch between the nominal value and market value of the EMT, the issuer must carry out an impairment assessment, in line with the indications of IFRS 9 (par. 5.5 et seq.).

Operational and accounting implications:

• Gains or losses from changes in fair value on EMTs are not recognised unless exceptional events occur.
• The liability must be maintained at nominal value, faithfully reflecting the repayment obligation.

Regulatory references:

• Art. 49 MiCA Regulation: obligation  to redeem at nominal value.
• Directive 2009/110/EC (EMD2): definition and characteristics of electronic money.
• IFRS 9: Accounting treatment of financial instruments classified as liabilities at amortised cost.

Considerations

This method of imputation and evaluation confirms how the EMT, while using innovative technologies such as blockchain and distributed ledgers, maintains an accounting and legal nature remarkably close to traditional electronic money. The adoption of a prudential and transparent treatment strengthens the confidence of stakeholders and ensures the correct representation in the financial statements of the financial obligations assumed by the issuer.

• MANAGEMENT OF FUNDS RECEIVED AS A NON-REPAYABLE GRANT

In the context of EMTs (Electronic Money Tokens) and the new provisions of the MiCA Regulation, the issuer may receive non-repayable funds from public bodies, institutions or other entities, aimed at supporting technological development, the adoption of the token or the liquidity necessary for issuance. The correct allocation of these funds to the balance sheet is crucial to ensure transparency and regulatory compliance.

3.1. Funds tied to the issuance of EMTs

When non-repayable funds are explicitly tied to the issuance and redemption of EMTs, they must be accounted for as a liability. This is because they represent a loan received with a specific intended use and the implicit obligation to comply with this constraint.

Accounting reasons and principles:

• According to the principles of OIC 24 – Government Contributions, a contribution tied to a future asset or liability must be recognised as a liability until the intended use is verified or the condition is met.
• The restricted fund therefore represents a debt, since the funds are not a revenue, but a specific loan intended to cover the issuance and redemption of EMTs.
• From an IFRS perspective, IAS 20 – Government Grants and Government Grant Disclosures also requires that an encumbrance contribution be recognised as a liability if there are conditions to be met.

Representation mode:

• On the balance sheet, the restricted fund is recorded as a current or non-current liability, depending on the period within which the funds are expected to be used.
• In parallel, funds are recorded as assets (e.g., escrow bank account), ensuring traceability and asset segregation.
• As funds are used to issue tokens or to redeem them, the liability decreases as the liability to EMT holders increases.

Practical example:

Debit Account	Credit Account	Amount (€)	Description
Bank account (assets)	Restricted provision (liabilities)	100.000	Receipt of restricted fund for EMT issue

As funds are used:

Debit Account	Credit Account	Amount (€)	Description
Restricted provision (liabilities)	Payables to EMT holders	60.000	Use of fund for EMT issuance

3.2. Unencumbered funds

If the non-repayable funds received are not subject to specific restrictions on use, the issuer may recognize them in the financial statements as:

• Capital grants (equity): where national legislation or CIUs provide for it, especially if they are long-term grants or not intended for specific costs.
• Income (income statement): if the funds are intended to cover current or operating expenses without formal constraints, and according to the accrual principle they are allocated as revenues.

References:

• The OIC 24 provides that capital grants must be recorded in equity, highlighting that these are resources available to the company without repayment obligations.
• IAS 20 allows contributions to be recognised as deferred revenue or directly in the income statement, depending on the conditions and nature of the contributions.

Implications:

• Unrestricted funds increase equity or income statement, without creating liabilities.
• However, it is advisable to clearly highlight the nature and destination of the contributions received in the notes to the financial statements.

3.3. Importance of accounting separation

Regardless of the nature of the fund, it is crucial to maintain a clear and transparent accounting separation between:

• Funds earmarked for the issuance of (encumbrances) EMTs and
• Other unrestricted or general funds.

This distinction ensures:

• The correct representation of assets and financial statements in the financial statements.
• Transparency towards stakeholders and control bodies.
• Proper reporting in compliance with MiCA requirements and national/international accounting standards.

Tabular summary

Type of Fund	Accounting Treatment	Classification Financial Statements	Regulatory references
EMT Restricted Funds	Financial liability (restricted provision)	Current/non-current liabilities	OIC 24, IAS 20, MiCA art. 49
Unencumbered funds	Capital grants or income	Shareholders’ equity or income statement	OIC 24, IAS 20

The correct classification and accounting management of non-repayable funds is a central element for a faithful and prudent representation of the financial situation of EMT issuers. The MiCA regulation, together with national and international accounting standards, offers a clear framework, but interpretation and application require attention and precision, especially with regard to traceability and segregation of funds.

4. Wallet Accounting Management

4.1. Introduction

In the context of the management of Electronic Money Tokens (EMTs), digital wallets represent the essential technological infrastructure for the storage and movement of the tokens themselves. Given their crucial function, it is necessary to distinguish wallets based on their ownership and accounting impact, ensuring transparency, security and fairness in asset representation.

4.2. Distinction between issuer and client wallets

a) Issuer wallet

The digital wallet held by the issuer plays a significant role:

• Main function: to receive fiat funds from subscribers in exchange for EMTs, to store the issued tokens and to manage refunds to the customer.
• Accounting relevance: transactions carried out through this wallet have direct equity and financial implications and therefore must be recognized in accounting.

Accounting postings:

• Incoming transactions: For example, receiving fiat funds or tokens from customers who subscribe to EMTs.
• Outgoing transactions: refunds to customers, transfers to other wallets, or payments made via EMT.
• Each movement must be correctly recorded to reflect the actual amount of cash and liabilities to holders.

Periodic reconciliations:

• It is essential to carry out frequent reconciliations between digital wallet balances and accounting entries, to verify correspondence and identify any discrepancies or errors.
• These reconciliations ensure the transparency and fairness of the financial statements, as well as compliance with MiCA and accounting regulations.

Regulatory references:

• MiCA (Art. 49 et seq.): requires issuers to maintain a secure and transparent token management system.
• IFRS 9 and OIC: define the need for correct accounting of financial instruments (represented here by EMTs).

Practical example:

When the issuer receives 50,000 EMT from a customer on the company wallet:

Debit Account	Credit Account	Amount (€)	Description
EMT Wallet (Assets)	Payables to EMT holders	50.000	Receiving tokens from the customer

When you make a refund:

Debit Account	Credit Account	Amount (€)	Description
Payables to EMT holders	EMT Wallet (Assets)	20.000	Customer token refund

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b) Customer Wallet

• The client’s digital wallet is owned and operated externally by the issuer.
• It does not fall within the issuer’s balance sheet, as the tokens held are client assets.
• However, the issuer must maintain accurate and transparent records  of outgoing or incoming transactions to and from the client’s wallet in order to:
  • Ensure traceability.
  • Allow verification of repayment obligations.
  • Fulfill the reporting and compliance obligations provided for by MiCA.

4.3. Internal control and risk management systems

a) Monitoring and reconciliation

• Implementation of internal control systems that:
  • They monitor all transactions on issuing wallets in real-time.
  • They automatically reconcile blockchain ledger data with ledger entries.
  • They report anomalies, suspicious transactions, or discrepancies.
• These systems are critical to preventing errors, fraud, or unauthorized use of EMTs.

b) Safety and protection of funds

• Cybersecurity measures, such as:
  • Multi-factor authentication.
  • Cold wallets for secure storage.
  • Transaction Restrictions.
• These measures are essential to ensure the safety of users’ assets and the solidity of the issuer.

4.4. Regulatory implications and transparency

• The MiCA regulation emphasizes the importance of a secure and reliable infrastructure for the management of EMTs.
• Accounting regulations require transparency and accuracy of the data represented in the financial statements.
• The separation between the issuer’s and the client’s wallets is a key measure to avoid capital confusion and ensure the correct allocation of resources.

4.5. Conclusion

In summary:

• The issuer’s wallets are an integral part of the company’s assets and must be recorded and reconciled in the financial statements with detailed and timely entries.
• The customer’s wallets  are not included in the balance sheet but require strict traceability and transparency to ensure the correctness of financial flows and regulatory compliance.
• The adoption of robust and secure internal control systems is essential to ensure the protection of funds, the prevention of fraud and the correctness of financial information.

5. Valorisation and Verification of EMTs

The valuation of Electronic Money Tokens (EMTs) must be carried out at nominal value, in accordance with the provisions of Article 49 of the MiCA Regulation. This means that regardless of market swings or other external factors, the book value of EMTs on the balance sheet must reflect the face value for which they were issued, which is generally the amount of fiat currency to which the tokens are pegged.

The responsibility for ensuring this correct valuation lies entirely with the issuer of the EMTs. He must ensure that the funds received from the subscribers, which form the asset base for the issuance of tokens, are properly segregated and securely stored. This segregation serves to protect token holders by ensuring that there are sufficient resources for the redemption of the tokens themselves at any time, as required by the regulations.

In addition to proper asset management, the issuer also has an obligation to ensure maximum transparency towards investors and users. To do this, they must prepare an information document known as a white paper, which is a key tool for providing all the necessary information about the project and how the token works. The white paper must contain detailed data about the issuer, clearly describe the technical and financial functioning of the token, specify the rights and obligations of the holders, and indicate the risks involved in investing in EMTs.

A further element that needs to be addressed in the white paper concerns the environmental impact of the consensus mechanism adopted by the blockchain on which EMTs are based. Considering the growing focus on sustainability, the issuer is required to provide clear and complete information on this aspect as well, so as to allow investors to evaluate not only the economic aspects, but also the environmental aspects of the token.

In summary, the valuation of EMTs at face value, segregation of funds, and disclosure transparency through the white paper are three key pillars established by MiCA to ensure security and trust in the e-money token market. The issuer must therefore rigorously manage both the financial and information aspects, ensuring users a clear, reliable framework that complies with current legislation.

6. Reference Legislation

• MiCA (Regulation (EU) 2023/1114): regulates the issuance and management of EMTs in the European Union.
• Directive 2009/110/EC (EMD2): sets out the conditions for the authorisation and supervision of electronic money institutions.
• IFRS 9: provides guidelines for the classification and measurement of financial liabilities.
• IFRS 7: concerns the disclosure of financial liabilities.
• IFRS 13: defines fair value and measurement techniques.

7. Conclusion

E-money tokens are an innovative form of electronic payment that offers advantages in terms of efficiency and accessibility. However, managing them requires careful consideration of accounting and regulatory implications. It is essential for issuers to adopt transparent accounting practices that comply with applicable regulations in order to ensure investor protection and the stability of the financial system.

The adoption of MiCA provides a clear regulatory framework that facilitates the integration of EMTs into the European financial landscape, fostering innovation and trust in the crypto-asset sector.

SERIES OF PRACTICAL EXAMPLES OF DOUBLE-ENTRY ACCOUNTING ENTRIES RELATING TO ELECTRONIC MONEY TOKENS (EMTS), based on an IFRS scheme (but also adaptable to UCIs).

Each entry is preceded by an operational context that justifies it, so as to provide you with a clear framework for the allocation in the financial statements.

General hypothesis

• The issuer is an authorised electronic money institution.
• Issuance of EMTs pegged to the euro (1 EMT = 1 EUR).
• Funds received are deposited in segregated bank accounts.
• There is no accrual of interest.
• Measured at amortised cost, consistent with IFRS 9.

1. Issuance of EMTs upon receipt of funds

Background: A customer buys 100,000 EMT, transferring the equivalent in EUR.

Accounting entry:

Date	Debit Account	Credit Account	Amount (€)
01/01/2025	Restricted account bank (assets)	Payables to EMT holders	100.000

Notes:

• The bank (current activity).
• The liability to holders is classified as “other payables” or “financial liabilities” at amortised cost.

 2. Redemption of tokens at the customer’s request

Context: A customer requests a refund of 10,000 EMT.

Accounting entry:

Date	Debit Account	Credit Account	Amount (€)
15/01/2025	Payables to EMT holders	Restricted bank account	10.000

Notes:

• A part of the liability is extinguished.
• The segregated bank deposit is used for repayment.

3. Receipt of non-repayable funds (donation or restricted grant)

Context: a public body grants €50,000 in grants to encourage the adoption of EMT. Funds are tied to the issuance of tokens.

Accounting entry:

Date	Debit Account	Credit Account	Amount (€)
20/01/2025	Restricted account bank (assets)	Passive restricted fund	50.000

Notes:

• The “restricted fund” is a separate liability (not revenue) until the funds are actually used.
• Alternatively, in the OIC principles “operating grants” can be used.

4. EMT issuance financed by a non-repayable grant

Background: EMTs are issued for €25,000 financed entirely through the restricted fund.

Accounting entry:

Date	Debit Account	Credit Account	Amount (€)
22/01/2025	Passive restricted fund	Payables to EMT holders	25.000

Notes:

• The fund is “turned over” to support the issuance of tokens.
• No cash enters because the funds were already available.

5. Operating expenses incurred with the restricted fund

Background: An IT expense of €5,000 is incurred to develop an EMT wallet management system.

Accounting entry:

Date	Debit Account	Credit Account	Amount (€)
25/01/2025	IT service costs	Restricted bank account	5.000

Or, if the fund is to be cancelled:

Date	Debit Account	Credit Account	Amount (€)
25/01/2025	Passive restricted fund	Restricted bank account	5.000
	IT service costs	Passive restricted fund	5.000

6. Valorization of incoming wallets (EMT reception)

Background: The company receives 2,000 EMTs as payment from a customer.

Accounting entry:

Date	Debit Account	Credit Account	Amount (€)
28/01/2025	EMT Wallet (Digital Asset)	Revenue from services/tokens	2.000

Notes:

• The asset “EMT Wallet” can be recorded as a “digital asset” (specific item in financial statements with notes to the financial statements).
• The valuation is at nominal value (1 EMT = 1 EUR), verified by objective evidence (e.g. blockchain, DLT system).

7. EMT transfer from wallet to third party (payment)

Background: The company uses 500 EMTs to pay a supplier.

Accounting entry:

Date	Debit Account	Credit Account	Amount (€)
30/01/2025	Payables to suppliers	EMT Wallet (Digital Asset)	500

8. Annual recognition in the financial statements (extract)

Assets (Balance Sheet)

• Bank restricted account: € 135,000
• EMT Wallet (Digital Asset): €1,500

Passive

• Payables to EMT holders: € 115,000
• Restricted fund (remainder): € 25,000

Equity

• Share capital + reserves: € x
• Operating profit: € x