MiCA classification of crypto-assets in Estonia with MiCA
For the MiCA regulation, as applied in Estonia, there are three different types of crypto-assets:

Electronic Money Tokens (EMT), whose value derives from a single other asset;
Asset-Referenced Tokens (ART), whose value derives from more than one other asset and/or from an algorithm;
Other crypto assets, gathering all those who don’t fall under the first two classes, but still require regulation.
Every crypto asset issued in Estonia requires the preparation of a whitepaper, to be professionally prepared and reviewed by the National Competent Authority (NCA) of Estonia before the ICO or ITO. The content and form of the whitepaper depends on the token classification, as well as its features and purpose.

It is important to note that the MiCA regulation differentiates crypto-asset issuers from crypto-asset services providers, even though an entity can be both. If you are interested in the CASP regime, we invite you to consult our guide to the MiCA license in Estonia.

Issuing an EMT in Estonia (Electronic Money Tokens)
EMTs are often compared to stablecoins, as the single referenced asset behind an EMT’s value is more often than not a fiat currency, such as the euro or US dollar.

The MiCA requirements in Estonia to issue an Electronic Money Token are the most stringent of any crypto-asset type, under the Markets in Crypto-Assets regulation. Basically, there are 5 points of compliance to ensure:

The issuer is authorized as an EMI or credit institution within the EU, as per Article 48.1.(a);
A complete whitepaper, compliant with Article 51 and Annex III of the Regulation;
Notification of the NCA at least 40 days before issuance (Article 48.6);
Issue the EMT at par value and on the receipt of funds (Article 49.3).
This means that issuing an EMT in Estonia will require an electronic money license and a very strong legal documentation, as well as a very tightly coordinated issuance. The EMI authorization in itself imposes requirements in terms of solvency and asset detention, pertaining to the crypto-asset to be issued.

Issuing an ART in Estonia
ARTs are a wider category than EMT, but their concrete use cases are less known. An ART issued in Estonia derives its value from various assets, and/or from two or more fiat currencies.

Unlike EMTs, they do not require the issuer to receive an EMI license first. The main requirement to keep in mind is then the obligation of solvency, with a minimum of 350,000 EUR (on the basis of three different calculations) to be held at all time by the ART issuer in Estonia.

Similarly, the MiCA regulation imposes on ART issuers to hold the reserve assets in sufficient amount and in segregated accounts, who may be the object of audits from the NCA.

There are also obligations applying to ART issuers in Estonia under MiCA, as they are required to report every quarter on the number of holders, their value, and the data pertaining to transactions.

Issuing a crypto-asset in Estonia (not EMT/ART)
Any crypto asset that does not qualify as an EMT or ART falls into a third category, in Estonia and within the MiCA regulation. This category is not a leftover one and has requirements, such as the one of issuing a compliant whitepaper.

NFTs are only excluded from this categorization if they are not intrinsically fungible (all the same), that they are unique pieces whose value doesn’t derive from another asset. Such NFTs are then theoretically outside the scope of MiCA.

Preparing the white paper of a crypto-asset to be issued in Estonia
The elements required by the white paper of a crypto-asset issued in Estonia, depending on its classification, are explained in the Annexes I, II and III of the Regulation.

Annex I of the MiCA regulation lists all the required information to legally issue a non-AMT/EMT crypto-asset in Estonia and in any MiCA-regulated jurisdiction. 78 elements and questions divided into 11 sub-parts must be duly filled by the issuer, in order to issue its crypto-asset according to MiCAR.

Annex II lists the requirements to issue an ART in Estonia or any other MiCA jurisdiction, with 65 elements divided into 7 sub-parts.

Annex III lists the requirements to issue an EMT in Estonia or another MiCA jurisdiction, and counts 37 elements divided into 6 sub-parts.

We encourage our reader to have a look at these requirements directly at the bottom of the MiCA regulation (link here) and to seek professional guidance such as offered by our services for clarification and for moving forward safely.

How long does it take to issue a token in Estonia under MiCA
The time necessary to fully prepare a token issuance in Estonia, compliant with the MiCA regulation, depends on how quickly the different steps to issuance are complete.

There are quite a few milestones to reach in order to issue a token:

Determining the crypto-asset class, making use of a legal opinion;
Establish a legal entity, for holding reserves among other things, to comply with necessary requirements;
Prepare the white paper, in accordance with the expectations laid out in the MiCA Annex pertaining to the relevant crypto-asset class;
Obtain authorization from the Estonian NCA, including an EMI license in the case of Electronic Money Tokens;
Ensure compliance, with consumer protection and AML rules;
Ensure the reserves and fund safeguarding, within regulated financial institutions;
Comply with the monitoring and reporting obligations, providing required info to the regulator.
Obtaining an EMI license to issue an EMT, for example, could take about 4 to 6 months. The issuance of a utility token can be significantly faster, all the steps being possible to complete in less than a month. ARTs are somewhere in between, with the obligation to get the greenlight from the Estonian NCA and to hold the regulatory required reserves.

How much does it cost to issue a token in Estonia under MiCA
As for the duration question: it depends on the issued asset class.

As we saw that the issuance of Electronic Money Tokens require to successfully register as an Electronic Money Institution, the costs associated with such licensing processes and operation are significantly higher than for the simple formation of a compliant corporate structure with the drafting of the necessary documents for issuing a crypto-asset that is neither an ART nor an EMT.

We know that you, the reader, would like to have hard numbers, and we would really like to provide them to you. But the fact is that the cost to issue a MiCA compliant token in Estonia will depend on multiple factors, ranging from legal preparation costs to corporate structure and necessary authorizations. And the best we can do is invite you to contact us for a personalized assessment of your project.

One may also want to consider the matter of taxes. Once you have proceeded to the token sale and collected profits, distribution of the money through wages and dividends from the company will be liable to taxation. The advantage of Estonia being that, if the money stays in the company, it won’t be subject to taxation.