Previously we got a hint on the possible technology solutions MiCAR is regulating. One of those solutions are asset-referenced tokens (ARTs). In order for this particular token (stablecoin) to have its usage in the crypto-asset industry is that it is technologically linked with some underlying asset of conventional meaning, such as real estate, commodities (gold, oil, timber) and financial instruments (stocks, bonds etc.). Notably, the ARTs are usually backed by the portfolio of the assets which means that there are several asset categories linked with particular tokens for the determination of its value.
Although several asset classes under one portfolio could be a sign of diversification, in the real of crypto-assets usually these portfolios are opaque and hardly to understand in terms of smart contracts and algorithms used. Moreover, the portfolios usually are gathered with relatively risky and volatile assets, hence in the times bear markets investors could lose significant amount of value.
On the other hand, if asset-referenced tokens are backed only by the most investment grade EU member state government bonds, situation the picture becomes completely different due to higher reliability, fixed income streams and better transparency. Since these are relatively low risk debt securities of the most advanced countries in Europe, they remain liquid and could be every investors choice in times when bad mood is all over the markets and fair of uncertainty prevails. The eurobond-backed stablecoins are issued for comparatively risk averse and modern retail and institutional investors that appreciates blockchain technologies, liquidity and transparency. ARTs offer the best of both worlds – stable income streams in bear markets and safe heaven for diversification.
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