Are Gold Tokens in Europe at Risk Under MiCA?

Our Alpha Plus members enjoy direct access to our analysts through our online Q&A forum on Discord. This interaction often leads to intriguing questions and valuable insights. Each month, we pick a few to feature under the banner of Alpha Answers.

1️⃣ What Would the Netherlands Look Like if We Embraced the Lightning Network for Payments?

Answer from Mike:

As you likely know, the Lightning Network allows for instant and low-cost bitcoin payments without the involvement of banks or payment providers. In theory, the Netherlands could leverage it to build an alternative payment system that’s open, global, and efficient.

However, the main hurdle here is efficiency. Although the Lightning Network can outperform systems in many other countries, it still doesn’t match the efficiency of our current, well-established payment methods like iDEAL, contactless payments, or Tikkie. Since our existing systems work so well, there’s little urgency to make a switch.

The underlying technology of the Lightning Network is robust enough for practical use, but it isn’t fully mature yet. Ongoing improvements—especially in routing, liquidity, and privacy—are continually being made.

In short, it serves those who choose to use it. Still, for widespread adoption in a country like the Netherlands, the network isn’t quite there yet. Internationally, Lightning is mainly used in cases where it offers a clear advantage over existing systems, which for now remains somewhat limited.

For our Alpha Plus members, we continue with these three questions:

2. Are Gold Tokens in Europe Threatened by MiCA?
3. Who Bears the Risk if Options Are Liquidated?
4. Reading Recommendations (for the May holidays)

2️⃣ Are Gold Tokens in Europe Threatened by MiCA?

Answer from Bert:

It’s possible that Paxos, the issuer of PAXG, might choose not to apply for a European MiCA license. If that happens, institutions regulated under MiCA—like European exchanges and brokers—would be required to delist PAXG from their platforms. In my view, this isn’t a direct threat from MiCA, but rather a strategic decision by Paxos.

In any case, there are several viable ways to gain exposure to gold:

1. Hold or trade PAXG or XAUT on an exchange that supports them (for example, one outside the EU or one not yet subject to MiCA).
2. Store PAXG or XAUT in your own non-custodial wallet. For example, you might withdraw a stablecoin like USDT/USDC and then convert it via a decentralized exchange (DEX) using an AMM (Automated Market Maker) into PAXG/XAUT.
3. Invest in a gold ETF through a traditional stockbroker.
4. Open a physical gold account with a specialized gold firm, such as GoldRepublic or Holland Gold.

I would personally consider option (2).

Additional answer from Mauro:

That’s correct; since PAXG is an Ethereum-based token, you can always purchase it through decentralized platforms like Uniswap and store it in your own hardware wallet or a software wallet like MetaMask—entirely outside of regulated European systems.

However, it appears that in the near future, regulated European brokers and exchanges won’t be able to offer or hold PAXG. In this context, MiCA classifies such tokens as ARTs (Asset-Referenced Tokens).

An ART derives its value from one or more underlying assets (such as gold, silver, or oil) or a basket of currencies managed by a central issuer. Conversely, if a token is pegged to a single official currency, like the euro or dollar, MiCA refers to it as an EMT (Electronic Money Token).

Issuing either EMTs or ARTs requires the issuer (for instance, Paxos for PAXG or Circle for USDC) to obtain a specific MiCA license. Furthermore, European crypto platforms (brokers, exchanges) can only offer ARTs and EMTs if the issuer holds the necessary license.

Several licenses have already been granted to issuers of EMTs (such as for USDC and EURC), but to our knowledge, no ART licenses have yet been issued for gold tokens—and it’s unlikely this will change soon. The stringent requirements, including those for capital and reserves, make issuing an ART under MiCA less commercially attractive.

Fun fact: MiCA was partly devised in response to Facebook’s Libra/Diem project, which envisioned a token backed by a basket of currencies (a typical ART). That project was eventually scrapped due to political and regulatory pressures.

Consequently, Bitmymoney will be able to offer PAXG until either they secure a MiCA license or the deadline of June 30, 2025, passes—unless Paxos manages to obtain an ART license before then.

3️⃣ Who Bears the Risk if Options Are Liquidated?

Answer from Bert:

This risk mainly applies when you sell naked options (i.e., write options), such as a short call or a short put. When you buy options (long call or long put) or sell a covered call, your maximum loss is predetermined, eliminating margin calls or forced liquidation in that sense.

The exact process for a forced liquidation of a naked position depends on your broker’s policies and the applicable regulations.

Within the EU, the MiFID II directive places significant responsibility on financial institutions (brokers) to protect investors from excessive losses—even though one might argue that the initial risk lies with the investor who knowingly takes on a risky naked position.

In practice, brokers implement robust risk management strategies to avoid such situations. This can mean increased margin requirements when market volatility rises or liquidity falls.

They also build in additional buffers to cover potential shortfalls during liquidations and may even opt to close positions preemptively before losses become too severe.

Without knowing the specifics of your brokerage agreement, I can’t say exactly how it’s handled in your case. However, under EU regulations, any shortfall following a forced liquidation in extreme cases typically falls on the broker, largely thanks to MiFID II’s investor protections.

4️⃣ Reading Recommendations (for the May holidays)

Answer from Bart:

I’d immediately recommend The Genesis Book by Aaron van Wirdum, which shares some of the same appeal as Tracers in the Dark. Another essential read for bitcoin enthusiasts is Mastering Bitcoin by Andreas M. Antonopoulos. It’s a bit technical, but I’ve learned a tremendous amount from it. Currently, I’m reading Broken Money by Lyn Alden, and the initial chapters look very promising.

Additional response from pimpuur:

I just finished reading Going Infinite, which covers Sam Bankman-Fried and the collapse of FTX. What a wild tale—I really enjoyed it!

Thank you for reading!

To stay informed about the latest market developments and insights, you can follow our team members on X:

• Bart Mol (@Bart_Mol)
• Peter Slagter (@pesla)
• Bert Slagter (@bslagter)
• Mike Lelieveld (@mlelieveld)

We appreciate your continued support and look forward to bringing you more comprehensive analysis in our next edition.

Until then!