Polkadot launches dotUSD without an issuer: why MiCA demands one

Polkadot has a stablecoin of its own. dotUSD has been running on the mainnet since October 8, 2026: a token pegged to the US dollar that has no issuer. No company issues it, no bank holds reserves, no supervisor has authorised it. It is steered by the holders of the network token DOT through the OpenGov voting system.

For investors in the European Union the launch falls at an awkward moment. On that same October 8, the European Securities and Markets Authority published an opinion that takes aim at exactly this kind of token. This piece explains what dotUSD is technically, why its construction collides with the EU crypto regulation MiCA, and which routes are left open to an investor in Germany.

dotUSD: what Polkadot launched on the mainnet on October 8

A stablecoin is a crypto asset whose price is meant to track a stable reference, usually a currency such as the US dollar. USDT and USDC are the well-known examples: there a company stands behind the token, manages reserves and undertakes to redeem it.

dotUSD takes a different route. The proposal underlying the launch states expressly that the token is to have no issuer and to work solely through logic on the blockchain. Polkadot’s own description calls it an overcollateralised stablecoin pegged to the US dollar. Overcollateralised means that behind every token issued sits more security than its face value, so that price swings in the collateral do not immediately push the token below the peg.

The large price database CoinGecko does not yet show a circulating supply for dotUSD. The token is listed there under the stablecoins category, but price and supply still stand at zero the day after the launch. How big dotUSD really is cannot therefore be put in serious figures on this Thursday.

Referendum 1944: how DOT governance resolved on the stablecoin

Legally and organisationally, dotUSD hangs on a vote. OpenGov referendum 1944 carries the title “dotUSD: A Native Stablecoin for Polkadot” and is marked as executed following its approval. It was tabled by the Polkadot Community Foundation, which expressly claims only an administrative role for itself in it.

OpenGov is Polkadot’s voting procedure: anyone holding DOT can decide on proposals, and an approved proposal is executed by the chain itself. Responsibility for dotUSD therefore rests with a shifting majority of token holders. That construction is technically consistent and, in supervisory terms, the core problem, as the section on MiCA below shows.

Peg Stability Module: how dotUSD is tied to the dollar in phase one

The launch comes in two stages, and the first looks different from what the term “native stablecoin” suggests. In phase one, users mint dotUSD one for one against USDT, through what is called a Peg Stability Module and subject to a cap. A Peg Stability Module is a contract on the chain that offers a fixed exchange rate between two tokens and so pins the price of the new token to that of the old one.

That means the current stage leaves dotUSD dependent on a third-party stablecoin for its backing. Holding dotUSD means carrying a share of the risk in the USDT reserves behind it. Which stablecoins German providers still offer at all, and how they differ, is shown by our stablecoin comparison.

Overcollateralisation along Liquity v2 lines: what phase two plans with DOT vaults

The second stage is meant to free the token from USDT. Users will then lock DOT in a vault and mint dotUSD against it below the dollar value of the collateral. The proposal gives a collateralisation ratio of 150 percent as an example: lock collateral worth 1,000 dollars and you mint at most around 666 dollars in dotUSD. The worked example in the proposal itself uses a DOT price of 5 dollars and therefore does not reflect today’s market.

Liquity v2 as the model: stability pool, liquidations and redemptions

As the technical basis the proposal names Liquity v2 and its stablecoin BOLD. That brings a price oracle to put the collateral’s price on the chain, a stability pool to absorb undercollateralised positions, plus liquidations and redemptions. A liquidation here means that a position’s collateral is realised compulsorily once its value falls below the required ratio. For the holder that means a sharp fall in DOT can cost the locked collateral, without any action of their own.

The dollar peg is to be held at this stage through two mechanisms: arbitrage, in which traders even out deviations by redeeming into DOT, and a capped buffer of existing stablecoins. Both are market-dependent mechanisms. Neither creates a claim against a counterparty.

E-money tokens and ARTs: what authorisation MiCA requires for a stablecoin

The EU regulation on markets in crypto assets, MiCA for short, has applied since 2024. It divides stablecoins into two classes: e-money tokens (EMTs), which reference a single official currency, and asset-referenced tokens (ARTs), which point to a basket or to other values. Under that scheme a token pegged to the US dollar falls into the first class.

On its page on token issuance under MiCAR, BaFin sets out who may issue such tokens at all. On e-money tokens it states that only credit institutions or e-money institutions may issue them or apply for their admission to trading. For asset-referenced tokens the supervisor requires authorisation in advance, citing article 16(1)(a) read with article 18 MiCAR. In both cases a crypto asset white paper has to be submitted.

Each of these duties presupposes an entity able to discharge it: an institution with a licence, an address for the supervisor, someone answerable for the white paper. That is precisely the place dotUSD leaves empty by its own description. A token without an issuer cannot meet the requirements placed on an issuer, and not out of negligence but by construction. We have set out elsewhere in detail which duties MiCA loads onto companies.

The ESMA opinion of October 8: three months to clear non-compliant stablecoins

On dotUSD’s launch day, ESMA sharpened its position on such tokens. In its opinion of October 8, 2026, reference ESMA75-113276571-1742, the authority writes that crypto asset service providers authorised under MiCA should cease providing services relating to non-MiCA-compliant stablecoins to clients in the European Union.

The scope is drawn widely. All the crypto services in the regulation are covered, singly or in combination: trading platforms, exchange, order execution, custody, portfolio management and transfers. National supervisors are to check that firms do not hold such tokens, do not list them and do not give clients access to them. Technical, contractual and organisational controls are expected, including ones that stop clients from building up or increasing existing positions.

For legacy holdings the opinion names a deadline: national authorities should require a wind-down no later than three months after the opinion is published, and as early as possible. What may continue during that time is narrowly limited to activities needed for liquidation, exchange, withdrawal, transfer or custody of such assets. Even that is to be time-limited, risk-based and closely monitored.

No issuer, no redemption claim: where the risk sits for holders

With a stablecoin that has a company behind it, there is an address a holder can turn to when the peg breaks. With dotUSD there is none. Under the proposal, the dollar peg rests on arbitrage and a capped stablecoin buffer, which is to say on the behaviour of market participants and on program code.

A practical consequence follows: if you hold dotUSD and see the price drift away from a dollar, you have no contractual counterparty from whom to demand the face value. You can sell the token on the market or, in the second stage, redeem it into DOT through the chain’s mechanism. Both depend on liquidity and mechanics working at that moment.

There is also the risk in the first stage. As long as the backing consists of USDT, dotUSD hangs on a token whose availability at MiCA-regulated providers in the EU is currently being wound back. An exchange through a supervised platform in Germany is therefore not a reliable escape route.

DOT at 1.15 dollars: the figures of the trading day

The network token itself reacted to the launch fairly calmly, but better than the market as a whole. DOT was quoted at 1.15 US dollars early on Thursday, 2.85 percent above its level 24 hours earlier. The day’s range ran from 1.01 to 1.15 dollars, so the price sat at the upper edge. Market capitalisation came to around 1.96 billion dollars, rank 51 in the overall market. Over seven days it is down 3.28 percent, over 30 days down 4.39 percent. All figures come from CoinGecko.

That gain falls in a weak market. Total crypto market capitalisation stood at about 2.78 trillion dollars at the same time, 4.69 percent below the previous day. Bitcoin was quoted at just under 82,000 dollars. DOT rising while broad parts of the market give way is striking, but the available data do not pin it on the stablecoin launch alone. The project’s description voices the expectation that demand for dotUSD in phase two will turn into direct demand for DOT, because collateral is withdrawn from free circulation. An expectation is not a measurement.

Buying route and custody in Germany: what works through regulated providers

In practice the position for an investor in Germany reads like this: access to dotUSD through a platform supervised in the EU is not to be expected on ESMA’s stance, as long as the token does not meet the regulation’s requirements. Wanting to hold it anyway leads to routes outside the regulated framework, which means self-custody through your own wallet on the Polkadot chain.

Self-custody: what hangs on the key

With self-custody the holder carries responsibility for the private key. There is no office that resets a lost password, and no deposit guarantee. A hardware wallet keeps the key in a separate device, apart from the computer or smartphone. Added to that is the risk of the vaults in phase two, where a slide in DOT can hit the locked collateral.

Holding period and tax: how gains from stablecoin dealings are taxed in Germany

In Germany crypto assets count as other assets. Gains from a sale within one year of purchase are taxable under section 23 of the Income Tax Act; after a year has passed they stay tax-free. An exemption threshold of 1,000 euros per calendar year applies to gains from private disposals; once it is exceeded, the entire gain is taxable.

Swapping one stablecoin for another crypto asset is a disposal for tax purposes, even when the dollar value stays the same. Minting dotUSD against USDT in phase one therefore sets off a tax-relevant transaction. Income from a vault would have to be assessed separately. This outline is not tax advice, and the treatment of a token without an issuer is not conclusively settled; for larger amounts the case belongs with a tax adviser.

dotUSD: without an authorised issuer, access stays narrow

With dotUSD, Polkadot has launched something that is cleanly described in technical terms and unfinished in regulatory ones. For German investors, day one changes little, because the route through supervised providers remains blocked. Three things are worth doing now:

1. Place your own provider. Check whether your platform holds a MiCA licence and which stablecoins it still lists. For comparison, the overview is with the regulated crypto exchanges.
2. Go through existing stablecoin positions. ESMA’s three-month deadline concerns legacy holdings at service providers, not tokens in your own wallet. Which custody solution fits is shown by the hardware wallet comparison.
3. Document every swap. Each swap from one stablecoin into another is a tax-relevant event. A tax tool or portfolio tracker records date, price and holding period before the tax return comes round.

(As of October 9, 2026. This article is not investment advice. Prices and fee structures change; check the terms with the provider before you buy.)