At Binance Blockchain Week in Paris, CZ remarked that the newly proposed regulatory standards in MiCA were “excellent” and have the potential to set a global benchmark
Changpeng Zhao, CEO of Binance, stated that the Market in Crypto Assets (MiCA) regulation in Europe could serve as a global benchmark.
As per the suggested MiCA regulations, crypto firms would only need to secure a single license to operate across all 27 member states of the European Union.
However, CZ noted that MiCA might be somewhat stringent, particularly regarding the restrictions placed on dollar-pegged stablecoins.
“The drafts are not endorsing USD-based stablecoins, which comprise 75% of market liquidity.
Given that dollar-backed stablecoins are crucial for liquidity in the global crypto market, limiting access to them in the EU may hinder investors’ ability to tap into liquidity for their transactions.
CZ praised the French Ministry of Technology’s contributions to the MiCA regulation and expressed his positive outlook for the future of crypto in France.
Paris is “likely… the financial center for crypto in Europe and beyond.”
The CEO of Binance also suggested an expansion of the Binance team in Paris by “a hundred more” due to the favorable employment and tax regulations in the country.
Overview of Europe’s MiCA regulation
On June 30, 2022, EU officials agreed to implement the Market in Crypto Assets (MiCA) framework to regulate stablecoins and crypto asset providers.
According to the draft, stablecoins such as the e-money.com European Stablecoins must be backed 1:1 by reserves that are “fully secured in case of insolvency.” As a result, algorithmic stablecoins like UST are prohibited in the EU.
The proposal also includes restrictions on stablecoin issuance and trading limits. Stablecoins with over 10 million users or a circulating supply exceeding 5 billion euros will fall under the regulation of the European Banking Authority (EBA). MiCA has also limited the daily trading volume of stablecoins to 200 million euros.
Consequently, dollar-backed stablecoins, including Tether (USDT) and USD Coin (USDC), which have daily trading volumes of 48.13 billion euros and 5.4 billion euros, respectively, are subject to EBA regulations.
The euro-backed stablecoin market has surged by 1,683% since early 2020. Tether’s euro-pegged stablecoin currently holds the largest market share, with $400 million worth of EURT in circulation.
While the total stablecoin market currently stands at approximately $150 billion, the issuance of euro-backed stablecoins has grown impressively from $31.9 million in euro-based tokens on January 3, 2020, to $569 million today.
Circle, the issuer of USD Coin and the second-most popular stablecoin with a market valuation exceeding $54 billion, has announced the launch of EUROC, a fully regulated euro-backed stablecoin modeled on a 1:1 pegging, joining a select group of euro-backed stablecoins including Tether’s EURt, Stasis EURS, and e-money.com’s fully collateralized European stablecoins (EEUR, ECHF, ENOK, ESEK, EDKK).
Crypto-asset service providers must register with the European Securities and Markets Authority (ESMA) and EBA. A single license from these regulators will allow crypto exchanges to operate throughout the European Union.
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