The finalized complete text of the groundbreaking Markets in Crypto Assets (MiCA) legislation has revealed that the restrictions on Stablecoins have been removed from the European Union’s digital asset framework.
Summary of Key Points
- The EU has wrapped up technical discussions regarding its significant MiCA regulatory framework.
- The MiCA report indicates an easing of restrictions on stablecoins.
- While the text remains open to feedback, it is, in effect, finalized.
- This report is now moving forward towards implementation, expected to commence in early 2024.
Officials in the European Union have advanced their efforts to build a robust framework for digital assets, marking a significant victory for proponents of Stablecoins in this latest iteration.
The proposal originally included restrictions on the issuance and trading of stablecoins, particularly those exceeding 10 million users or having a circulating supply over 5 billion euros, coupled with a daily trading volume cap of 200 million euros.
The completed Markets in Crypto Assets (MiCA) regulation indicates that the previously imposed restrictions on the use of U.S. dollar-pegged tokens in the EU have been lifted; however, issuers of crypto assets will be required to produce white papers that detail their technical plans, and platforms will need to register with authorities, along with stablecoin issuers being mandated to maintain sufficient capital and prudent management.
Lobbyists from the digital asset industry expressed concerns regarding the phrasing, cautioning that it might lead to unforeseen issues for cryptocurrency trading in Europe.
Algorithmic stablecoins, which were initially excluded from MiCA’s scope when it was first proposed in 2020, are now included and will be regulated “regardless of the issuer’s design intention for the crypto asset, including the method used to maintain stable value.”
A recital in the law outlining requirements for crypto asset issuers stated:
“Managers or entities aiming for the trading admission of algorithmic crypto assets that do not seek to stabilize the value of the assets by referencing one or multiple assets must adhere to Title II of this Regulation,”
The legislation emphasizes stablecoins and other digital asset trading but leaves room for future regulations concerning decentralized finance (DeFi) and non-fungible tokens (NFTs) by the European Banking Authority and other financial authorities.
This rule-making process is the outcome of discussions termed “trilogues” involving the European Parliament, European Commission, and European Council, which concluded on June 30. Interestingly, specific parts of the recital were deliberately left open for further dialogue despite receiving initial approval from all three institutions.
A recital serves as a preamble to EU legislation, articulating its intent. Though it is similar to the binding articles of the regulation, a recital can aid supervisors and courts in interpreting the legislation’s scope.
Previous drafts aimed to restrict the issuance of stablecoins tied to non-EU fiat currencies such as the U.S. dollar. This raised concerns that it would exclude prominent U.S. dollar-pegged stablecoins like USDC from the EU market. The new draft appears to eliminate this barrier.
Circle, the issuer of USD Coin, the second most widely used stablecoin with a market capitalization exceeding $54 billion, has introduced the EUROC, a fully compliant, 1:1 pegged ‘full-reserve model’ euro-backed stablecoin, joining a select group of euro-backed stablecoins, including Tether’s EURt, Stasis EURS, and
e-money.com and the existing portfolio of 100% Collateralized European Stablecoins (EEUR, ECHF, ENOK, ESEK, EDKK).
This regulatory framework will impose obligatory guidelines on the digital asset sector in Europe. Following EU protocols, the document must be translated into the languages of member states. The provisions regarding stablecoins are anticipated to take effect in January 2024, with the remaining provisions to be implemented in June 2024.
Disclaimer:
GlobalStablecoins.com serves as an informational platform providing news about cryptocurrencies, blockchain companies, blockchain products, and blockchain-related events. This should not be construed as investment advice. It is recommended to consult an advisor before considering any investments in ICOs, Cryptocurrencies, Cryptoassets, Security Tokens, Utility Tokens, Exchange Tokens, Global Stablecoins, Stablecoins, or eMoney Tokens. GlobalStablecoins.com does not accept any responsibility, directly or indirectly, for any damages or losses incurred, claimed, or otherwise, resulting from the use or reliance on any content on this site.
Affiliate Disclosure / Sponsored Posts:
If a Sponsored Post references a cryptocurrency project, we urge readers to exercise caution and perform due diligence before taking any further action. GlobalStablecoins.com does not endorse the purchase, sale, or holding of any cryptocurrency. Conduct your own thorough research and consult your financial advisor before making any investment choices.
GlobalStablecoins.com may receive compensation for affiliate links. Engaging with an affiliate link signifies that some form of compensation may be received by GlobalStablecoins.com. For instance, if you click on an affiliate link, then register and trade on an exchange, GlobalStablecoins.com may receive payment.
Prior to investing in Cryptoassets, please be aware of the following:
Cryptoassets are classified as high-risk, speculative investments.
If you choose to invest in Cryptoassets, be prepared to potentially lose your entire investment.
All Sponsored Posts are funded by crypto projects, coin foundations, advertising agencies, PR firms, or other marketing entities. GlobalStablecoins.com is not an affiliate of any marketing agency, nor is it owned by any crypto or blockchain foundation.
The purpose of offering Sponsored Posts to our advertisers is to support the ongoing operations of GlobalStablecoins.com.
If you encounter a Sponsored Post that appears fraudulent or dubious, please contact us, and we will conduct a prompt investigation.
