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EU Signs MiCA Law: Stablecoin Regulation Could Quickly Stifle” Use of Large Stablecoins
MiCA, the new European cryptocurrency law, was officially signed today by the President of the European Parliament Roberta Metsola and the Swedish Minister of Rural Affairs Peter Kullgren. It stressed that the use of major stablecoins could quickly be restricted and regulators should reconsider daily limits. Stablecoins are cryptocurrencies designed to track the price of fiat currencies such as the US dollar and help avoid the price volatility of cryptocurrencies such as Bitcoin and Ether. Due to some incidents such as the collapse of the algorithmic stablecoin UST and the brief unpegging of USDC, regulators have raised concerns about the possible impact of stablecoin failures. …
EU Signs MiCA Law: Stablecoin Regulation Could Quickly Stifle” Use of Large Stablecoins
MiCA, the new European cryptocurrency law, was officially signed today by the President of the European Parliament Roberta Metsola and the Swedish Minister of Rural Affairs Peter Kullgren. It stressed that the use of major stablecoins could quickly be restricted and regulators should reconsider daily limits.
Stablecoins are cryptocurrencies designed to track the price of fiat currencies such as the US dollar and help avoid the price volatility of cryptocurrencies such as Bitcoin and Ether. Due to some incidents such as the collapse of the algorithmic stablecoin UST and the brief unpegging of USDC, regulators have raised concerns about the possible impact of stablecoin failures.
According to the MiCA law, issuers of stablecoins that exceed the cap of 200 million euros must stop their issuance activities and cooperate with regulators to bring transactions below the cap. Law firm Clyde and Co highlights that the use of certain major stablecoins could quickly be restricted. This could accelerate the growth of central bank digital currencies (CBDCs).
However, it is noted that the proliferation of private stablecoins in other jurisdictions could have a negative impact on the crypto market in the EU. Lawmakers have taken into account possible negative impacts of the regulations, but the use of stablecoins is expected to be limited by the current rules.
Most feedback about MiCA has been positive. The law gives start-ups and smaller companies better access to the market, which promotes innovation and competition. Paolo Ardoino, CTO of Tether, welcomes MiCA's initiative, but also emphasizes the need for further discussions and revisions to the framework for private stablecoin providers.
There are criticisms regarding MiCA's regulations. Some argue that it is too cautious, while others express concerns that it does not adequately mitigate threats to financial market stability.
MiCA is expected to come into force in 2024 after it is published in the EU's Official Journal. The implementation of the regulations and guidelines will depend on how they are enforced in member states and whether legislators continue to respond to innovations in the crypto industry.