The MiCA (Markets in Crypto-Assets Regulation), which establishes a regulatory framework for crypto-assets and related services in the European Union, has started to be implemented in phases. This regulation, aimed at fostering innovation and ensuring consumer protection, had its final text approved in October 2022 and partially came into effect on June 30, 2023, initially focusing on the regime of stablecoins.
Within the scope of MiCA, crypto-assets are divided into three main categories: asset-referenced tokens, e-money tokens, and other types of tokens. This regulatory framework directly impacts the issuance, trading, and related services of these assets in the European Economic Area.
The complete regulation for crypto-asset service providers will be implemented six months after the entry into force of the stablecoin regime, which is expected to be at the end of December 2023.
One of the major questions that arises with the implementation of MiCA is how it affects popular stablecoins like USDT and USDC. The issuers of these tokens now need specific authorizations and must comply with reinforced prudential requirements, including increased capital requirements and risk management, under the direct supervision of the European Banking Authority, rather than national authorities.
Stablecoin issuers must also ensure sufficient reserves to maintain the value of the issued tokens, with strict regulations on the composition and quality of these reserves. These changes bring a layer of complexity and uncertainty, especially regarding electronic money and banking licenses, whose process is known to be costly and time-consuming.
On June 30, the landscape of electronic money licenses among stablecoin issuers was still uncertain, contributing to an atmosphere of insecurity. In addition, there are limits on the issuance of stablecoins that exceed one million daily transactions or a total value of €200 million.
These restrictions raise questions about the applicability of the rules to all stablecoins or only to those denominated in euros. This scenario has direct implications for the most widely used stablecoins, such as USDT and USDC, and has already affected support on several major exchanges.
For example, Uphold announced the discontinuation of support for several stablecoins in compliance with MiCA. Bitstamp and Kraken are also reevaluating their support for USDT, while Binance has already announced restrictions on USDT services.
Disclaimer: The views and opinions expressed in this article are for informational purposes only and do not constitute financial, investment, or other advice. Investing or trading cryptocurrencies carries a risk of financial loss.
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