For some time, the European Union has been thinking about implementing new legislation on the market for classic cryptos and stablecoins. Recently, the MiCA regulation was the subject of an agreement which is far from pleasing to the crypto lobbyist associations.
What does the MiCA regulation say about stablecoins?
Currently, the EU is settling technical details for the implementation of the MiCA regulation. Cryptocurrency lobby associations want EU lawmakers to explain this proposal to them. They do not want this regulation to come into force because it involves restrictions on stablecoins linked to a foreign currency.
In fact, with the MiCA regulation, dollar-backed stablecoins will be banned in the 27 countries of the European Union (EU). Concretely, this proposal imposes restrictions on the issuance and use of stablecoins linked to a non-local currency. Thus, it does not affect stablecoins backed by an official currency of an EU member state.
The Blockchain for Europe and the Digital Euro Association recently addressed a letter to the Council of the EU. The two associations want the MiCA regulation to be reviewed, because it could prevent the development of large projects of stablecoin. That said, USDT, USD Coin (USDC), and Binance USD (BUSD) could be banned within the EU. Yet these stablecoins account for a large portion of cryptocurrency trading volumes globally.
Blockchain for Europe and the Digital Euro Association said in their letter: “The three largest stablecoins by trading volume risk being banned in the EU from 2024, due to quantitative limits on the issuance and use of e-money tokens denominated in foreign currencies in the framework of MiCA. “.
Restricting the use of foreign currency-backed stablecoins in the Eurozone would “cause crypto markets to seize up,” according to two crypto lobbying associations. We could then see a significant flight of cryptocurrency-related activities outside the EU.
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