MiCA regulations impact on EUROC and other stablecoins
The European Union (EU) has introduced Markets in Crypto-assets proposal (MiCA), a framework for regulating the crypto market in the continent. On 01 July 2022, a MiCA reporter, Stefan Berger, took to Twitter to announce that Europe has become the first continent to have a regularised crypto policy.
Berger mentioned that the Parliament, Council, and Commission have approved a balanced MiCA framework. In addition, he indicated that PoW technology will not be banned; however, crypto issuers will be accountable for energy consumption and its impact on the environment.
Where MiCA regulation has rejected the ban on PoW technology, it might still affect the digital asset market in various ways. One of the most affected crypto-assets can be stablecoins like EUROC and others.
MiCA’s harsh regulations for stablecoins like EUROC
The EU-endorsed MiCA framework has a dedicated section for stabilising stablecoins, including the Euro coin. The framework has considered the recent crash of Terra Luna, a stable cryptocurrency and formed policies to protect crypto consumers.
For this reason, the framework proposed certain strict measures that the stablecoin issuers would have to take to mitigate instability and risk. Here are the proposed MiCA regulations for the stablecoins like EUROC:
- Stablecoin issuers must have an adequate liquid reserve with a 1:1 ratio.
- Stablecoin consumers can claim the token at any time without any additional fee.
- All stablecoins will be supervised by the European Banking Authority (EBA.)
- Non-European currency-based asset-referenced tokens will be regulated to ensure Europe’s ‘monetary sovereignty.’
- Asset-referenced token issuers would need to register themselves in the EU.
The stance of Circle’s Euro coin (EUROC)
According to the Head of Global Policy and Chief Strategy Officer of Circle, Dante Disparte believes that:
“MiCA regulation will be to crypto what GDPR was to privacy.”
Though many crypto users call MiCA a crack-down on the crypto market, Disparte reflected that MiCA policy will likewise work as a guiding framework for crypto issuers and consumers.
Author: Wasay Ali
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