Stablecoin issuers such as Tether and Circle will face stricter regulations in the European Union starting June 30 under the Markets in Crypto Asset (MiCA) legislation. The new rules require proper authorization for operation in the 27-nation trading bloc and impose limits on transaction numbers and values.
According to MiCA’s Article 23, companies will need to cease issuing a stablecoin used for exchanges exceeding 1 million transactions or a value over 200 million euros per day. These regulations aim to prevent stablecoins from replacing the euro and safeguard the monetary system within the EU.
The European Banking Authority (EBA) clarified that companies can issue stablecoins denominated in assets other than the euro as long as they are not used as a means of exchange for goods or services. Transactions between currency areas, peer-to-peer transactions, and exchanges with e-money tokens are exempt from the strict limits set by MiCA.
Stablecoin issuers like Tether and Circle have a limited time to obtain the necessary licenses to comply with the new regulations. Circle, for example, is working towards securing an e-money license to continue its operations within the EU.
Challenges and Responses
One of the major challenges for stablecoin issuers is the cost and complexity of obtaining an e-money institution license or banking license, which can be a lengthy process. Tether and Circle are among the companies striving to meet the regulatory requirements within the stipulated timeframe.
Some cryptocurrency exchanges have already taken steps to comply with MiCA by delisting certain stablecoins. Bitstamp and OKX have removed Tether tokens from their platforms, focusing instead on euro-denominated liquidity to align with the new regulations.
Stablecoin issuers are actively engaging with regulatory authorities and exchange partners to ensure compliance with MiCA while advocating for balanced regulatory policies that protect consumers and foster growth in the industry.
Future Outlook
The implementation of MiCA regulations raises questions about the future of stablecoins in the EU. The outcome will depend on decisions made by the European Commission and the newly elected European Parliament regarding the regulation of stablecoin activities within the region.
Stakeholders in the cryptocurrency industry are closely monitoring developments in the EU to understand the implications of the new regulations and potential pathways for compliant operations moving forward.