EU Crypto Rules Should Cap Dollar-Pegged Stable Coins

LONDON, Oct 7 (Reuters) – European Union rules to regulate crypto assets will reduce the market share of non-euro-denominated stablecoins from 2024, which could limit the EU’s competitiveness, officials said. said industry representatives.

Ambassadors from the 27 EU states on Wednesday gave their approval to an agreement on the new Crypto Asset Markets Regulation (MiCA) reached in June with the European Parliament.

To become law, Parliament must vote on the rules, which is expected to happen in December or early 2023.

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The ambassadors also released a full text of the agreement, revealing details such as the fact that non-euro stablecoins will be limited to 1 million transactions and 200 million euros ($196 million) in value. transaction when they are marketed in the euro zone.

A joint letter from crypto industry groups Blockchain for Europe and the Digital Euro Association said that the world’s three largest stablecoins – Tether, USD Coin and Binance USD – account for 75% of the trading volumes of crypto and are already exceeding the set transaction count and volume limits. under EU rules.

Anto Paroian, CEO of cryptocurrency hedge fund ARK36, said the restriction “will likely limit EU competitiveness and innovation potential”.

The European Crypto Initiative, a Brussels-based crypto lobbying group, said in a statement that the outcome could be “onerous”.

But he said a more favorable approach to euro-denominated stablecoins was likely to emerge after “initial fears for EU financial stability and monetary sovereignty”.

Stablecoins are a type of cryptocurrency designed to hold constant value, usually through a 1:1 peg with fiat currency.

“If the current wording of the directive does not change, it will significantly restrict the use of dollar-denominated stablecoins such as USD Coin, Tether and Binance US,” said Fabian Astic, global head of DeFi and digital assets at Moody’s. Investors Service.

Stefan Berger, a member of the European Parliament who helped negotiate the final deal, told Reuters: “Indeed, this could increase euro-pegged stablecoins, which is a welcome development.”

Tether’s dollar-pegged coin is the world’s third-largest cryptocurrency, with a market capitalization of $68 billion, compared to $202 million for the euro-pegged version, according to data from CoinGecko.

($1 = 1.0202 euros)

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Reporting by Huw Jones and Elizabeth Howcroft, editing by Barbara Lewis

Our standards: The Thomson Reuters Trust Principles.

Elizabeth Howcroft

Thomson Reuters

Reports on the intersection of finance and technology, including cryptocurrencies, NFTs, virtual worlds and money that generates “Web3”.

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EU Crypto Rules Should Cap Dollar-Pegged Stable Coins

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