The European cryptocurrency market is on the brink of significant changes due to the MiCA regulation, which establishes strict requirements, including for stablecoins. Popular #USDT #DAI risk being permanently removed from European platforms, raising concerns among users. Will the new rules really protect consumers, or will they strike a blow to innovation and lead to a significant leap towards monopolization?
The European law 'Markets in Crypto-Assets Regulation' (MiCAR) partially came into force in June 2024, and the date for the next tightening related to the licensing and authorization phase is approaching (January 2025). These regulations aim to reduce consumer risks and ensure the stability of the European cryptocurrency market, but at the same time raise entry barriers for many major stablecoin issuers, such as Tether (USDT) or MakerDAO (DAI), which do not fully comply with the new EU standards. According to the regulation, stablecoins that do not meet these requirements may be removed from the market. Here are some of them:
Stablecoins must have full backing by reserves equivalent to the value of issued tokens. Reserves must be held in reliable financial institutions within the EU and consist of highly liquid assets, such as cash deposits or government bonds.
MiCA prohibits stablecoins that maintain price stability solely through algorithmic regulation (for example, UST from Terra was such a stablecoin).
Issuers must regularly provide data on reserves, including their composition, liquidity, and storage location. This information must also be publicly available.
Stablecoin reserves must be audited by independent auditors with regular publication of results.
Issuers are required to ensure the possibility of quick and unobstructed exchange of stablecoins for the underlying currency (for example, euros or US dollars).
Reserves must be structured to avoid any liquidity or solvency risks.
In the event of an issuer's collapse, stablecoin holders have the right to reimbursement within the limits of the reserves.
Issuers must provide consumers with complete information about how the stablecoin operates, the risks associated with it, and the mechanisms of stability.
Stablecoins that have a significant volume of circulation or are widely used are considered 'significant'. Additional requirements apply to such assets: daily turnover must not exceed €200 million, no more than 1 million transactions daily, increased oversight by regulators, including the European Central Bank (ECB) and the European Securities and Markets Authority (ESMA).
Issuers must obtain a license in the EU and operate in accordance with the national legislation of EU member states.
They must be registered in an EU country and comply with local regulatory authorities.