The European Union (EU) will introduce on January 1 the Markets in Crypto-Assets Regulation (MiCA). This regulation will establish a unified legal framework for crypto assets across the 27-member bloc to protect consumers, foster transparency, and ensure market stability.
“MiCA is a significant step in ensuring the responsible evolution of the crypto market,” Ari Redbord, Head of Legal and Government Affairs at TRM Labs, said. “It represents the EU’s commitment to creating a balanced environment that encourages innovation while safeguarding stakeholders.”
Under MiCA, crypto firms will face new compliance demands, including licensing requirements, anti-money laundering (AML) standards, and strict oversight for stablecoins. Although impressive on paper, MiCA risks a negative impact on competitiveness and innovation.
MiCA Framework in Detail
MiCA primarily aims to create a secure and transparent environment for crypto-assets. Central to its framework are stablecoins, cryptocurrencies pegged to fiat currencies like the euro or US dollar.
Stablecoin issuers must secure e-money licenses and maintain reserves primarily in low-risk assets, a rule designed to ensure stability, with at least 60% of reserves held in liquid, safe assets.
Total Stablecoin Market Cap, 2021-2024, Source: CCData
These measures are seen as a double-edged sword. While they protect consumers and prevent financial instability, they raise concerns among stablecoin issuers.
For example, cryptocurrency exchanges Binance and Seychelles-based OKX have preemptively delisted Tether (USDT) in anticipation of compliance issues, …
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