In July, the European Parliament approved the MiCA bill. This means that the EU will have stricter policies for crypto markets in early 2024. The EU has also been very strict with stablecoin issuers, but some say the MiCA law will help with this.
EU regulation restricts stablecoins
That writes The Block, who spoke with Fabian Astic, director of DeFi and Digital Assets at Moody’s, a major US crypto asset services company. The Markets for Crypto AssetsThe law is very strict, but Astic expects it to bring a lot of good for stablecoins.
Earlier this year, the European Commission banned stablecoins that are supposed to track the value of the euro from having a market value of more than 200 million euros. Also, with these tokens, it only allows 1 million transactions per day. Both will become increasingly difficult in the financial world, more and more assets will be linked to blockchains and high frequency trading is quite popular. Such a limit is thus a hard limit for the growth of such a stablecoin ecosystem.
Eeuropean ecosystem for DeFi
Astic argues that the MiCA law will probably not be active until early 2024. Therefore, euro stablecoins would now have a little over a year to develop the ecosystem. The crypto market is currently dominated by USD stablecoins, but the CEO considers this a risk.
The coming period may be a time for Europe to develop a euro ecosystem in the DeFi (Decentralized Finance) world. Otherwise, this market will continue to be dominated by dollar stablecoins, and thus indirectly by the United States. The CEO also believes that good regulation can be a way for other high-quality stablecoins to gain a foothold in Europe. He cites USDC as an example.
The MiCA legislation should not regulate cryptocurrencies away, but make the market more robust and protected. A former top executive of a US government agency even thinks that the EU is surpassing the United States in this.