In June last year, the European Union took a big step by signing the Crypto Assets Markets Act (MiCA). This should bring major changes to the crypto industry, which should, among other things, ensure better protection for small investors. But according to one of Europe’s most important policymakers, little has changed since then.
MiCA strict about crypto
The MiCA legislation was already passed last year, but will only come into force gradually. The final part of the law will be introduced by the end of 2024, but this also means that a significant part will take effect earlier.
The rules for stablecoins are much more pressing. These are not even fully finished yet, although they are due to come into force next summer. They are primarily aimed at stablecoin issuers. For example, you must maintain sufficient and high-quality collateral to cover the value of the tokens. Crypto companies also need to ensure enough liquidity for stablecoins so that they can be easily used to buy and sell other assets.
MiCA is quite strict, but the industry seems very happy with the clear rules. Last year, investors flocked to Europe after the law was introduced.
The effect of the MiCA law is not yet really visible
But the effects of MiCA can only be measured to a limited extent, the European Securities and Markets Authority (ESMA) concludes in a research report. Euro-denominated trading volumes did not increase following the announcement of the law. However, this could change when MiCA officially comes into force.
The report was released last Wednesday and discusses in detail the state of affairs in the crypto market in general. It turns out that the euro only accounts for 10% of the total trading volume between fiat currency and crypto. A much larger share of the volume is accounted for by the US dollar and the South Korean won, both of which have a market share of up to 40 percent.
But that’s nothing compared to the share of stablecoins; these are involved in around 65 percent of all crypto trading.
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