EU Regulators to Strengthen Stablecoin Rules under MiCA Framework, Aiming for Full Implementation by December
Summary:
The European Union (EU) financial regulators are looking to enhance stablecoin regulations under the Markets in Crypto-Assets (MiCA) framework. They have proposed draft regulations for stablecoin issuers to resolve complaints effectively. This regulatory structure, a result of collaboration between the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA), is due for submission to the European Commission for approval by June. It also mandates rigorous screening of shareholders and board members for crypto asset service providers (CASPs) to ensure the separation of customer assets from the company's funds. The full application of MiCA is expected by December, with stablecoin regulations due for launch in the summer.
European Union (EU) financial regulators are aiming to enhance stablecoin regulation parameters under the existing Regulatory Framework of Markets in Crypto-Assets (MiCA). They have done this by proposing draft regulatory norms for stablecoin issuers to deal with objections. On March 13, the Regulatory Technical Standards (RTS) outlined protocols to effectively and fairly resolve complaints from Asset Reference Tokens (ARTs) holders. It provides comprehensive steps and standards for stablecoin issuers to proficiently administer objections. The European Banking Authority (EBA) document stated that the structure should aid innovation and equality, whilst protecting retail holders and maintaining the integrity of the crypto asset markets. As per the EBA document, the joint efforts of both EBA and European Securities and Markets Authority (ESMA) resulted in the new regulatory standards for stablecoins. The consultations were carried out between July and October 2023. This well-developed framework will be presented to the European Commission by the end of June for validation and will be reviewed by the European Parliament and the European Council before being published in Union's official law record- The Official Journal of the European Union. Under the MiCA framework, stablecoins which can be linked to several fiat currencies or other assets including cryptocurrencies are categorized as asset reference tokens (ARTs). This is unique when compared to those stablecoins, the value of which is only associated with a single currency, such as euro or dollar. The regulation of stablecoins through MiCA was previously supervised by the EU closely. The need for this heightened after the crash of Terra Luna’s UST, which sparked doubts about their systemic implications. The EU and EBA have previously proposed regulations for stablecoin issuers. Additional directive included in the MiCA law also requires intense scrutiny of shareholders and board members for crypto asset service providers (CASPs). These regulations are designed to authorize CASPs while ensuring customer assets and company's own money are kept separate. The purpose of this is to prevent the mixing of customer and company funds, like in the case of FTX. By December, complete implementation of MiCA is expected, with the stablecoin regulations proposed for launch in the upcoming summer. MiCA law aims to create a thorough framework for crypto issuers, service providers, and users.
Published At
3/14/2024 11:59:37 AM
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