MiCA and Cryptocurrencies: How Will Stablecoins React to New EU Rules?
Date: 2025-01-03 Author: Henry Casey Categories: CRYPTO PAYMENTS, IN WORLD
Stablecoins such as USDT and DAI may be at risk due to strict requirements regarding their support, liquidity, and transparency. But will these cryptocurrencies be able to survive the new rules?
The MiCA (Markets in Crypto-Assets Regulation), which came into effect partially in June 2024, is preparing for more stringent stages in 2025. The main goal is to reduce risks for consumers and ensure the stability of the crypto market in the EU. However, many large stablecoin issuers, such as Tether (USDT) and MakerDAO (DAI), do not comply with these standards 100%. This means that they may be excluded from European platforms.
The main requirements of MiCA include the obligation for stablecoin issuers to have full reserves, which must be placed in reliable EU financial institutions. Reserves must consist of liquid assets, such as government bonds or cash deposits. Stablecoins that maintain price stability only through algorithmic mechanisms, as was the case with Terra's UST, are also prohibited.
Issuers must regularly publish reports on their reserves, which must also undergo independent audits. In the event of the liquidation of the issuer, token holders will be entitled to reimbursement from the reserves. Stablecoins with a high turnover (more than €200 million per day) will come under special scrutiny from regulators such as the European Central Bank (ECB) and ESMA.
These changes are already having consequences: for example, the cryptocurrency exchange Coinbase temporarily delisted a number of popular stablecoins, including USDT and DAI, on December 13, 2024, due to their non-compliance with MiCA. At the same time, tokens such as USDC and EURC, which comply with the new standards, continue to remain on the platform.
In addition, some companies are looking for ways to circumvent the new rules. Tether, for example, has invested in Quantoz Payments, which plans to issue stablecoins compliant with MiCA requirements. The company also announced support for StablR, which has issued euro and dollar stablecoins compliant with MiCA.
The stablecoin market in the EU is undergoing major changes. The removal of popular cryptocurrencies such as USDT could significantly limit the choice for traders and investors, forcing them to use only a few certified tokens such as USDC and EURC. This could lead to a monopolization of the market by a few large players such as Circle and Coinbase, which contradicts the main idea of decentralized finance.
According to recent reports, trading volumes of euro stablecoins are growing, indicating an adaptation to the new requirements. However, strict regulations may negatively impact the market by reducing liquidity and leading to capital outflows. At the same time, users will receive greater protection and a guarantee of stability.
MiCA will certainly have long-term consequences for the crypto market in Europe, and may lead to new challenges and opportunities for adaptation and innovation.
