According to industry representatives, European Union regulations governing crypto assets will reduce the market share of non-euro-based stablecoins starting in 2024, thereby reducing EU competitiveness.
On Wednesday, ambassadors from the EU’s 27 member states approved a compromise with the European Parliament on the new Markets in Crypto Assets Regulation (MiCA). Before it can become a law, the guidelines must be approved by Parliament, which is projected to happen in December or early 2023.
The ambassadors also released the complete document of the agreement, exposing information such as the fact that stablecoins not denominated in euros would be restricted to 1 million transactions and a transaction value of €200 million ($196 million) when offered in the eurozone.
Beneficiaries of crypto are not happy
According to a joint letter from blockchain industry groups Blockchain for Europe and the Digital Euro Association, the world’s three largest stablecoins – Tether, USD Coin and Binance USD – hold 75 percent of all crypto transaction volumes and have already surpassed the transaction count and volume limits set by EU rules. According to Anto Paroian, CEO of cryptocurrency hedge fund ARK36, the restriction would undoubtedly hinder the EU’s competitiveness and innovative potential.
A great development for some
The European Crypto Initiative, a crypto lobbying organization located in Brussels, stated that the consequence may be “burdensome”. However, it noted that a more favourable attitude toward euro-denominated stablecoins was expected to emerge following early worries about the EU’s financial stability and monetary sovereignty.
Stablecoins are a form of cryptocurrency meant to keep value constant, typically through a 1:1 peg with a fiat currency. Stefan Berger, a member of the European Parliament who helped negotiate the final agreement, told Reuters that the regulations could enhance euro-pegged stablecoins, which is a great development for some.
According to CoinGecko statistics, Tether’s dollar-pegged coin is the world’s third-largest cryptocurrency, with a market worth of $68 billion, compared to $202 million for the euro-pegged counterpart.