Today’s European Union regulators took a sturdy step forward in creating a compliant blockchain industry, issuing a timely statement for stablecoin issuers with comprehensive guiding principles before the mandate of MiCA, the Markets in Crypto Assets Regulation, takes effect in just over a year.
The statement, released by the European Banking Authority (EBA), encourages stablecoin issuers to adhere to full transparency and sound governing practices in order to mitigate crypto risks and protect consumers.
The EBA statement outlines a series of guidelines for responsible risk management practices, highlighting that “the statement is intended to encourage timely preparatory actions to MiCA application, with the objectives to reduce the risks of potentially disruptive and sharp business model adjustments at a later stage, to foster supervisory convergence, and to facilitate the protection of consumers”.
As part of the statement, the EBA also announced a second batch to be released in October of this year, which will address the active capital needs of stablecoin issuers and how businesses should manage redemptions in volatile markets.
In addition to this statement, the European Securities and Markets Authority (ESMA) also issued a set of proposals applicable to Crypto Asset Service Providers (CASPs), including exchanges, lenders, brokers, token issuers, and trading firms. The proposals address issues such as the avoidance of commingling of customer and company money in order to prevent another fiasco like the one experienced with the FTX exchange in November, where customer funds were allegedly used to fill holes in the balance sheet of its sister company after taking significant losses from bad trades.
Read more: UK Government Pushes For Crypto Sandbox, Stablecoin Regulation
These announcements, along with MiCA, are testament to the European Union’s commitment to promoting innovation and adoption within the blockchain industry. As evidenced by a representative from Tether, one of the most popular stablecoins within the space, “MiCA is a commendable initiative in the European Union that aims to foster crypto innovation and adoption. It provides guidelines and requirements for issuers of stablecoins, such as Tether, to ensure transparency, consumer protection, and financial stability.”
It’s clear that the EU is dedicated to creating a robust culture of responsible digital finance within the decentralized market and the document’s release today signify that regulators have accepted the blockchain industry as a crucial staple of the region’s fiscal future.
It remains to be seen how the guidance will be implemented into the newMiCA regulations, but with the rapid growth of the blockchain sector it is likely to be enacted sooner rather than later. For now, regulators have set out a compliant agenda for stablecoin issuers to adhere to ahead of the upcoming legislations, as well as a clear signal of their dedication to protecting consumers within the industry.
Featured News
UK Probes Lindab’s Acquisition of HAS-Vent Amid Fears of Market Monopoly
Apr 28, 2024 by
CPI
Shein Faces EU Regulations Over User Data
Apr 28, 2024 by
CPI
Google Fights Back Against US Antitrust Lawsuit
Apr 28, 2024 by
CPI
US Homeland Security Establishes Blue-Ribbon Board with Tech CEOs to Advise on AI
Apr 28, 2024 by
CPI
FTC Accuses Amazon Executives of Using Disappearing Messaging Apps to Conceal Evidence
Apr 28, 2024 by
CPI
Antitrust Mix by CPI
Antitrust Chronicle® – Economics of Criminal Antitrust
Apr 19, 2024 by
CPI
Navigating Economic Expert Work in Criminal Antitrust Litigation
Apr 19, 2024 by
CPI
The Increased Importance of Economics in Cartel Cases
Apr 19, 2024 by
CPI
A Law and Economics Analysis of the Antitrust Treatment of Physician Collective Price Agreements
Apr 19, 2024 by
CPI
Information Exchange In Criminal Antitrust Cases: How Economic Testimony Can Tip The Scales
Apr 19, 2024 by
CPI