Stablecoins put on notice as EU lawmakers agree on landmark MiCA framework

European Union (EU) lawmakers reached a political agreement on crypto asset regulation on June 30.

The final trial covered clauses such as supervision architecture, AML clauses, and stablecoin policy.

After analyzing the agreement Seth HartrainThe Ledger Global Policy Officer said of the regulation:Will have a significant impact on Europe’s future competitiveness and its viability Web3 industry.“

There were many “hits” in the proposed framework, but Hertlein also pointed out that he was concerned.

Stablecoins with limited size and range

Stephen BergerThe European Parliament and Cryptocurrency Market Reporter (MiCA) framework will announce news on Twitter that “balanced” transactions will include concessions that do not include a Proof of Work (PoW) ban. He added that he was pleased. )technology.

MiCA Trilog: Durchbruch! Europa ist der erste Kontinent mit einer Krypto-Asset Regulierung. Parliament, Commission, rat haben sich auf ausgewogene #mica geeinigt. Frmichals Berichterstatterwar wichtig, dass es hier keine Verbannung von Technologien wie # POWs Give / 1

StefanBerger (@DrStefanBerger) June 30, 2022

This agreement sets out the first major regulatory framework for cryptocurrencies, but comes when the industry is suffering from a cruel recession.

Given that the current market condition was TerraUST’s depeg, the issue among EU parliamentarians when closing the deal was a proper stablecoin policy.

according to CNBCUnder the tentative agreement, exchanges and stablecoin issuers will respond to stricter new rules designed to avoid repeating what happened at Terra and enhance consumer protection.

In this proposal, Stablecoin needs to hold enough redemption reserves to cover the withdrawal. In addition, the largest operator’s daily transactions have thresholds that limit their scope and market impact.

Stablecoins like Tether and Circle USDC need to maintain sufficient reserves to meet redemption demands in the event of a large withdrawal. Stablecoins that grow too large can also be per day. Is facing a limit on the value of its transactions to 200 million euros. “

Hertlein points out MiCA’s mistake

Just as MiCA has been hailed as a coveted comprehensive framework for the cryptocurrency industry, Hertlein raised some concerns when evaluating the proposal.

First, Mr. Berger said that PoW mining was exempt from the ban, Hertlein Point out that the possibility of a “backdoor ban” had infiltrated the agreement.

“”The Commission must report on the “Required Minimum Sustainability Criteria for Consensus Mechanisms” within two years.“”

In addition, Hertlein The approach to stablecoin regulation was called “especially heavy”. In addition, since no stablecoin meets the currently proposed rules, Hertlein has suggested that scrambling will allow stablecoin issuers to be severely uprooted and compliant.

9 / #Stablecoin Regulations are particularly strict and must physically exist in the EU. We don’t know what this means for distributed stablecoin until the final text is displayed, but the current percentage of MiCA-compliant stablecoin circulation is approaching zero.

Seth Hertlein (@SethHertlein) July 1, 2022

MiCA is expected to come into effect by 2024.