Tuesday, January 31, 2023

New EU MiCA Regulations Could Unleash Stablecoin Innovation: Moody’s Executives

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Restrictions in new EU limitations could potentially serve as a booster to stablecoin creations in Europe. Moody’s Global Head of DeFi and Digital Assets Fabian Astic informed The Block in an exclusive interview.

European representatives recently voted to standardize Markets in Crypto Assets (MiCA) regulatory policies. Although, over the past weeks’ miscellaneous revisions of Europe’s national MiCA frameworks proposed differing positions over stablecoin regulation. Ultimately, limitations on non-euro-backed stablecoins made their track into the regulatory guidance. The regulations presented a €200 million (just under $194 million) cap on transactions-per-day non-Euro-backed stablecoins. 

With a final vote on the new legislation anticipated on Oct. 10. Executives from global bond recognition rating and analysis company Moody’s Investors Service, provided. The Block outlook on the forthcoming stipulations in an exclusive interview.

According to Astic, MiCA’s earlier implementation is in 2024. Participants would have just two years to boost euro-denominated stablecoins in the territory. Potentially making a euro-backed coin a key participant in the global crypto and DeFi space. But, without sufficiently euro-backed stablecoins, progress may slow down. As an extensive majority of today’s stablecoins are U.S dollar-backed, he warned

Although, several widely utilized dollar-backed stablecoins are arranged. Deployed by web3 providers outside of the banking sector, existing traditional finance players joining the space bring with the. An existing history of compliance and customer protections that regulators may favor. Moody’s Head of DeFi and Digital Assets Strategy Rajeev Bamra added.

“The deployment of non-euro denominating stablecoins is essential because it can either fuel the European DeFi ecosystem or it can be a real obstacle,” claim Astic. “It would depend on whether European market participants are ready to fuel the market with more euro-denominated stablecoins between now and the official implementation date.” 

With additional regulatory direction, opportunities will come for known stablecoin issuers to enter the playing domain as well, Bamra added. “If there is a regulatory framework or legal framework in a place like the one in the EU, and then we know there are article proposals in the U.S., then that may or should potentially open up the window for all these big major stablecoins like the USDC and similar ones,” he said.

For now, inventors may be hiding by uncertainties over lawfulness or tax efficiency according to Astic, who said that frameworks are a useful catalyst for innovation.

Moreover, Bamra stated it can be challenging to promote an “atmosphere that is reasonable and equitable to encourage innovation.” The primary plans of the legislation, he said, should prioritize ease of access to financial services and “assure that society benefits from increased technological efficiency.”

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Emily Carter
Emily Carter
I'm Emily Carter, a content writer focusing on blockchain and crypto news. I stay informed on the latest trends and developments in this fast-changing field and deliver clear, concise news to my readers. With a journalism background and English degree, I write high-quality, informative, and engaging news articles.

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