EU’s Draft Regulation to Fragment the Crypto Market with Special Focus on ‘Subset’ Stablecoins
The 168-page long leaked version of the draft legislation of “Markets in Crypto Assets (MiCA)” by the European Commission provides legal certainty about digital currencies.
To be issued later this month, the set of regulations will be covering the issuance and trading of digital assets across the bloc.
Europe is basically planning to regulate crypto-like other financial instruments with the purpose to “further enable and support the potential of digital finance in terms of innovation and competition while mitigating the risks.”
However, the European Commission is putting a particular focus on stablecoins, a “subset of crypto-assets” leading to market fragmentation.
This is no surprise given the calls for regulating them for some time now. As we reported, this month, first, Bank of England governor and then five of the European countries supported regulatory oversight for asset-backed coins like Facebook’s Libra.
Additionally, regulators believe stablecoins have the potential to become widely accepted and potentially systemic, and of course, the plans for CBDC are behind the decision.
The new regulation will establish specific rules for ‘stablecoins,’ including when these are e-money.