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EBA Calls for Early Adoption of Stablecoin ‘Guiding Principles’
The European Union's banking regulator urged stablecoin issuers to adopt the Markets in Crypto Assets Regulations (MiCAR) guidelines, which the EU adopted in April. Specifically, the regulator has cited the provisions related to the permanent right of redemption of assets by the users and the rules for guiding complaints in the MiCAR requirements.
The European Banking Authority (EBA) released a report today (Wednesday) for public consultation that provides more information about the requirements provided by the MiCAR for stablecoin issuers. The requirements will reportedly be implemented on June 30, 2024.
EBA Eyes Stablecoins
"The statement is intended to encourage timely preparatory actions to the MiCAR application, with the objective of reducing the risks of potentially disruptive adjustments of business models at a later stage. It aims to promote supervisory convergence and to facilitate the protection of consumers," the EBA said in a statement.
Ahead of the implementation of the MiCAR next year, the EBA is expecting an increase in the issuance of stablecoins following the approval of the regulations. In light of that, the regulator urged the stablecoin issuers to apply its good governance and risk management policies.
The EBA is expected to issue subsequent draft rules, which include the guidelines for companies to redeem their stablecoins when the markets are volatile, in October. The rules will also address capital requirements for stablecoins issuers, the EBA said.
The MiCAR is considered one of the most comprehensive cryptocurrency laws in the EU. Adopted by the Council of the EU in May, the regulation aims to protect consumers dealing with digital assets, promote environmental sustainability, and prevent money laundering in the digital asset space.
EU Regulates Cryptocurrencies
In a separate report, the EU's European Securities and Markets Authority (ESMA) similarly provided guidelines for Crypto Asset Service Providers (CASPs) who trade cryptocurrencies. In the guidelines, the ESMA stated that the CASPs should ensure that they separate customer assets from their own. The ESMA's guidelines will reportedly be implemented in January 2025.
In a report published today (Wednesday) by Finance Magnates, Verena Ross, Chair of the ESMA, said: "This first consultation package is an important milestone for ESMA in the implementation of the MiCAR framework. It translates to our ambition to set high regulatory standards in the EU for the trading of cryptocurrencies.
This article was written by Jared Kirui at www.financemagnates.com.
