MiCA is live: How new EU regulation will affect the global crypto market

As a researcher with experience in the cryptocurrency industry, I’m excited about the entry into force of the Markets in Crypto-Assets (MiCA) law on June 30, 2024. The MiCA regulation is a significant milestone for the EU, as it clarifies and uniformly regulates the cryptocurrency market, defining digital asset classification and specifying laws and areas of responsibility for their implementation.

Starting in July, crypto exchanges and stablecoin issuers in the EU will adhere to the regulations outlined in the MiCA law.

As a crypto investor in the EU, I’m excited about the upcoming changes brought by the Markets in Crypto-Assets (MiCA) law, effective from June 30. This regulation will have a major impact on our industry. One of MiCA’s crucial aspects is the regulation of stablecoins, ensuring they comply with specific requirements to maintain their stability and trustworthiness. Furthermore, it lays down rules for various crypto assets and exchange platforms, enhancing transparency, security, and investor protection within our community.

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What MiCA says

As a researcher studying the cryptocurrency sector, I would describe MiCA (Markets in Crypto-Assets) as a regulatory framework that brings clarity and uniformity to this market by establishing a consistent regulatory structure. It classifies digital assets and lays down the legal guidelines for their implementation, specifying the responsibilities of the relevant parties.

As a crypto investor, I’m excited to share that back in April, European Parliament members made history by approving the Markets in Crypto-Assets (MiCA) regulation bill. This groundbreaking move positions the EU as one of the world’s pioneering jurisdictions, introducing comprehensive regulations for crypto assets.

To ensure transparency towards customers, companies must publicly reveal their business models and operations, set up robust governance structures incorporating risk management, register with the European Banking Authority (EBA), create a buyback system, and maintain adequate financial reserves.

Starting from June 30, the creators of asset-related tokens (ART) and electronic money tokens (EMT) are required to disclose sustainability information. Meanwhile, crypto service providers must initiate the process of requesting such disclosures no later than the end of this year.

Non-credit institution ART issuers can carry on their operations if they had already issued tokens prior to June 30, but they must apply for approval under MiCA by July 30.

Entities not complying with MiCA may be fined and barred from operating in the European Union.

What restrictions have crypto companies introduced?

With the implementation of the MiCA (Markets in Crypto-Assets) regulation in the European Union, certain crypto companies are limiting the application of stablecoins for their customers.

In March, OKX halted USDT (Tether, the largest stablecoin) trading for EU-based users.

Starting from early June, Binance notified EU customers that they would be restricted from using certain unregulated stablecoins on its platform. Additionally, Binance intends to reduce the scope of services involving these unregulated coins for clients from the European Union. The copytrading feature and engagement in the Launchpad and Launchpool programs are among the services that will no longer be accessible for EU users on the exchange.

Bitstamp, the cryptocurrency exchange, announced its intention to remove the EURT, or the Euro-pegged Tether’s stablecoin, along with other non-compliant stablecoins from its platform by June 30, in accordance with the latest EU regulations governing crypto assets.

Additionally, Lugh, a European firm, stated that they would no longer release their EURL stablecoin prior to the implementation of the MiCA regulatory framework.

📢 Annonce :

MiCA : Lugh suspend son activité d’émission de stablecoin

— Lugh (@LughStablecoin) June 4, 2024

State of the Stablecoin Market

Based on CoinGecko’s data, the European crypto community witnessed a significant decline in the usage of EURT stablecoin throughout 2023. By October last year, its market capitalization dropped significantly, shrinking from approximately $231 million at its peak in 2022 down to just $32 million.

MiCA is live: How new EU regulation will affect the global crypto market

Among stablecoins that are linked to the Euro and have a significant market value, EURT ranks as the second largest, following USDT from Tether. However, the amount of EURT in circulation is relatively small, with approximately 32.1 million coins in existence by June 26th.

Based on data from analytics company Kaiko’s report, Euro-backed stablecoins make up only 1.1% of the overall trading volume for stablecoins tied to fiat currencies.

MiCA is live: How new EU regulation will affect the global crypto market

Approximately 90% of all stablecoin transactions involve US dollar-pegged assets, while just over 10% relate to stablecoins backed by reserves in other currencies and non-fiat assets like gold.

As a crypto investor, I’ve noticed that the weekly trading volume for dollar stablecoins like USDT surpasses an impressive $270 billion mark. On the other hand, the turnover for euro stablecoins such as EURT, EURS, EURCV, and AEUR, among others, hovers around a mere $40 million per week. Analysts predict that this discrepancy could change in the near future, given the increasing regulatory pressure on exchanges to withdraw dollar assets from circulation in Europe.

What the experts say

Expert: MartyParty, the analyst, anticipates a significant surge in the creation of stablecoins following the enactment of MiCA in European Union. He predicts that banks, financial institutions, and stablecoin issuers within the EU will commence generating massive quantities of euro-pegged stablecoins as early as July.

Starting from 30 June 2024, I, as an analyst, will observe the implementation of MiCA regulations specifically designed for stablecoins. By January 2025, the full MiCA regulation is expected to take effect. Throughout this period, EU banks, financial institutions, and existing stablecoin issuers will begin creating massive quantities of Euro-backed digital tokens, marking a potential explosion in the stable coin market.

— MartyParty (@martypartymusic) June 22, 2024

As the CEO and co-founder of Albus Protocol, I, Alexander Ray, want to highlight the importance of upcoming regulatory changes for businesses dealing with asset-linked tokens. These organizations will be mandated to enforce compliance measures such as Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols in their transactions.

The speaker stated that enforcing Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations in cryptocurrency businesses is certain to boost their expenses, which the end-users will bear eventually.

Sven Mohle, the managing director of BitGo Europe GmbH, stated that MiCA’s adoption in Europe would establish high standards for global regulations against money laundering and terrorist financing. Nevertheless, it’s uncertain that users will experience uniform international rules entirely.

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2024-06-30 03:10