European Union authorities work together on stablecoin regulations to safeguard investors and promote equitable trade.
The European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) have worked together to establish new regulations to strengthen the regulatory environment for stablecoins. With the Markets in Crypto-Assets (MiCA) framework, financial authorities in the European Union (EU) want to make sure that cryptocurrency markets are honest and that consumers are better protected.
Asset reference token (ART) holders may find mechanisms for properly addressing complaints in the recently announced Regulatory Technical Standards (RTS). In order to handle complaints effectively, stablecoin issuers must follow the processes and criteria outlined in these guidelines. Encouraging innovation and fair competition while protecting retail holders’ interests and ensuring market integrity is the overriding purpose of this approach.
After much back-and-forth, the EBA and the ESMA came up with this stablecoin regulatory framework. Stakeholder views and input were gathered during consultations that took place from July to October 2023.
By June 30th, the completed framework should be ready for submission to the European Commission for clearance. After that, the EU’s legislative bodies will examine the standards and then publish them in the EU’s official journal.
Cryptocurrencies that are pegged to various fiat currencies or other assets are known as ARTs under the MiCA regulatory framework. This categorization sets them apart from stablecoins that are tied to the value of only one currency, such as the dollar or euro. It is expected that the MiCA Act will be fully implemented by December, with the goal of creating a complete framework for crypto issuers, service providers, and consumers.
Crypto asset service providers (CASPs) are required under MiCA law to do extensive due diligence on their board members and owners. The purpose of these regulations is to permit CASPs while keeping client funds and trades separate. Preventing the mixing of client and company funds is one way the rules try to lessen the dangers of platforms like FTX.
Concerned about the systemic consequences of stablecoin failures, the drive for improved regulation of stablecoins gathered steam after Terra’s UST meltdown. The European Union has been keeping a close eye on stablecoins to determine market vulnerabilities and dangers prior to the MiCA framework’s implementation.
Also Read: Andorra follows IMF advice to track Bitcoin transactions March 14, 2024
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