Source: Cointelegraph
Original article: (The MiCA regulations in Europe have been launched, but can the crypto industry keep up?)
The EU's regulation on the crypto asset market—commonly known as MiCA—is currently in a critical implementation phase. This legislation aims to unify cryptocurrency regulation across the 27 EU member states, promising a clear regulatory framework, consumer protection, and long-term market stability. However, as the implementation process begins, issues have started to surface.
In this week's "Byte Insights" feature, we delve into the key provisions of MiCA that are currently in effect, particularly regarding the regulations on stablecoins, and why some major market participants are refusing to comply with these regulations.
Starting from January 2025, crypto asset service providers (CASPs) will begin applying for licenses to operate legally within the EU. Depending on the regulations of different member states, existing institutions may receive a transition or "grandfathering" period of up to 18 months to achieve compliance. Nevertheless, as the deadline approaches, companies are being forced to act quickly.
One of the earliest and most controversial provisions of MiCA relates to stablecoin regulation. According to this law, no stablecoin may be offered to EU users unless its issuer is authorized in the EU and publishes a white paper approved by the regulatory authorities.
The bill also includes strict asset reserve requirements, governance requirements, conflict of interest prevention, and marketing restrictions. Issuers are even prohibited from offering token interest, which removes a common user adoption incentive.
The most widely used stablecoin globally—Tether's USDT—has already announced that it will not seek compliance with MiCA regulations, meaning exchanges may soon be forced to delist this currency across the EU. This will have a significant impact on liquidity, retail access, and DeFi activity in the region.
Paolo Ardoino, CEO of Tether, told Cointelegraph reporter Gareth Jenkinson at the Token 2049 conference:
"The reason is not a fear of regulation or compliance requirements... My concern with MiCA is that this licensing is very dangerous when it comes to stablecoins, and I believe it poses greater risks to the European small and medium-sized banking system."
On the other hand, other companies are actively adapting to the new regulations. The crypto custody company BitGo recently successfully obtained a MiCA-compliant license in Germany, enabling it to provide services to institutional clients across Europe.
Brett Reeves, Head of Go Network and European Sales at BitGo, revealed to Cointelegraph that obtaining a license is not just about compliance, but is also a strategic move to align with the evolving regulatory environment in Europe.
"We find that both the German Federal Financial Supervisory Authority (BaFin) and European regulators are relatively easy to communicate and cooperate with. Although they sometimes raise tricky questions, their goal is to ensure our processes are sound and meet standards."
We also interviewed Erwin Voloder, policy director of the European Blockchain Association, who emphasized the need for consistent interpretations at the national level and clearer guidance from regulators to prevent market fragmentation.
Please listen to the full interview of Byte-Sized Insight on Cointelegraph's podcast page, Apple Podcasts, or Spotify. Also, feel free to follow all the great programs offered on the Cointelegraph platform.
Related news: The stablecoin bill was passed in the Northern Mariana Islands, and the House overturned a previous veto.