#StablecoinLaw
Stablecoin regulations are undergoing significant changes, particularly in the European Union. The Markets in Crypto-Assets Regulation (MiCA) is a landmark regulatory framework that aims to bring clarity, consumer protection, and financial stability to the crypto world.
*Key Highlights of MiCA:*
- _Authorization Requirement_: Stablecoin issuers must obtain authorization from the European Banking Authority (EBA) before launching in the EU market .
- _Reserve Backing_: Issuers must maintain fully backed reserves, held in highly liquid assets such as cash or government bonds, to cover the entire circulation supply.
- _Quarterly Audits_: Mandatory quarterly audits ensure full transparency of reserve holdings
- _Transaction Limits_: Strict transaction limits apply to prevent systemic risks to the financial system
*Impact of MiCA on Stablecoins:*
- The EU stablecoin market is projected to grow by 37% in 2025, reaching a total value of €450 billion.
- Euro-backed stablecoins are expected to capture 30% of the total EU market share by the end of 2025.
- At least 20 new stablecoin projects are expected to launch in the EU, specifically designed for compliance with MiCA.
*Global Implications:*
- MiCA-inspired stablecoin regulations are under discussion in at least 12 non-EU countries, including the UK, Switzerland, and Singapore .
- The US is also preparing major policy changes in 2025, with President Trump's recent Executive Order on Digital Financial Technology highlighting the role of stablecoins in strengthening the US dollar.
