EBA prompts stablecoin issuers to start preparing for MiCA regulations.
The European Banking Authority (EBA), the financial watchdog of the European Union, is urging stablecoin issuers to adopt proposed "guiding principles" ahead of expected regulatory requirements set to come into force in a year.
The newly proposed "guiding principles" focus on consumer protection and risk management.
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The EBA publicized its initial series of protocols for feedback on Wednesday, July 12th. These protocols aim to clarify the upcoming Markets in Crypto Assets Regulation (MiCA) rules pertaining to stablecoin issuance.
MiCA, the world's first all-inclusive regulation for crypto asset trading as well as stablecoin issuance, gained approval from the EU in April.
Following the adoption of the regulatory framework, EBA forecasts an escalation in stablecoin issuance over the upcoming months. The watchdog is, thus, encouraging enterprises to adopt its guiding principles on risk management and good governance ahead of the actual implementation of the necessary regulations.
As per the EBA's statement, the intent behind the advice is to:
Encourage timely preparatory actions to MiCA application, with the objectives to reduce the risks of potentially disruptive and sharp business model adjustments at a later stage, to foster supervisory convergence and to facilitate consumer protection.
Meanwhile, another regulatory progression is ongoing. The European Securities and Markets Authority (ESMA) is drafting regulations for crypto asset service providers (CASPs). The rules aim to authorize CASPs while ensuring customer assets and trading are separate to prevent the mixing of company and customer funds.
These impending ESMA regulations, due to be operational in January 2025, will not include a compensation scheme for customers who incur losses on investments in unbacked crypto assets.
It is worth noting that in October, the EBA plans to release a secondary set of proposed guidelines that will address the capital requirements of stablecoin issuers and the management of stablecoin redemptions in fluctuating markets.
At the end of June, the European Union (EU) lawmakers took a decisive step toward ratifying the controversial European Data Act.
