MiCA has made euro stablecoins safe but weak, new report argues

A new Blockchain for Europe report says MiCA has made euro stablecoins safer but less competitive, and urges targeted reforms to reserves and remuneration.

A new report released Monday from industry group Blockchain for Europe argues that the European Union’s flagship crypto laws, the Markets in Crypto-Assets Regulation (MiCA) framework, have produced euro-denominated stablecoins that are ultra-safe but commercially weak, leaving the bloc far behind US dollar-pegged tokens in digital payments and trading.

The report cites DeFiLlama data that euro stablecoins account for less than 1% of global stablecoin volume despite the euro’s much larger role in global markets, and argues that MiCA has pushed them onto the “downward-sloping” part of a regulatory "Laffer" curve, where stricter rules reduce the activity they are meant to govern.

Drafted by European Central Bank official Ulrich Bindseil and Blockchain for Europe’s Erwin Voloder, the report focuses on MiCA’s rules for euro electronic money tokens, or EMTs, which must be fully backed and are barred from paying interest.

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