Stablecoin Regulation: EU Drafts Complaints Rules Under MiCA

The European Union (EU) financial regulators want to add more stablecoin regulation guidelines under the Markets in Crypto Asset (MiCA) regulatory framework.

EU Stablecoin Regulation Sees MiCA Law Update

According to a document from the European Banking Authority (EBA), regulators have presented a draft of technical standards for stablecoins that reference multiple currencies or assets. This stablecoin regulation is a result of the collaborative effort between the EBA and the EU’s markets regulator ESMA. They both consulted on stablecoin education from July 2023 till October. 

Beyond stablecoin regulation, both entities have been working together to establish more rules under MiCA in the form of Regulatory Technical Standards (RTS). The Wednesday publication of RTS is only one out of the numerous rules expected from the regulators in the runup to MiCA’s full implementation.

The current RTS outlines procedures for the “prompt, fair, and consistent handling of complaints by holders of ARTs,” or asset reference tokens.

“Such a framework should support innovation and fair competition while ensuring a high level of protection of retail holders and the integrity of markets in crypto assets,” the EBA document highlighted.

These ARTs which include Libra were proposed by Meta a few years ago. Unlike other stablecoins that are pegged to the value of one currency like the United States dollar or the euro, ARTs can reference other several fiats or even cryptocurrencies. 

MiCA Implementation Timeline Unveiled

Before this time, the EU has been making great efforts to oversee stablecoins by introducing the MiCA rule. The move for stablecoin regulation was necessary considering the collapse of Terra Luna’s UST which caused questions to arise regarding their systemic impact. On its own, the EBA had previously proposed regulations for stablecoin issuers. 

Precisely, the proposed rule might have helped boost capital and liquidity for stablecoin issuers to provide a secure stablecoin trade environment. Another rule under the MiCA law requires crypto asset service providers to undergo strict vetting of their shareholders and board members. 

MiCA is not expected to become fully effective until December but the stablecoin regulation will be launched this summer. The MiCA legislation aims to e­stablish an extensive frame­work for crypto issuers, service provide­rs, and users.