EBA Calls for Early Adoption of Stablecoin ‘Guiding Principles’

The European Union's banking regulator urged stablecoin issuers to adopt the Markets in Crypto Assets (MiCA) regulations, which the EU adopted in April. Specifically, the regulator has cited the provisions related to the permanent right of redemption of assets by the users and rules related to complaints in the MiCA regulation requirements.

The European Banking Authority (EBA) released a report today (Wednesday) for public consultation that provides more information about the requirements provided by MiCA for stablecoin issuers. The guidelines will reportedly be implemented on June 30, 2024.

EBA Eyes Stablecoins

"The statement is intended to encourage timely preparatory actions to the MiCA application, with the objective of reducing the risks of potentially disruptive adjustments of business models at a later stage. It aims to promote supervisory convergence and to facilitate the protection of consumers," the EBA said in a statement.

Ahead of the implementation of the MiCA regulations next year, the EBA is expecting an increase in the issuance of stablecoins following the approval of the regulations. In light of that, the regulator urged the stablecoin issuers to apply its good governance and risk management policies.

The EBA is expected to issue subsequent draft rules, which include the guidelines for companies to redeem their stablecoins when the markets are volatile, in October. The rules will also address capital requirements for stablecoins issuers, the EBA said.

MiCA is considered one of the most comprehensive cryptocurrency laws in the EU. Adopted by the EU Council in May, the regulation aims to protect consumers dealing with digital assets, promote environmental sustainability, and prevent money laundering in the digital asset space.

EU Regulates Cryptocurrencies

In a separate report, the EU's European Securities and Markets Authority (ESMA) similarly provided guidelines for crypto asset service providers (CASPs) who trade cryptocurrencies. In the guidelines, ESMA stated that CASPs should ensure that they separate customer assets from their own. ESMA's guidelines will reportedly be implemented in January 2025.

In a report published today (Wednesday) by Finance Magnates, Verena Ross, the Chair of ESMA, said: "This first consultation package is an important milestone for ESMA in the implementation of the MiCA framework. It translates to our ambition to set high regulatory standards in the EU for the trading of cryptocurrencies."