European Banking Authority to Finalize Stablecoin Monitoring Rules This Month

The European Banking Authority (EBA) plans to finalize its monitoring framework for stablecoin issuers by the end of this month, Coindesk reported. This development aligns with MiCA's broader regulations, which provide strict caps on transaction volumes and values. Specifically, stablecoins are prohibited from facilitating more than 1 million transactions or exceeding daily transaction values of 200 million euros.

Regulatory Caps Threaten Operations

The EBA is expected to release a detailed report clarifying how it will measure transaction volumes. Preliminary consultations suggest that transactions involving parties outside the EU may be excluded from the cap calculations. However, transactions with at least one party within the EU are likely to be counted.

The European Union's new stablecoin regulations, part of the EU's Markets in Crypto Assets (MiCA) legislation, are set to reshape the landscape for major issuers like Tether and Circle. These stringent rules aim to impose tight controls on stablecoin transactions, potentially sidelining key players from the European market.

The impending regulations have raised alarms among stablecoin issuers. Tether, known for its dollar-pegged USDT, and Circle, the company behind USDC, might find themselves unable to operate within the EU.

MiCA Regulations

The introduction of the MiCA regulations marks a significant regulatory step for the EU's crypto industry, enabling firms licensed in one member state to operate across the entire bloc. According to Article 23 of MiCA, stablecoin issuers must cease operations if they surpass the defined transaction thresholds. This provision is intended to safeguard the euro from being overshadowed by private digital currencies, a concern sparked by Facebook's now-abandoned Diem project.

Stablecoin issuers face the dual challenge of compliance and obtaining the necessary certifications. Circle, which conditionally registered as a Digital Asset Service Provider with France's Financial Markets Authority in April, is reportedly working to meet the set deadline.

The MiCA rules regulating stablecoins are expected to significantly affect the services offered by cryptocurrency exchanges in the region by the end of the month. So far, Binance, the top cryptocurrency exchange, has halted some of its services provided to users in the region.

This week, the crypto exchange informed its users in the region that certain services would no longer be available. Finance Magnates recently reported that Binance had already blocked access to some services, including copy trading, as of June 26.