Three years after MiCA became law, Europe's crypto framework is undergoing a rethink
Key takeaways
- A lot has changed in the meantime, not the least the growing interest from businesses and individuals in stablecoins for international payments.
- “If you listen to European Central Bank officials, you'll notice their opinions change depending on the individual,” Orchard said in an interview.
- Dollar-denominated tokens account for $310 billion of the $311 billion market.
Now they have moderated that stance.There are good reasons why non-U.S. banking authorities might be skittish about how and where stablecoin reserves are held and accounted for.It’s been six years since Europe’s Markets in Crypto Assets (MiCA) was first mooted and three years since it was enacted. A lot has changed in the meantime, not the least the growing interest from businesses and individuals in stablecoins for international payments.
That's dragged the tokens, cryptocurrencies whose value is pegged to a fiat currency, to the forefront as MiCA undergoes review in preparation for what's being called “MiCA 2.0,” an update to the once-pioneering regime that was designed mainly for spot crypto.
The European Central Bank has repeatedly said the strength of dollar-pegged stablecoins could damage its control over monetary conditions in the 21-nation eurozone, though its preferred solution is a central bank digital currency (CBDC), not euro stablecoins. Still, some policymakers have moderated their opposition, according to John Orchard, chairman of the Digital Monetary Institute at OMFIF, an independent research group for central banking, economic policy and public investment.