• The European Banking Authority (EBA) has released its first set of measures for public comment to clarify the Markets in Crypto-Assets regulation (MiCA) requirements for issuing a stablecoin.
• The Economic and Financial Affairs Council of the European Union approved MiCA in May, which is the world’s first comprehensive set of rules for trading crypto assets and issuing stablecoins.
• In October, the EBA will release a second set of draft guidelines that address the compensation plan protocol for customers who lose money on investments in unbacked crypto assets when they go into effect in January 2025.
European Banking Authority Calls For Early Adoption Of Stablecoin Standards
The banking watchdog for the European Union, the European Banking Authority (EBA), has asked stablecoin issuers to voluntarily follow certain “guiding principles” on risk management and consumer protection in advance of required regulations expected in the coming year. On July 12th, EBA released its first set of measures for public comment to clarify the Markets in Crypto-Assets regulation (MiCA) requirements for issuing a stablecoin set to take effect on June 30th 2024.
What Are The Guiding Principles?
The guiding principles contain clauses such as a perpetual right of redemption and guidelines for managing complaints. EBA officials anticipate a surge in stablecoin issuance over the coming months so businesses are urged to use these principles before restrictions are implemented.
May Approval Of MiCA Law
In May, The Economic and Financial Affairs Council of the European Union approved MiCA which is said to be world’s first comprehensive set of rules for trading crypto assets such as Bitcoin BTC $30,310 and Ether ETH $1,867 , and issuing stablecoins like Tether USDT $1.00 .
ESMA Rules For Crypto Asset Service Providers
The EU’s European Securities and Markets Authority (ESMA) has also put forward draft rules for crypto asset service providers (CASPs). These rules seek to authorize CASPs while ensuring separation between customer assets and trading with an aim to avoid any kind of commingling between customer money and company money, as seen with FTX platform.
EBA’s Second Set Of Draft Guidelines In October
In October this year, EBA will release its second set of draft guidelines that address compensation plan protocol when it comes into effect from January 2025 onwards; this will provide customers with financial protection should they lose money on investments made via unbacked crypto assets.