EU crypto rules set to limit dollar-pegged stablecoins

LONDON, Oct 7 (Reuters) – EU rules to regulate cryptoassets will dampen the market share of non-euro stablecoins from 2024, potentially limiting EU competitiveness, industry representatives have said.

Ambassadors of the 27 EU states on Wednesday gave their approval to an agreement on the new Markets in Crypto Assets Regulation (MiCA) struck in June with the European Parliament.

To become law, parliament must vote on the rules, which is expected to happen in December or early 2023.

The ambassadors also published a full text of the agreement, which reveals details such as that non-euro-denominated stablecoins will be limited to 1 million transactions and 200 million euros ($196 million) in transaction value when marketed in the eurozone.

A joint letter from crypto industry groups Blockchain for Europe and the Digital Euro Association said the world’s three largest stablecoins – Tether, USD Coin and Binance USD – account for 75% of crypto trading volumes and are already exceeding transaction and volume limits set. out in the EU rules.

Anto Paroian, CEO of cryptocurrency hedge fund ARK36, said the curb “is likely to limit the EU’s competitiveness and innovation potential”.

The European Crypto Initiative, a Brussels-based crypto lobby group, said in a statement that the result could be “severe”.

But it said a more favorable approach to euro-denominated stablecoins was likely to emerge after “initial fears about the EU’s financial stability and monetary sovereignty”.

Stablecoins are a type of cryptocurrency designed to maintain a constant value, usually via a 1:1 peg with a fiat currency.

“If the directive’s current wording is not changed, it will significantly limit the use of dollar-denominated stablecoins such as USD Coin, Tether and Binance US,” said Fabian Astic, Global Head of DeFi and Digital Assets at Moody’s Investors Service.

Stefan Berger, a member of the European Parliament who helped negotiate the final deal, told Reuters: “This could actually boost the euro-pegged stablecoins, which is a welcome development.”

Tether’s dollar-pegged coin is the world’s third-largest cryptocurrency, with a market capitalization of $68 billion, compared to $202 million for the euro-pegged version, data from CoinGecko shows.

($1 = 1.0202 euros)

Reporting by Huw Jones and Elizabeth Howcroft, editing by Barbara Lewis

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