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MiCA (Markets in Crypto-Sets) regulations are a legal framework set up by the European Union to supervise digital assets. Its purpose is to establish clear and uniform rules in the cryptocurrency sector, in order to protect users and ensure financial stability. Among the assets concerned, the stablecoin occupy a central place. For what ? Because they have become a pillar of digital finance by allowing rapid and stable transactions while responding to the price of Fiat currencies. However, their massive adoption can also make risks if it is not properly regulated, in particular in the event of lack of transparency or insufficient reserves.
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What is a stablecoin ?
A stablecoin is a cryptocurrency specially designed to maintain stable value. This stability is generally ensured by relying on a reference asset, such as a fiduciary currency (called "Fiat" currency, for example the dollar or the euro) or tangible assets like gold. Unlike other cryptocurrencies, stablecoin s are not subject to significant price fluctuations, which makes them ideal for payments or value storage. Some known examples include:
- USDT (TETHER) and USDC (CIRCLE) indexed to the US dollar.
- EURC ( Euro Coin by Circle) , linked to the Euro.
The three main categories of stablecoins
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Fiat collateralized (backed by fiduciary currencies)
These stablecoin s are directly supported by traditional currency reserves (such as the dollar or the euro). stablecoin unit is guaranteed by an equivalent unit of fiduciary currency filed in a bank or a reserve account.- Example: USDT (TETHER), USDC (USD Coin), and EURC (Euro Coin).
Why is it important? These stablecoin offer great stability, because their value depends directly on tangible assets.
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Crypto collateralized (supported by cryptocurrencies)
These stablecoin s are guaranteed by cryptocurrency reserves, often oversized to compensate for their volatility. For example, 1 DAI can be backed by 1.5 times its value in ETH ( Ethereum ) to maintain its stability.- Example: DAI on the Ethereum .
How does it work? These stablecoin use smart contracts to automatically manage the guarantees and adjust their offer.
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Algorithmic
These stablecoin s is not guaranteed by real asset reserves. They maintain their value thanks to automatic algorithms and mechanisms, such as adjusting the supply in circulation. For example, if the price of a stablecoin exceeds $ 1, the system issues new tokens to lower the price.- Example: the UST de Terra (which failed in May 2022).
Issue ? These stablecoin s are more risky because they are based on user confidence in algorithm. UST's collapse has demonstrated their vulnerability.
MiCA : definition and objectives of regulations
Before the entry into force of MiCA (Markets in Crypto-Asets) , the regulation of cryptocurrencies in Europe was fragmented. Each Member State applied its own rules, which created legal uncertainty for businesses and investors. Some jurisdictions had favorable laws, while others imposed severe restrictions, making the harmonized development of the crypto sector in the European Union difficult.
MiCA marks a turning point by offering a unified legal framework for all the actors of cryptocurrencies in Europe, whether tokens issuers, service providers or investors. These regulations pursue several objectives:
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MiCA consumers requires issuers and service providers that they comply with high standards for transparency, security and responsibility.
Concrete example: Stablecoin stablecoin must be backed by solid reserves and allow rapid refund in the event of a request. - Ensure the stability of the financial markets
with the growing adoption of cryptocurrencies, instability in this sector could have repercussions on the traditional economy. MiCA imposes control mechanisms to avoid market manipulation, privileged information abuses and systemic faults.
stablecoin of systemic importance is a stablecoin used on a large scale in the economy (as for payments, regulations or international transfers). If this stablecoin were to lose its stability or to encounter major problems (such as a bankruptcy of the transmitter or a collapse of confidence), this could disrupt not only the cryptocurrency market, but also the traditional financial system.
Such an incident could cause a liquidity crisis (users massively seeking to withdraw their funds), problems of payment between institutions or a generalized loss of confidence in digital assets.
What obligations the MiCA regulations impose on stablecoins issuers?
The MiCA regulation imposes strict requirements on stablecoin to guarantee the safety and confidence of users. Here are the main obligations:
Compulsory license : transmitters must obtain an approval as a credit or electronic currency establishment. This allows them to prove that they respect high management standards in terms of management and security.
Reinforced transparency : transmitters are required to publish a white paper detailing the characteristics of the stablecoin , associated risks and user rights. Any erroneous information in this document can engage their responsibility.
Management of funds and reservations :
- The funds received from users must be invested in safe and low -risk assets, for example state bonds.
- These funds must be separated from the other assets of the transmitter and deposited in a separate account in a financial institution.
Guaranteed reimbursement stablecoin holders must be able to convert their tokens into a fiduciary currency at any time and peer (for example, 1 stablecoin = 1 euro). This includes clear reimbursement procedures in the event of a project dissolution or financial difficulties.
Rescue plans : Emitters must establish recovery and reimbursement plans to anticipate and manage any financial failures.
Classification of important stablecoin : the stablecoin of "significant importance", identified by criteria such as the number of users or the total value emitted, are subject to even more stringent requirements. These projects are placed under the supervision of the European Banking Authority (ABE).
Requirements for service providers : platforms offering services related to stablecoin s must:
- Respect high standards of integrity, professionalism and transparency.
- Protect user funds and cryptive assets by keeping them separated from the company's assets.
- Implement measures against money laundering and financing terrorism.
Challenges for the crypto market against MiCA
The MiCA regulations result in significant compliance costs for cryptocurrency issuers. These costs are linked to several obligations:
Obtaining a license : transmitters must comply with the approval requirements in a member state of the EU. This includes complex and costly administrative procedures, such as verification of financial solidity and legal compliance.
Publication of a white paper : MiCA requires issuers to publish a detailed white paper describing the project, its risks, and its operating mechanisms. The creation of this document often requires using legal, technical and financial experts.
Maintaining reserves and guarantees : stablecoin S must be backed by reservations solid enough to guarantee their stability. This means that transmitters must mobilize substantial funds to cover the commitments linked to the tokens, which immobilizes capital.
Regular audits and reporting : MiCA requires regular evidence of transparency and fund management. This involves frequent external audits and the implementation of sophisticated management and monitoring systems.
Risk management and consumer protection : transmitters must develop mechanisms to prevent conflicts of interest, secure user funds, and manage complaints. These infrastructures represent a investment , especially for small businesses.
These requirements, although useful to strengthen confidence in the crypto market, could slow innovation. Small transmitters, with limited resources, may be excluded from the market. In addition, algorithmic stablecoin, which do not meet the reserve criteria imposed by MiCA, could disappear in their current form.
Implications for MiCA regulations on stablecoins
The strict MiCA requirements have significant repercussions on existing stablecoin, by imposing clear rules on transparency and financial guarantees. For example, popular stablecoinlike theUSDT of Tether, the PAX, the PYUSD and even the Makerdao DAI do not currently fully comply with the standards required by MiCA, in particular in terms of regular proofs of reserves backed by real assets and transparency in financial reports.
These non-conformities have pushed platforms like Coinbase to delude these stablecoins within the European Union. In particular, theUSDT, which has long been criticized for the opacity of its reserves, does not meet new obligations. Conversely, compliant stablecoin, such as theUSDC, which already meet the transparency and guarantee criteria imposed by MiCA, could benefit from a competitive advantage by becoming the privileged assets of platforms and users in the EU.
Why are the non -compliant stablecoinlike theUSDT and the DAI still widely used?
Although certain rules specific to MiCA relating to stablecoinhas already entered into force since June 30, 2024, their strict application depends on several factors:
1. Transition periods and progressive adjustment:
stablecoinS transmitters and platforms need time to comply with the complex MiCA requirements (guaranteed reserves, transparency, peer reimbursement, etc.).
The European Union has not yet fully implemented controls and sanctions for non -compliant actors. This transition phase allows projects and platforms to adapt.
2. Complex task for regulators:
The strict application of the MiCA rules requires considerable resources, in particular to monitor the thousands of crypto and stablecoinin circulation.
Many transmitters and platforms are still negotiating with regulators to clarify their status or adapt their practices.
3. Temporary laxity to avoid market disruption:
TheUSDT, for example, is the most used stablecoin in the world. An immediate ban could disrupt crypto markets in Europe and harm users. The regulators therefore adopt a gradual approach to avoid a shock.
So what will happen once MiCA fully applied?
From December 30, 2024 , strict surveillance of platforms and transmitters will begin. At that time:
- European crypto platforms will have to withdraw from the list (delisher) all the stablecoin which do not respect the MiCA .
- Stablecoin s like the stablecoin or the DAI , if they cannot prove that they meet the requirements, could be USDT from the European market .
This explains why platforms like Coinbase already anticipate these changes, delisiting stablecoin s which may not be in conformity, such as USDT , dai , pax , and PYUSD .
Conclusion: MiCA, a regulation for the future of stablecoins
The MiCA regulation marks a major turning point for the stablecoins in Europe, by offering a clear and harmonized legal framework. This regulation aims to strengthen the confidence of users and investors while ensuring greater transparency and security on the market.
However, these strict rules are not without consequences: they could slow down innovation and exclude certain projects, in particular the stablecoinalgorithmic, which do not meet the imposed criteria. However, this approach aims to protect consumers and avoid systemic crises that could affect the entire economy.
To find out more, click on the words in bold to discover our items on the stablecoin s Euro and which stablecoin to choose according to your preferences.
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Yohan Uzzan
Training engineer, I quickly became interested in the field of finance. Convinced that decentralized finance has a bright future ahead of it, I participate in its democratization by developing Crypternon.
