Introduction of mica legislation triggers discussions about Stablecoin transaction limits: Experts are calling for a new evaluation

Von Krypto News Österreich

mica legislation and their effects on stable coins

Since May 31, the legislation of the European Union has come into force on markets for crypto-assets (mica). This new regulation has caused both praise and concerns in the crypto industry. Although Mica is celebrated for its groundbreaking regulations in the area of ​​cryptocurrencies, there is also concern about a specific aspect: the introduction of a daily transactional limit for private stable coins.

This upper limit was set at 200 million euros ($ 219 million) and has triggered discussions and demands for a revision of mica legislation to ensure that the use of stable coins is not suffocated.

In an interview with CoinTelegraph, legal director Chander Agnihotri and the partner Rachel Cropper-Mawer from the global law firm Clyde and Co commented on this topic. They emphasized that large stable coins could come across potential obstacles and suggested that the supervisory authorities should rethink the daily limits for these digital assets.

stablecoins were originally introduced to alleviate the price volatility of cryptocurrencies such as Bitcoin and ether. They should reflect the value of Fiat currencies, especially the US dollar. However, recent incidents such as the collapse of the Algorithmic StableCoins Terrausd (VAT) in May 2022 and the temporary de-pegging of USDC after the collapse of the Silicon Valley Bank collapsed in early 2023 the attention of the regulatory authorities to private stage coins.

According to Agnihotri, the regulatory authorities have a valid reason to focus on the regulation of private stable coins. These incidents have shown that stricter supervision and control are necessary to ensure stability and protect investors, since larger stable coins have a stronger connection to the traditional financial system. Therefore, Agnihotri and Cropper-Mewer suggest that the regulatory authorities should rethink the regulatory framework for stable coins.

While the discussion about the regulation of stablecoins continues, it is important for the regulatory authorities to find a balance between the promotion of innovations and the protection of market participants. The developing nature of the cryptocurrency landscape requires constant discussions and adjustments to ensure the stability and sustainability of the financial system.

Another aspect of regulating stablecoins is the daily transactional limit of 200 million euros. According to Cropper-Mawer, this is not synonymous with a ban. When the threshold is exceeded, the issuers must set the further emission activity and work with the regulatory authorities to bring the transactions below the upper limit. While larger stable coins could be confronted with restrictions, Cropper-Mewer believes that the legislature will rethink this question.

In view of the current regulation, which may restrict the use of stablecoins, it is reasonable to expect digital currencies from central banks to experience an accelerated growth. However, Cropper-Mewer admits that legislators are aware of the possible negative effects of these regulations, especially in comparison to other countries in which the use of stablecoins is less limited.

Despite the criticism, Agnihotri emphasizes that the majority of the feedback on Mica was positive. The legislation is expected to improve market access for startups and smaller companies and promote innovation and competition. As with any legislation, however, adjustments may be necessary to consider potential improvement areas.

Overall, mica legislation is a significant step towards regulating the cryptoma market, especially with regard to stable coins. The effects on the crypto industry are still being discussed, and it is important that the regulatory authorities create a balanced rules that promotes innovations and at the same time guarantees the protection of market participants.