Regulation of stablecoins: The race for the crypto future begins!

Regulation of stablecoins: The race for the crypto future begins!

Stablecoin regulation has the potential to act as a catalyst for the entire crypto industry. The interest of institutional investors could increase significantly through clear framework conditions, which increases the attractiveness of digital currencies. Ash Pampati of the Aptos Foundation points out that the world outside the US is already betting heavily on stablecoins, while the US is now on the verge of making similar moves. Stablecoins not only offer efficiency, but also cross-border possibilities, making them particularly attractive for international money transfers. Particularly in emerging markets, stablecoins act as a hedge against the volatility of fiat currencies, further enhancing their utility.

A survey shows that Latin America leads the way in using stablecoins for cross-border payments with 71% users. Additionally, 86% of companies are ready to integrate stablecoins into their business models, with 75% seeing clear customer demand. Regulation plays a crucial role here, as the success and acceptance of stablecoins depends heavily on regulatory developments. In the European Union, an important step in this direction is being taken with the MiCA Regulation (Markets in Crypto-Assets), which is intended to promote both innovation and investor protection.

MiCA regulation: A milestone for crypto regulation

The MiCA regulation aims at risk-based regulation and creates legal frameworks that are important for the respective industry. The regulations on asset-referenced cryptoassets and e-money tokens are expected to come into force in July 2024, while the majority of the regulation will take effect in early 2025. The European supervisory authorities, including BaFin, are already working on the technical regulatory and implementing legal acts as well as the necessary guidelines.

In Germany, many businesses with crypto assets are already subject to licensing. Providers must prepare an emissions document or white paper and submit it to the regulatory authorities. Approval is required for public offerings of e-money tokens and asset-referenced tokens. The EU regulation defines three categories of cryptoassets: e-money tokens, asset-referenced tokens and utility tokens. In particular, common cryptocurrencies such as Bitcoin and Ethereum fall under the scope of MiCA, while security tokens and NFTs are generally not covered.

Long-term perspectives and challenges

The redemption claims against issuers are mandatory for customers, as are the minimum liquidity requirements for issuers. Providers with more than 15 million active users are considered significant providers and are subject to increased supervision. ESMA also advocates for supervisory convergence and maintains a “black list” for providers that do not meet MiCA requirements. These developments could have far-reaching implications for the industry and encourage wider adoption and use of stablecoins.

In summary, regulating stablecoins, particularly through initiatives such as the MiCA regulation, could not only revolutionize the crypto industry but also increase investor confidence. With clear guidelines, institutional investors could continue to come in, which would significantly impact the future of stablecoins.