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There's a stirring in the cryptocurrency world after the introduction of new European Union legislation. Experts from the legal sphere are warning that the new Markets in Crypto-Assets (MiCA) legislation may potentially impede the progress of stablecoins, a specific type of cryptocurrency, because of an imposed daily transaction cap.
With its last signing on May 31, the MiCA law has quickly become a focal point of the cryptocurrency community. Though many have embraced this pioneering legislation that offers regulatory guidelines for cryptocurrencies, it also ushers in controversial elements like a daily cap of 200 million euros ($219 million) on transactions involving private stablecoins, including popular ones such as Tether (USDT) and Circle's USD Coin (USDC).
Clyde and Co law firm's legal director, Chander Agnihotri, and partner, Rachel Cropper-Mawer, have voiced concerns over these caps. They argue that it may hinder the use of significant stablecoins and have urged regulators to reassess the imposed daily limits.
However, Cropper-Mawer clarifies that the new cap is "not equivalent to a ban." Exceeding the cap simply means issuers must halt further issuing activities and liaise with regulators to keep transactions within the limits. She acknowledges that the popularity of private stablecoins could lead to the stifling of larger stablecoins but expects lawmakers to address the issue.
Cropper-Mawer goes on to suggest that the regulations might unintentionally favor the growth of central bank digital currencies over private stablecoins. Yet, she doesn't think MiCA regulators overlooked the potential drawbacks, especially considering the global popularity of private stablecoins.
Despite criticisms over its broad scope, Agnihotri believes that most feedback regarding MiCA has been positive. He points out that the legislation will allow startups and smaller firms better market access, encouraging innovation and competition, although some parts of the law could benefit from tweaks.
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