Will the MiCA bill hamper stablecoin adoption?

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Will the MiCA bill hamper stablecoin adoption?

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 Will the MiCA bill hamper stablecoin adoption?
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Highlights

  • Binance CEO Changpeng Zhao welcomed the supposed text of the MiCA bill.
  • Few experts believe that changes in the MiCA bill could hamper the functioning of the central banks of respective areas and the crypto businesses.

With the rumours of the European Union finalising the text of its Markets in Crypto Assets (MiCA) bill, the market experts have mixed reactions. While the likes of Binance CEO Changpeng Zhao welcomed the supposed text of the bill, few others feel that if the bill gets passed into law, it may stifle stablecoins and crypto innovations.

According to a news report from CoinDesk, the EU lawmakers had almost finalised the text of the MiCA bill, with the lawmakers preferring to take a “substance over form” approach. The stablecoin regulation has especially gained prominence post-Terra Luna collapse last June-July. Several other algorithmic stablecoins, such as Tether, Tron, DEI, etc., also lost their pegs. This resulted in a debate about the need for a regulatory structure to safeguard investors from losing money.

Mixed reviews about the MiCA bill

But on 30 June, the Council of EU reached a provisional agreement on MiCA proposal. Later in July, the European Central Bank (ECB) called for harmonisation with member states to ensure a smooth transition ahead of its eventual launch.

However, few sects of the ECB felt that possible changes in the MiCA bill could hamper the functioning of the central banks of respective areas and the crypto businesses operating in the country. Besides, few believe that implementing it could also deter stablecoin adoption in the EU region. Although much needs to be finalised, the rough sketch suggested in the document may hamper the stablecoins overall.

On the other hand, Binance CEO Changpeng Zhao feels that the latest draft could remove the restrictions that the non-EUR stablecoins face.

Recently, Circle protocol launched the Euro Coin (EUROC) – the stablecoin backed by Euro. Euro Coin utilises the same model which Circle uses in its existing US-Dollar backed stablecoin USD Coin (USDC). The Euro Coin will be held in euro-denominated banking and is redeemable 1:1 for euros.

Conclusion

All in all, the recent information of the MiCA bill text being finalised has evoked mixed results within the crypto community. Whether all mentioned in the documents gets listed in the final bill or not remains to be seen.

The bill, however, will be discussed and debated further during its second hearing in October, and it may be then that a few things would clear up a little more.  

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