Introduction
Tether, Circle, and other major stablecoin issuers face stringent new EU regulations. These rules take effect on June 30, requiring them to obtain appropriate authorization and adhere to strict transaction limits.
New Authorization Requirements and Transaction Limits
To operate in the 27-nation EU bloc, stablecoin issuers need proper authorization. The new rules enforce limits on the number of transactions and their total value. Issuers like Tether and Circle may struggle to comply, especially since 99% of the stablecoin market is in USD, according to Robert Kopitsch of Blockchain for Europe.
Caps and Their Implications
MiCA, the EU’s comprehensive crypto regulation, was voted into law last year. Article 23 of MiCA states that firms must halt issuing a stablecoin if it’s used for more than one million transactions or exceeds €200 million ($215 million) daily. These rules aim to prevent stablecoins from replacing the euro. Mark Foster from the Crypto Council for Innovation explains that the caps are meant to safeguard the monetary system.
Industry Response and Compliance Efforts
Blockchain for Europe and the Digital Euro Association argued against these measures, claiming they effectively ban large issuers. However, the European Banking Authority (EBA) clarified that issuers can operate without limits if their tokens aren’t used as a means of exchange.
Jón Egilsson from Monerium notes that transactions between currency areas, peer-to-peer transfers, and exchanges for e-money tokens are not restricted. The EBA will publish a final report on transaction measurement by the end of the month.
The Challenge of Obtaining Certification
Issuers must submit a compliance plan to resume issuance if halted. This can be challenging, as USDT’s daily global trading volume is about $27 billion, and USDC’s is $5 billion, according to CoinGecko. Obtaining necessary certifications, like an e-money or banking license, is also a lengthy and costly process.
Circle and Tether’s Efforts
Tether and Circle have three days to secure an e-money license. Circle registered as a Digital Asset Service Provider with the French Financial Markets Authority in April and aims to obtain an e-money license by the deadline. Circle plans to issue EURC and USDC from Circle France in compliance with MiCA.
Tether’s CEO, Paolo Ardoino, stated that Tether is working with exchange partners to meet regulatory requirements. He emphasized the importance of balanced regulatory policies that protect consumers and support industry growth.
Future Prospects
The future of stablecoin regulations will depend on the European Commission and new European Parliament members. Kopitsch points out that there is growing recognition of the need for a solution to the restrictive nature of these rules.
