European Union (EU) financial regulators are planning to enhance the regulations surrounding stablecoins under the Markets in Crypto-Assets (MiCA) framework. They have released draft regulatory standards for stablecoin issuers to address complaints effectively.
The Regulatory Technical Standards (RTS) were issued on March 13, outlining the protocols for resolving complaints from asset reference token (ART) holders in a fair and efficient manner. These guidelines provide stablecoin issuers with procedures and standards to manage complaints successfully.
According to a report from the European Banking Authority (EBA), the regulatory framework for stablecoins is the result of a collaborative effort between the EBA and the European Securities and Markets Authority (ESMA), the EU’s markets regulator. The consultations took place between July and October 2023.
The regulatory framework will be submitted to the European Commission for approval by the end of June. Following that, the European Parliament and the European Council will review the standards before they are published in the Official Journal of the European Union.
The MiCA regulatory framework categorizes stablecoins that can be linked to multiple fiat currencies or other assets as ARTs. This is different from stablecoins that are pegged to a single currency, such as the euro or dollar.
Prior to this, the EU had been monitoring stablecoins under the MiCA regulation. The need for stablecoin oversight became apparent after the collapse of Terra’s UST, which raised concerns about their potential impact on the financial system. The EBA had previously suggested regulations for stablecoin issuers.
The MiCA legislation also includes a provision that requires thorough screening of shareholders and board members of crypto asset service providers (CASPs). These rules aim to authorize CASPs while ensuring the separation of customer assets and trading to prevent the mingling of customer and company funds.
The full implementation of MiCA is expected by December, while the stablecoin regulations are set to be launched in the summer. The MiCA legislation aims to establish a comprehensive framework for crypto issuers, service providers, and users.