EU Stablecoin Caps Could Lighten or Get Tougher, French Official Warns
Limits on stablecoins denominated in currencies other than euros were among the most controversial elements of the European Union’s Markets in Crypto Assets law.
Controversial caps on stablecoins planned by the European Union could be lifted – or alternatively made yet stricter, a French official warned Tuesday, while an EU lawmaker said the bloc may have “overregulated” the crypto sector.
The EU’s recently agreed Markets in Crypto Assets Regulation (MiCA) requires crypto service providers such as digital wallet companies to register for authorization to serve the bloc. It also imposes a tough limit on the size of crypto assets that are linked to assets other than EU currencies, which some in the industry fear could restrict the market.
While national governments don’t want private virtual money rivaling fiat currencies such as the euro, that “doesn't mean that the caps are rocket science,” Gabriel Cumenge, deputy assistant secretary at the French Ministry of the Economy, said of proposals that could see stablecoin issuers ordered to halt services inside the EU if they surpass 1 million transactions per day.
“We'll need to see how the markets develop, and maybe the threshold will need to be revised, up or down,” Cumenge said at a conference hosted by the Blockchain for Europe industry body in Brussels. Stablecoins, which are cryptocurrencies that seek to maintain their value against assets such as the U.S. dollar or gold, would only pose a worry if used as a means of payment, not if they only constitute an investment, Cumenge added.
The stablecoin cap – first proposed after officials worried that Facebook’s now-abandoned cryptocurrency libra (later diem) could threaten Europe’s monetary sovereignty – was one of the most controversial elements in the closing stages of legislative talks, with lobbyists seeking to ensure that the limits wouldn’t apply to pure trading activity.
But even the lawmakers who wrote the legislation, which was finalized in September, realize they may have gone too far in clamping down on stablecoins.
“I think we possibly overregulated some of the parts” of MiCA, said Ondrej Kovarik, an EU parliamentarian for the liberal Renew Europe Group. “I think we could have been a bit more principle-based rather than prescriptive, on issues like for instance stablecoins.”
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