- The MiCAR comes into force on June 30, 2024 and regulates stablecoins in the EU.
- Stablecoins link their value to external assets such as fiat currencies or precious metals.
- Important use cases are DeFi, cross-border payments, e-commerce and microfinance.
- MiCAR introduces two categories of stablecoins: ARTs and EMTs.
- Issuers require a license from BaFin and must comply with strict regulations.
- Regulation strengthens trust in stablecoins and promotes their acceptance.
- New opportunities for blockchain projects and fintech start-ups are created by clear rules.
When the Markets in Crypto-Assets Regulation (MiCAR) comes into force on June 30, 2024, a new era for stablecoins in the European Union will begin. This regulation brings clarity and security to a previously largely unregulated area of cryptocurrencies.
What are stablecoins?
Stablecoins are cryptocurrencies that aim to maintain a stable value by being pegged to an external asset such as a fiat currency (e.g. euro or US dollar), precious metals or a basket of different assets. In contrast to volatile cryptocurrencies such as Bitcoin or Ethereum, stablecoins are intended to minimize price fluctuations and thus serve as a reliable means of payment and store of value.
Use cases and start-ups
Stablecoins are particularly suitable for the following blockchain use cases and start-ups:
1. decentralized finance (DeFi): Stablecoins often form the basis for lending, trading and yield farming in DeFi protocols.
2. cross-border payments: Startups can use stablecoins to offer fast and low-cost international transfers.
3. e-commerce: online merchants can accept stablecoins as a means of payment without having to worry about currency volatility.
4. tokenization of assets: Real estate or other tangible assets can be represented as stablecoins.
5. microfinance: In regions with unstable currencies, stablecoins can serve as an alternative for small loans and savings products.
MiCAR regulation for stablecoins
The MiCAR Regulation introduces two categories of stablecoins:
1. asset-referenced tokens (ARTs)
2. e-money tokens (EMTs)
Strict regulations apply to both categories:
– Issuers require a license from the competent authority (BaFin in Germany).
– Sufficient own funds and reserves must be maintained.
– A detailed crypto white paper must be published.
– Issuers must have their registered office in the EU.
– Holders have a redemption claim against the issuer.
– Stricter requirements for “significant” stablecoins apply above a certain size.
In addition, issuers of e-money tokens must be licensed as a credit institution or e-money institution.
Conclusion
The MiCAR regulation for stablecoins creates a clear legal framework that enables innovation while protecting investors. Startups and established companies that want to issue or work with stablecoins in the EU should familiarize themselves with the new requirements at an early stage. Regulation offers the opportunity to strengthen trust in stablecoins and promote their acceptance in mainstream finance.
The clear rules open up new opportunities for blockchain projects and fintech start-ups to develop innovative financial products and services based on stablecoins. At the same time, regulation ensures that these innovations are in line with the objectives of investor protection and financial stability.
