Ahead of required regulations expected in a year, the European Union’s banking watchdog called on stablecoin issuers to voluntarily follow certain “guiding principles” on risk management and consumer protection.
The European Banking Authority (EBA) published its first set of measures on Wednesday, July 12, for public comment in an effort to clarify the Crypto Asset Market Regulation (MiCAR) requirements for the issuance of a stablecoin that would take effect on June 30th. , 2024. They contain clauses such as a perpetual right of redemption and guidelines for handling claims.
Screenshot of the EBA statement. Source: EBA
The EU approved its MiCAR in April, the world’s first comprehensive set of rules for trading crypto assets like bitcoin and ether, and issuing stablecoins, a crypto asset backed by a coin or asset.
However, now that the framework law has been adopted, EBA officials anticipate an increase in stablecoin issuance in the coming months and have urged companies to use its guiding principles on good governance and risk management before the necessary restrictions are implemented.
According to the EBA statement:
“aims to encourage timely preparatory actions for the application of MiCAR, with the aim of reducing the risks of abrupt and potentially disruptive adjustments of the business model at a later stage, to encourage supervisory convergence and to facilitate consumer protection” .
In another regulatory development, the EU’s European Securities and Markets Authority (ESMA) has established draft rules for crypto asset service providers (CASPs). These rules seek to authorize CASPs while ensuring the separation of client assets and trading. The goal is to avoid any type of mix between customer money and company money, as we saw in the case of FTX.
Related: MiCA Stablecoin Transaction Limit Stifles Crypto Adoption, Lawyers Say
ESMA regulations will have no compensation plan for clients who lose money on unbacked crypto asset investments when they come into force in January 2025. In October, the EBA will publish a second set of draft guidelines addressing the capital needs of stablecoin issuers. and how companies should handle stablecoin swaps in volatile markets.
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This post European Banking Authority calls for early adoption of stablecoin standards
was published first on https://cointelegraph.com/news/european-banking-authority-calls-for-early-adoption-of-stablecoin-standards
