According to the new Markets in Crypto Assets (MiCA) legislation passed by the European Union, a lot of the stablecoin use could be stifled by daily transaction caps. This has naturally raised a lot of voices throughout the continent, with them calling for the framework to be revised.
On the 31st of May, this legislation was signed into law, which then paved the way for the first regulatory guidance on cryptocurrencies in the world to come into effect. This legislation was further received pretty positively by most of the crypto industry, but a controversial measure that was introduced was the 200 million Euro cap on the daily transactions for multiple private stablecoins such as Circle, and Tether.
MiCA Legislation Could Harm Stablecoins
In an interview with Cointelegraph, Rachel Cropper-Mawer and Chander Agnihotri, the partner and legal director at global law firm Clyde and Co., mentioned that the use of large stablecoins could be stifled pretty quickly, and regulators would have to look in order to revisit the daily limit as claimed by MiCA. For those who are unaware, stablecoins usually aim at mirroring the price of the fiat currencies- which is mainly the USD. Stablecoins were initially introduced as a solution to address the extreme price volatility of multiple cryptocurrencies such as Ether and Bitcoin.
MiCA’s 200 million euro cap is not yet tantamount to a ban, said Cropper-Mawer, and if the threshold ends up being passed, the issuers would be required to completely cease any further issuing activities, as well as working with regulators to bring the transactions under the cap. However, the partner noted that with the increase in the popularity of private stablecoins, it seems to be expected that the use of certain big stablecoins will become curtailed.