Blockchain for Europe has called for targeted reforms to the European Union’s (EU) landmark crypto framework in a new report, seeking to boost the global competitiveness of Euro-denominated stablecoins.
Euro Stablecoins On The ‘Regulatory Laffer Curve’ DownsideOn Monday, Blockchain for Europe, an organization that represents international Blockchain industry players in the EU, said that while the EU’s Markets in Crypto Asset Regulation (MiCA) has established a framework that makes euro-pegged stablecoins safe, it has also made them less competitive than their US-denominated rivals.
“If compliant projects do not ultimately locate domestically, then regulation fails to achieve its objectives,” Blockchain for Europe affirmed, adding that a framework’s goal is to have a regulated but strong local industry.
The report noted that euro-pegged stablecoins account for less than 1% of global stablecoin volume, far below the level the euro’s broader role in global markets would suggest.
Under this premise, the group argues that the ground-breaking, comprehensive legislation has placed Europe on the “downward-sloping part of the regulatory Laffer curve,” as skepticism prevails among European policymakers regarding the trajectory of euro electronic money tokens (EMTs).
Nonetheless, the European Banking Authority (EBA) addressed these concerns in November, asserting that MiCA already has safeguards against potential risks posed by the tokens.
Reforming MiCA To Boost The European MarketBlockchain For Europe suggested multiple reforms to improve the regulated European stablecoin market and maximize MiCA’s positive impact on the industry, the Savings and Investment Union, European citizens, and businesses.
In addition, the industry group suggested removing or reducing the minimum bank deposit requirement, replacing the 30% and 60% thresholds with a principle-based approach to reserve composition. This would allow issuers to allocate across high-quality liquid assets without forcing concentrated exposure to bank deposits.
Meanwhile, the report listed enabling calibrated access to central bank infrastructure and providing clarity and a “workable framework” for cross-border stablecoin usage as potential reforms to support the token’s competitiveness.
Europe Eyes Centralized Crypto OversightBlockchain for Europe’s report comes as the European Central Bank backs a proposal to shift oversight of key financial markets, including crypto, from national authorities to a centralized supervisory authority.
The EU initially proposed the plan, led by France and Germany, during MiCA’s development, but ultimately scrapped the plan. Notably, multiple nations and industry participants have opposed the measure.
