- The cap is on daily transactions for private stablecoins like USDC and Tether
- Central bank digital currencies will grow at a more rapid rate to compensate
The Markets in Crypto Assets (MiCA) legislation, which the EU recently adopted, could “stifle” stablecoin use with its highly restrictive transaction caps, lawyers alarm. The legislation entails a $219 million (200 million euro) cap on daily transactions for private stablecoins like USDC and Tether.
Regulators should revisit daily limits
In an interview with Cointelegraph, Chander Agnihotri and Rachel Cropper-Mawer of global law firm Clyde and Co encouraged regulators to increase the limits because they would thwart the use of large stablecoins as is.
Laser focus is justified
Terra’s stablecoin UST collapsed in May 2022, and USDC lost its peg to the USD after Silicon Valley Bank collapsed early this year. Regulators’ laser focus on the regulation of private stablecoins is justified. However, if the limit is exceeded, stablecoin providers will have to stop issuing the assets and start working with watchdogs to reduce the number of transactions.
CBDCs could grow faster than anticipated
With current rules potentially thwarting stablecoin use, Cropper-Mawer believes it would make sense for central bank digital currencies (CBDCs) to grow “at a more rapid rate than otherwise might be the case.”
She added that MiCA legislators probably didn’t miss the potential negative consequences of their regulations, particularly considering how popular private stablecoins are in non-EU markets.
Tether CTO: Framework needs to be revised
Tether’s chief technology officer Paolo Ardoino told Cointelegraph regulators might need to revise the framework before imposing guidelines on private stablecoin issuers. He said:
Further discussions on the technical implementation standards are crucial in providing clarity to the market over certain provisions and we look forward to the outcomes of these discussions in due course.
MiCA will take effect after it’s published in the Official Journal of the EU. Many of the guidelines and regulations affecting crypto companies are expected to come into force sometime next year.
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