Blockchain for Europe has called for targeted reforms to the European Union’s (EU) historic cryptocurrency framework in a new report, seeking to boost the global competitiveness of euro-denominated stablecoins.
Euro stablecoins are on the downside of the “Regulatory Laffer Curve”.
On Monday, Blockchain for Europe, an organization representing international players in the EU’s blockchain industry, said that while the EU’s Markets in Cryptoassets (MiCA) regulation has created a framework that makes euro-pegged stablecoins safe, it has also made them less competitive than their US-denominated rivals.
In it a report Titled “MiCA Reform for European Stablecoins,” the industry group noted that the lack of regulation hinders market development. Conversely, overly stringent regulations may prove ineffective, because they risk pushing targeted economic activity into less regulated or more hospitable areas.
“If compliant projects are not ultimately located locally, regulation fails to achieve its objectives,” Blockchain for Europe stressed, adding that the goal of the framework is to have a regulated but robust domestic industry.
The report noted that stablecoins linked to the euro represent less than 1% of global stablecoin volume, far below the level suggested by the euro’s broader role in global markets.
Under this premise, the group argues that the sweeping, ground-breaking legislation has placed Europe on the “sloping part of the regulatory Laffer curve,” where doubts prevail among European policymakers regarding the path of euro electronic money tokens (EMTs).
Last year, the European Central Bank (ECB) and the European Systemic Risk Board (ESRB) Express Concerns about the risks of financial instability, prompting stricter regulations, including a ban on multi-issuing stablecoins in the bloc.
However, the European Banking Authority (EBA) addressed these concerns in November, confirming that MiCA already has safeguards in place against potential risks posed by the tokens.
MiCA reform to boost the European market
Blockchain For Europe has proposed multiple reforms to improve the regulated European stablecoin market and maximize the positive impact of MiCA on the industry, the Savings and Investment Union, European citizens and businesses.
To achieve this, the industry group proposed allowing The reward From emerging market countries denominated in the euro with adequate regulation to ensure liquidity, arguing that there is no justification for such a ban.
In addition, the industry group proposed removing or reducing minimum bank deposit requirements, and replacing the 30% and 60% thresholds with a principles-based approach to reserve formation. This would allow issuers to allocate high-quality liquid assets without imposing concentrated exposure to bank deposits.
They also proposed expanding and diversifying the pool of eligible reserve assets and introducing more proportionate and risk-based transparency order For EMTs to reduce concentration risks, improve market performance, and avoid raising barriers to entry.
Meanwhile, the report listed enabling standardized access to central bank infrastructure and providing clarity and a “practical framework” for the use of cross-border stablecoins as potential reforms to support currency competitiveness.
Europe is eyeing centralized censorship of cryptocurrencies
The Blockchain for Europe report comes as the European Central Bank supports a proposal to shift supervision of major financial markets, including cryptocurrencies, from national authorities to a central supervisory authority.
like I mentioned By Bitcoinist The European Central Bank has backed the European Commission (EC) plan to integrate the EU capital market through a central entity, the European Securities and Markets Authority (ESMA), to enhance competitiveness and harmonize regulation.
The European Union initially proposed the plan, led by France and Germany, during the development of MiCA, but eventually scrapped the plan. Notably, many countries and industry participants opposed this measure.
In November, Blockchain Europe’s Secretary General, Robert Kubis, stated, Argue That a shift towards a more centralized supervisory model should occur in the future is based on “concrete” evidence gathered from the early years of MiCA, and he noted that local regulators have more direct and frequent interactions with companies.
The total crypto market capitalization is at $2.54 trillion in the one-week chart. Source: TOTAL on TradingView
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