Head of the European banking management (EBA) Jose Manuel Campa has argued that central banks should veto stablecoins if they fear that permissionless private blockchains and crypto projects could threaten monetary policy.
“Central banks should have veto power over the widespread adoption of so-called stablecoins” if they affect financial stability, monetary policy and other policy goals.
Over the next few months, Campa will work on precise and detailed rules for the implementation of the European Union’s long-awaited regulatory framework for crypto-asset markets ( MiCA ).
MiCA is likely to get a final vote from finance ministers next week – and after a vote in European Parliament the law will come into effect, and some of the most important provisions are expected to take effect in 12 to 18 months.
Among many other things, MiCA will require all stablecoin issuers operating in the EU to be licensed and have sufficient reserves.
However, Campa suggested that stablecoins could become “even more relevant” as a means of payment in the future, complementing other forms of payment, but added that these coins should have “smart hedges.”
This will include compliance with laws and regulations, such as anti-money laundering laws.
EU stablecoin issuers must “request permission” and present their projects, which will then be assessed, “particularly in light of concerns raised by US regulators » he said.
“In the future, all issuers will be subject to strict authorization, as well as a supervisory system,” added Campa.
Larger projects will receive more attention, and the largest issuers will see “enhanced stress testing” of reserves.
The authority will consider governance, buyout agreements, business conduct, etc.
The EU first reached an agreement on MiCA last July. The bill aims to regulate all cryptocurrency-related activities within the EU, especially the issuance of cryptocurrencies.
It will also introduce much stricter oversight for companies designated as crypto-asset service providers (CASPs).
Companies affected by the bill include crypto exchanges, depository service providers, investment advisors, stablecoin issuers and other entities operating in the European market.
Notably, MiCA allows central banks to have a say in proposals to issue new stablecoins, also known as “asset-linked tokens.”
If the token becomes widely used, recording more than 1 million transactions per day, the issue will be terminated.
Big names in the crypto industry, including USDC issuer Circle announced that they plan to issue stablecoins under MiCA.