😱 EU🇪🇺: stablecoins between MiCA and banks — who is responsible, what to do and where to start❓

😱 EU🇪🇺: stablecoins between MiCA and banks — who is responsible, what to do and where to start❓

The traditional banking services market is struggling to adapt to the new digital reality following the entry into force of MiCA regulations. What should financial institutions do to comply with the regulation while also developing capabilities in digital assets❓

😵‍💫 June 30 marked the end of the MiCA transitional period in the EU. Stablecoins that had previously operated in a regulatory “grey area” had to either comply with the new framework or leave the market. As a result, 8 euro-denominated stablecoins compliant with MiCA remained on the market. Over the course of one year, their combined market capitalization increased by 128%, from USD 295.6 million to USD 673.9 million. Despite this growth, euro stablecoins still account for less than 1% of the global stablecoin supply, while USDC continues to dominate the market.

😵‍💫  MiCA established a regulatory minimum, giving traditional banks a foundation for developing activities in this sector. However, their main weakness is operational readiness. Banks view stablecoins as an innovative project rather than asking what customer problems a stablecoin can solve❓ The most obvious one is cross-border payments. It is more efficient for banks to work with regulated infrastructure providers while maintaining control over customer relationships than to build the entire infrastructure themselves.

😵‍💫  Key obstacles hindering the scalability of crypto-based settlements:

🔒 Slow connections with fiat currencies, which reduce the effective speed of blockchain-based transactions.

🔒 Non-standardized compliance infrastructure, requiring additional controls and processes that can slow down transactions.

🔒 Outdated internal data management systems, many of which have limited compatibility with blockchain-based infrastructure.

😵‍💫 Stablecoins are also a major driver of the development of agentic payments, but banks are also lagging in this area. Authentication systems for non-human agents and 24/7 settlement systems are required. Pilot projects in these areas should be launched now to facilitate implementation at scale.

🖋Reminder: MiCA requirements

The regulation classifies stablecoins pegged to a fiat currency as electronic money tokens (EMTs).

✍️  An EMT issuer must hold a license as an electronic money institution (EMI).

✍️  The token must be fully backed by fiat currency at a 1:1 ratio.

✍️  The token must be registered in the ESMA EMT register.

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