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Blockchain for Europe and the Digital Euro Association have asked the Council of Europe to revise the provisions of the law restricting the issuance and use of dollar-linked crypto assets.
According to representatives of the associations, the adoption of the law on crypto asset markets (MiCA) in the current edition may in fact ban the USDT, USDC and BUSD stablecoins:
“USDT, USDC and BUSD stablecoins pegged to the US dollar account for almost 75% of crypto trading volumes around the world. Restricting their use in the eurozone from 2024 will not only lead to stagnation of crypto markets, but can also lead to destabilizing consequences and a significant outflow of crypto assets outside the EU. “
The letter notes that EU crypto investors, with a high degree of probability, may face extremely pronounced short-term price volatility caused by the effect of a change of dislocation. In the medium to long term, fragmented liquidity will increase the cost of trade, reduce competition and slow down innovation:
“Despite the dynamics of stablecoins denominated in EUR, they account for an extremely small share of trading volume. It is unrealistic to expect them to replace us dollar-pegged stablecoins in crypto trading, let alone do so smoothly by January 2024.”
In order to avoid negative consequences, Blockchain for Europe and the Digital Euro Association propose to clarify the concept of “using crypto assets as a medium of exchange” within the framework of the MiCA law in order to protect the role of dollar-pegged stablecoins to ensure crypto trading and liquidity of DeFi pools.
Recall that members of the European Parliament have reached a preliminary agreement on the provisions of the law on crypto asset markets (MiCA). In accordance with the agreement, EU lawmakers propose from 2024 to limit the issue and use of digital assets that are not denominated in the official currency of one of the 27 EU member states. Also, the proposal includes plans to impose restrictions on stablecoins used as a means of exchange and trade.
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