The European Union rules to regulate cryptocurrencies will result in a decrease in the market share of non-euro denominated stable coin from 2024, potentially limiting EU competitiveness, industry representatives said.
Ambassadors for the 27 EU states on Wednesday gave their approval for a deal on the new Markets in the MiCA Regulations, which was thrashed out of the European Parliament in June.
The Parliament must vote on the rules to become law, something that is expected to happen in December or early 2023.
The ambassadors also published a full text of the deal, revealing details such as that stable coins that are not denominated in the euro will only be limited to 1 million transactions and 200 million euros $196 million in transaction value when marketed in the euro zone.
A joint letter from the industry groups Blockchain for Europe, and the Digital Euro Association, said the world's three largest stablecoins -- Tether, USD Coin and Binance USD -- account for 75 per cent of the trade volumes and already exceed the transaction-count and volume limits set out in the EU rules.
Anto Paroian, CEO of ARK 36, said the curb would limit the EU's competitiveness and innovation potential. The European Crypto Initiative, a Brussels-based lobbying group, said in a statement that it was likely that a more favorable approach to stable coins would be adopted after initial fears of the EU's financial stability and monetary sovereignty. Stable coins are a type of coin designed to maintain a constant value, usually via a 1: 1 peg with a fiat currency.
If the directive does not change, it will restrict the use of dollar-denominated stable coins such asUSD Coin, Tether, and Binance US, Fabian Astic, Global Head of DeFi and Digital Assets at Moody s Investors Service, said.
Stefan Berger, a member of the European Parliament who helped negotiate the final deal, told Reuters: Indeed, this may increase the euro-pegged stable coin, which is a welcome development. The data shows that the dollar-pegged coin is the third largest coin in the world, with a market cap of $68 billion, compared to $202 million for the euro-pegged version.