The European Union’s (EU) financial regulators have released proposed regulatory criteria for stablecoin issuers to follow when handling complaints. This aims to expand the regulations governing stablecoins under the Markets in Crypto-Assets (MiCA) regulatory framework.
TakeAway points:
- EU financial regulators have outlined regulatory criteria for stablecoin issuers to follow when handling complaints.
- However, this regulatory framework is expected to be submitted to the European Commission in order for it to be approved by the end of June.
- This regulatory framework for stablecoins was developed through a joint collaboration between the European Banking Authority and the European Securities and Markets Authority.
Regulatory Criteria
The Regulatory Technical Standards (RTS) released procedures for quickly and fairly handling complaints from holders of Asset Reference Tokens (ARTs) yesterday. The processes and requirements that stablecoin issuers must follow in order to properly handle complaints are outlined in these guidelines.
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The European Banking Authority (EBA) document reads:
“Such a framework should support innovation and fair competition while ensuring a high level of protection for retail holders and the integrity of markets in crypto assets.”
As per the EBA report, the European Securities and Markets Authority (ESMA), which oversees EU markets, and the EBA worked together to conduct consultations between July and October 2023 that resulted in this stablecoin legal framework.
Regulation Submission
This regulatory framework is due for submission to the European Commission for approval by the end of June. Subsequently, these standards will undergo review by the European Parliament and the European Council before being published in the Official Journal of the European Union, the bloc’s authoritative repository of existing laws.
Asset reference tokens (ARTs) are stablecoins that are able to be connected to numerous fiat currencies or other assets, such as cryptocurrencies, according to the MiCA legal framework inside the bloc. Compared to stablecoins that are just based on the value of one currency—such as the dollar or the euro—this is different.
Previously, the EU monitored stablecoins under the MiCA law. Following the collapse of Terra Luna’s UST, which sparked worries about their potential systemic ramifications, the need for stablecoin monitoring became critical. The EBA had independently proposed regulations for stablecoin issuers in the past.
Strict screening of board members and shareholders for crypto asset service providers (CASPs) is also required under another component of the MiCA regulation. These regulations aim to maintain the separation of client assets and trading while approving CASPs. Avoiding financial entanglements between the company and its clients—like FTX—is the aim.
