MiCA Weakens Euro Stablecoins: New Report

MiCA Regulation Leaves Euro Stablecoins Behind

According to a report published by Blockchain for Europe on Monday, the European Union's MiCA regulation has made euro stablecoins ultra-safe but left them behind US dollar-based tokens by reducing their commercial competitiveness. According to DeFiLlama data, euro stablecoins make up less than 1% of the global stablecoin volume; this is a direct result of strict reserve and interest restrictions. The MiCA rules, emphasized in the report by European Central Bank official Ulrich Bindseil and Blockchain for Europe official Erwin Voloder, require euro electronic money tokens (EMT) to be fully backed by reserves, prohibit interest payments, and mandate that at least 30% of reserves (60% for large issuers) be held in bank deposits. These rules make stablecoins similar to traditional bank products, zeroing out their yield potential.

MiCA Reform Proposals and ECB Context

The report states that these strict rules disadvantage euro stablecoins against bank deposits and foreign stablecoins. Proposals include a principles-based approach for reserves, diversification in high-quality liquid euro assets, limited yield mechanisms, and targeted changes in transparency rules. It is also recommended to provide large issuers with limited access to central bank accounts during crisis periods. These proposals are coming to the agenda in the context of MiCA 2.0 discussions and ECB's financial stability warnings; critical for increasing euro dominance in the DeFi ecosystem.

Reforming MiCA for Euro Stablecoins. Source: Blockchain for Europe

ALT Technical Outlook in Light of Stablecoin Competition

While regulations like MiCA affect stablecoin usage in DeFi, ALT is stable at $0.00 level, 24h change +0.00%. RSI 54.13 neutral, overall trend uptrend but Supertrend giving bearish signal. EMA 20: $0.0074.

• Supports: S1 $0.0073 (68/100 ⭐ STRONG, -3.05%), S2 $0.0068 (59/100, -9.69%)
• Resistances: R1 $0.0077 (81/100 ⭐ STRONG, +2.26%), R2 $0.0088 (63/100 ⭐ STRONG, +16.87%)

ALT detailed analysis and futures click here. The ALT spot market should be monitored.