Regulators in the European Union have redoubled their efforts of creating a compliant blockchain industry within the 27 member states of the confederation.
They wish to accomplish this goal before next year, when the landmark MiCA regulations will come into effect.
A statement was published by the top banking watchdog in the EU, the European Banking Authority (EBA), which provided comprehensive and clear guiding principles.
These are non-binding ones that are aimed at all the stablecoin issuers that are currently operating within the bloc.
A press release related to the matter also provided encouragement to all relevant financial institutions for taking preparatory steps in a timely manner in order to ensure compliance with the MiCA regulation of the bloc.
June 30th, 2024 is the final application date that has been set for ensuring compliance with the said regulations.
The purpose of issuing the guidelines is nothing more than a dress rehearsal conducted for making sure MiCA is complied with.
Stablecoin issuers have been told to maintain complete transparency when it comes to their risk management, business model, disclosure, reserve recovery, communication with the authorities, and redemption arrangements.
A spokesperson for Tether said that MiCA was undoubtedly an excellent initiative taken in the EU that would promote crypto adoption and innovation.
The spokesperson added that MiCA highlights the requirements and guidelines that stablecoin issuers like Tether can use for ensuring financial stability, consumer protection, and transparency.
They went on to say that embracing regulation is a must for existing as well as new projects because this would provide them with clarity.
They asserted that it would help in establishing a strong foundation and also help with the practical implementation of blockchain and other decentralized technologies.
The statement from the EBA confirms that until MiCA comes into effect, crypto assets will remain unregulated.
Therefore, even if the stablecoin issuers become compliant with the principles, consumers will still not be able to take advantage of the protections and rights highlighted in MiCA.
A set of proposals were issued by the European Securities and Markets Authority (ESMA) that apply to Crypto Asset Service Providers (CASPs).
Token issuers, crypto brokers, lenders, exchanges as well as trading firms are all included under this particular term.
These proposals from ESMA are the first use of the new powers that the authority will be granted under MiCA.
They are also one of the three consultation packages and crypto companies have been asked by the regulator to share their feedback regarding their conflict of interest management, identification, and authorization.
In the first set of proposals, one of the primary concerns of the regulator is to prevent the commingling of company and client funds in order to ensure there is no repetition of the FTX fiasco.
Last November, the FTX crypto exchange collapsed and it was revealed that it had filled the holes in the balance sheet of Alameda Research, its sister company, with its own customer funds.
The exchange had done so after the latter had suffered from heavy losses because of some bad trades.