European crypto regulations pose dangers for stablecoins, lawyers say

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If anyone thought the world would embrace crypto without any problems, they were wrong. This is probably because the economy is used to working on centralized standards. Crypto, on the other hand, operates on a decentralized distributed ledger. So some disputes will definitely arise. But what really matters is how our global economy will find a solution to this problem.

MiCA and Stablecoin Limits

Something similar is currently happening with legislation on the European Crypto-Asset Market (MiCA). On May 31, the EU took a historic decision by enacting the MiCA law. It became the world’s first regulatory rulebook on crypto assets.

The crypto industry welcomed the legislation with open arms. However, it looks like body and crypto advocates will have to settle some things. According to the project, the group wants to set up a daily cap on transactions. The bill sets the threshold for daily transactions on stablecoins such as Tether and Circles USD Coin.

She set the cap at 200 million euros ($219 million). Crypto advocates were quick to react to this update. Rachel Cropper-Mawer and Chander Agnihotri have made an official statement about it. They said the daily limit might discourage users from using stablecoins.

The lawyers said that stablecoins aim to indicate the price of fiat currencies. Also, industry incumbents touted it as a solution to address the issue of price volatility. It brings stability to Bitcoin and Ethereum prices and is quite essential for the whole ecosystem. And therefore, regulators should increase the limit or revoke it.

Take into account the concerns of regulators

At the same time, the lawyers became aware of certain incidents which could have led to these judgments. Notably, the collapse of Terra and the de-pegging of the USDC raised questions about the capacity of stablecoins. Lawyers acknowledged that regulators have full authority to introduce a cap like this.

Cropper-Mawer said a €200m cap is still achievable. This would then force users and businesses to limit their stablecoin-based activities. Highlighting the growing adaptation of stablecoins, she said the limit offered would not be enough. Regulators will have to give in to demand in the future, so they better revise it now.

The lawyer hinted at a possible attempt to promote the CBDC by limiting the use of other alternatives. She pointed out that MiCA lawmakers will need to consider the growing popularity of stablecoins. Both advocates acknowledged that MiCA has done a great job of solving most crypto user issues.

Under this system, small businesses and startups will be able to harness the power of crypto.

Tethers seen on MiCA

Meanwhile, Tethers CTO Paolo Ardoino has expressed his views on this development. Speaking to Cointelegraph, he said government and crypto entities will need to work together to resolve the issues. He also praised MiCA for addressing specific industry concerns.

He noted that the daily limit ticked off many crypto users. But the government has its own reasons for such implementations. It is therefore essential that both parties sit down together and discuss the differences.

Steve Anderson is an Australian crypto enthusiast. He has been a specialist in management and trading for more than 5 years. Steve worked as a crypto trader, he loves learning about decentralization, understanding the true potential of blockchain.

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