A recently published paper proposes altering the European Union’s crypto-asset regulations, MiCA, regarding the treatment of systemic or significant stablecoins. It argues that there’s too much of a cliff effect for a stablecoin to be treated as ‘significant’ suddenly. Plus, it asserts the additional requirements are too onerous. It compares MiCA to other regulations, such as those for global systemically important banks (G-SIBS).
For example, the requirements for G-SIBS are graded across multiple indicators. They are then given an overall score and allocated to one of five buckets. Only JP Morgan is classified in the highest Bucket 4. The higher the bucket, the higher the requirements imposed on the bank.
In contrast, under MiCA, a stablecoin’s classification is not progressive. It’s either significant or not. MiCA sets out several criteria for stablecoins, referred to as e-money tokens or asset-referenced tokens. If a stablecoin ticks three of the boxes below, it is significant.
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