A few press reports have raised concerns about stablecoin limits under the European Union’s Markets in Crypto Assets Regulation (MiCAR). The stablecoin elements of the regulation came into force at the end of June. The regulation does indeed have some draconian limits, at which point the stablecoin must cease activity. However, the limits explicitly avoid targeting stablecoin usage in the crypto world, or investments more broadly. The European Banking Authority has relaxed the rules in its final iteration.
The EU is saying if you want to use stablecoins to buy crypto and do DeFi stuff, have at it. But if you want to use stablecoins to pay for goods and services like your coffee or your rent, then you need to use Euro (or other EU currency) stablecoins. The limits are really about monetary sovereignty.
Hence, it does not impose limits on Euro or EU currency e-money style stablecoins. The limits apply to foreign currency e-money tokens (EMTs) and asset-referenced stablecoins (ARTs). With ART stablecoins, the digital currency’s peg links it to multiple currencies, commodities, crypto or other assets. Facebook’s Libra/Diem is a good example.
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