Regulation
Italy steps up supervision of cryptocurrencies in line with MiCA
Italy is preparing to strengthen oversight of cryptocurrency markets as part of its accession to the European Union’s Cryptocurrency Markets Regulatory Framework (MiCA).
This regulatory measure, initially approved in 2022, aims to ensure stricter oversight of digital asset markets, targeting insider trading and market manipulation.
Challenges for Blockchain Companies and DeFi Protocols
The new decree provides for fines ranging from 5,000 to 5 million euros (from 5,400 to 5.4 million dollars) depending on the severity of the violations. This step is part of a larger effort to ensure compliance and maintain the integrity of the marketplace.
THE The MiCA regulatory framework poses significant challenges for blockchain companies and decentralized finance (DeFi) protocols. These protocols must choose between completely decentralizing their networks or adhering to the framework’s anti-money laundering (AML) and Know Your Customer (KYC) regulations.
MiCA regulatory framework. Source: European Union
Fully decentralized networks are exempt from MiCA reporting requirements. However, many DeFi protocols use foundations and intermediaries to moderate their communities, risking not complying with MiCA’s definition of decentralization.
As a result, these protocols are faced with the dilemma of whether to completely decentralize them or require users to submit verification data, a difficult decision for many participants.
Adjustments by centralized exchanges in response to MiCA
In response to MiCA, centralized exchanges such as Binance has started to adapt its operations. Binance recently informed its European customers of the move to a model that classifies stablecoins as permissioned or unauthorized, in line with MiCA requirements.
The exchange plans to gradually transition users to this new system. Binance CEO Richard Teng stressed that the company is not removing these stablecoins from spot markets, but is limiting their availability for certain products to European users.
Similarly, Uphold made changes to comply with EU regulatory changes, announcing the delisting of six stablecoins: Tether (USDT), Frax Protocol (FRAX), Pax Dollar (USDP), Dai (DAI), TrueUSD ( TUSD) and Gemini. Dollar (GUSD).
Despite growing regulatory pressure in Europe, experts remain optimistic about the future of stablecoins. Many believe that stablecoins could potentially alleviate debt crises caused by the overprinting of fiat currencies.
Former Speaker of the US House of Representatives Paul Ryan recently argued that stablecoins could help mitigate economic shortfalls linked to the debt-laden US dollar.
The promising future of stablecoins
Jeremy Allaire, CEO of stablecoin issuer Circle, echoed this sentiment. He predicted that stablecoins will represent 10% of the money supply within the next decade.
Allaire pointed out that many of the world’s largest payment companies are already using this technology and exploring ways to expand its use. He emphasized that the advantages of public blockchains and stablecoins are becoming more and more evident.
Allaire believes the potential market size for stablecoins is in the “billions” and that implementing digital dollars on blockchains can deliver on the promises of financial inclusion, reduce the costs of remittances and enable seamless cross-border trade. continuity.
He predicted that cryptocurrency adoption could reach billions of users across millions of applications over the next decade. During this period, more business and financial transactions could be executed via smart contracts on the public blockchain infrastructure.
Allaire also suggested that some on-chain organizations could outperform multinationals in this time frame, although he did not provide specific details on how or in which sectors this could occur.
Within the framework established by MiCA, this forward-looking perspective highlights the transformative potential of stablecoins and blockchain technology in the global financial system.