There are rumors that the European Commission is about to slightly loosen the MiCA regulations on stablecoins in the EU. Specifically, they want to make stablecoins not approved in the global market Fungible with stablecoins only certified in the EU.
The European Central Bank (ECB) strongly opposes this proposal, instead supporting the development of the digital euro CBDC. They warn of risks to European banking stability, but ignoring stablecoin development is also a risk.
Impact of MiCA on EU Stablecoins
Since MiCA took effect in December 2024, the European cryptocurrency landscape has changed significantly. In fact, it may have changed too dramatically.
The global stablecoin market is heating up, but the largest Token issuer has left the EU market due to MiCA without affecting their business. Currently, some regulators are considering a few changes.
According to a Reuters report, European Commission officials may soon loosen MiCA's requirements on stablecoins. To be clear, this does not make the licensing process less strict.
Instead, if a company issues a token specific to the EU and a global version, they will soon be able to provide both assets to European citizens in a Fungible manner.
This seems like a small difference, but it caused an issue in March. Ethena tried to apply for MiCA approval for its German branch to issue stablecoins but was rejected.
Shortly after, the company left the continent entirely. If this regulation changes, any company approved for one asset will be able to operate freely in the EU.
However, reports suggest that the ECB is having issues with this proposal. The regulatory body supported changing MiCA regulations in April, but they proposed even tighter stablecoin restrictions.
Instead, they are targeting a digital euro, seeing it as a way to differ from Trump's policy. ECB President Christine Lagarde reiterated this view on Monday:
Even if restrictions remain unchanged, companies are still finding ways to circumvent the law. Moreover, recent ECB policies have highlighted Europe's declining importance in the global cryptocurrency market.
Assuming that loosening MiCA is truly dangerous, being abandoned by this massive industry seems even riskier.
In other words, a digital euro seems insufficient to truly address the issue. Additionally, an anonymous European Commission spokesperson dismissed claims about MiCA and stablecoin risks:
"A run on a well-managed and fully collateralized stablecoin is very unlikely. Even if it happens, foreign investors will exchange their tokens in the US [or other countries] where most tokens circulate and most reserves are held," the official told Reuters.
In summary, stablecoin users in the EU may soon receive some real relief from MiCA. If an issuer manages to get approved for a token in Malta or another loosely regulated area, these assets will be Fungible with the assets others are using.
