Representatives from the European Banking Authority have expressed their concerns over large stablecoins and their effect on public policy goals. Specifically, EBA Chairperson José Manuel Campa proposed that central banks should veto large stablecoins if they believe they could negatively affect monetary policy.

The EBA chair will focus on setting out the detailed rules to implement the European Union’s Markets in Crypto Assets regulation (MiCA) in the following months, and he voiced his concerns during a recent event hosted by think tank OMFIF. His main concerns were that stablecoins could affect public policy goals, including financial stability or monetary policy. It’s worth noting that Campa's agency will also be responsible for supervising major issuers under MiCA.

According to Yahoo, the EBA chair also talked about a future where stablecoins will become more relevant as a means of payment and compared the situation with private payment systems that now complement central bank money. However, he noted that stablecoins would have to comply with relevant regulations, including anti-money laundering laws. Regarding stablecoin issuers, Campa emphasised that they should also for permission and submit their project for evaluation.

Furthermore, more ambitious projects would be subjected to more scrutiny. More information about MiCA MiCA is set to receive a final sign-off from finance ministers in the coming week, and Yahoo estimates that its provisions will probably take effect around July 2024. MiCA allows central banks to intervene on proposals to issue new stablecoins, referred to as asset-referenced tokens.

The law also dictates that issuance of these stablecoins should cease if the tokens become widely used with over 1 million transactions per day. Different rules apply for stablecoins tied to the value of a single fiat currency, known as e-money tokens. In April 2023, MiCA passed with 517 votes in favour to 38 against and 18 abstentions following an initial vote postponement due to technical difficulties related to the document’s translation.

MiCA aims to regulate insider trading, unlawful disclosure of inside information, as well as other market manipulation attempts related to cryptocurrencies to preserve the integrity of the market. This new law will benefit consumers by making sure that they will be better informed about the costs, risks, and charges linked to their operations. The legal framework will also support market integrity and financial stability by regulating public offers of crypto assets.

To combat money-laundering risks, the European Securities and Markets Authority (ESMA) aims to create a public register that will include non-compliant crypto asset service providers that operate in the European Union without authorisation. .