JAKARTA - The European Union is increasingly clarifying digital asset laws by introducing Markets in Crypto Assets (MiCA) rules. These regulations, which will take full effect by the end of 2024, aim to increase transparency and reduce illegal activities such as money laundering in the crypto ecosystem.
However, a number of industry experts are concerned about its impact on the attractiveness of the European Union as a global investment center, especially in the midst of the United States' increasingly friendly steps towards cryptocurrencies under President Donald Trump's leadership.
One of the affected by MiCA rules is the world's largest stablecoin, USDT Tether. Now some crypto exchanges in Europe are starting to remove Tether (USDT) from their trading list. This forces crypto investors in the region to use euros more as a medium of exchange in digital asset transactions.
In an effort to stay in the European market, Tether has invested in local stablecoin publisher StablR, which has met MiCA compliance. MiCA regulation requires all stablecoins listed on the centralized exchange to be issued by entities that have an electronic money license (e-money).
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In addition, stablecoin publishers are required to support two-thirds of their reserves in independent banks and monitor all transactions for payment purposes. To date, Tether has not obtained the license, while its main competitor, Circle (USDC user), has been getting it since July 2024.
Although this regulation is designed to increase surveillance, many have doubts about its effectiveness. Isabella Chase, senior policy adviser at TRM Labs, stressed that the success of transaction surveillance relies on more sophisticated monitoring tools, not just on MiCA rules.
On the other hand, the pro-crypto approach in the United States under Trump's administration puts further pressure on Europe. Several digital asset support figures have been appointed in strategic positions, including Howard Lutnick, CEO of Cantor totaling LP, who will oversee the Commerce Department. The move marks the potential for a more crypto-friendly policy change in the United States.
Meanwhile, venture capital investments in European crypto startups are projected to hit their lowest point in the last four years in 2024. However, reports by the European Central Bank (ECB) show that crypto holdings in the euro region have doubled since 2022, reaching 9%. This reflects people's growing interest even though regulations are getting tighter.
MiCA regulations offer opportunities to create a more secure crypto ecosystem, but the European Union needs to ensure that this rule does not limit its innovation and competitiveness in fast-moving global industries.
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