The European Banking Authority (EBA) published ‘guidelines’ for stablecoins issuers in the MiCA regulatory framework MiCA.
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The document urges issuers to prepare their business to comply with the legislation approved on 20 April, which will take effect on 30 June 2024.
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\”The statement is intended to stimulate timely preparatory steps toward MiCA to reduce the risks of potentially disruptive and abrupt changes to the business model at a later stage, and to facilitate closer engagement with supervisory authorities and to ensure consumer protection,\” the press release said.
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The document says that the regulator’s proposal requires issuers of \”stablecoins\” to:
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- provide full disclosure of information to customers;
- present a public business model;
- establish an effective governance framework, including risk management;
- create a redemption mechanism and maintain adequate reserves;
- register with the EBA.
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The authority noted that the recommendations for issuers are voluntary for now, but investor protection is not guaranteed until the law comes into force.
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\”Consumers should note that, prior to MiCA taking effect, stablecoins and electronic money tokens are not regulated instruments, and therefore consumers do not yet enjoy the rights and protections set out in it,\” the EBA said.
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Earlier, Chair Jose Manuel Campa stated, that forthcoming legal norms would emphasise diversity of reserve backing for stablecoins. He stressed the importance that issuers address conflicts of interest and also reflect the linkage between custody providers and trading platforms.
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Back in May, Campa proposed to grant central banks the power to ban ‘stablecoins’. In his view, central banks should have the ability to curb the broad deployment of large stablecoins if they affect the objectives of state policy.