Ardoino points out that under MiCA, a large portion of the stablecoin issuers’ assets in banks in Europe will be converted into loans, which could put a large portion of the issuers’ reserves at risk in the event of a bankruptcy. For example, if Tether manages €10 billion, €6 billion of that would need to be held in banks. However, the fact that banks can distribute 90% of this amount as loans creates potential risks to the adequacy of stablecoin reserves.

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Ardoino, on the other hand, states that under the MiCA framework, stablecoin issuers can protect themselves against the risk of bankruptcy. As a suggested solution, he emphasizes that reserves can be secured by purchasing securities such as treasury bonds or government bonds in addition to bank accounts.

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The post Tether CEO’s MiCA Statement appeared first on Coin Engineer.

Crypto exchanges operating in the European Union will be subject to Regulation (EU) 2023/1113 (Travel Rule guidelines), which requires the reporting of information on transfers of funds and crypto assets from 30 December.

As a result, cryptoasset service providers (CASPs) defined under the EU’s Crypto-Asset Markets Regulation (MiCA) will be subject to the EU’s Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regime.

Impact of EU Travel Rules on Crypto Exchanges

Once the regulation comes into force, payment service providers (PSPs), intermediate PSPs, CASPs and intermediate CASPs will receive a two-month buffer period to declare their compliance with the new requirements.

“The deadline for authorities to report whether they have complied with the guidelines will be two months after the translations are published.”
General provisions include collecting user information for fund or crypto asset transfers, determining whether the transaction is related to the procurement of services, and detecting transfers that appear to be linked.

The EBA acknowledged that complying with EU Travel Rule guidelines would put financial pressure on crypto exchanges and service providers. But the regulatory agency expects overall benefit in the long run.

“Overall, the benefits from these guidelines are expected to exceed the potential costs and these guidelines will contribute to making the fight against ML/TF more effective.”
Crypto exchanges and service providers currently covered by the EU’s Anti-Money Laundering Directive (AMLD) or a domestic AML/CFT regime will continue to be subject to existing AML/CFT requirements.

As European governments tighten crypto exchange activities, crypto protocols are taking a proactive approach to compliance.

The Cardano Foundation, in collaboration with the Crypto Carbon Ratings Institute, has published sustainability indicators for the Cardano network, which will comply with MiCA regulations in the EU.

The report highlights that Cardano operates on a more energy-efficient consensus protocol and consumes significantly less electricity than proof-of-work protocols.

Additionally, other important metrics such as annual electricity consumption and carbon footprint of the Cardano network and marginal power demand per transaction per second are also provided.

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The post Crypto Exchanges Will Be Subject to EU Travel Rule Within 6 Months appeared first on Coin Engineer.