European Union publishes draft rules for stablecoin issuer complaint procedures

The European Banking Authority and the European Securities and Markets Authority collaborated to develop this stablecoin regulatory framework. The European Union (EU) financial regulators intend to add new stablecoin regulation rules to the Markets in Crypto-Assets (MiCA) regulatory framework by issuing proposed regulatory standards for stablecoin issuers when dealing with complaints.

On March 13, the Regulatory Technical Standards (RTS) issued guidelines for resolving complaints from asset reference token (ART) holders efficiently and equitably. These recommendations describe the procedures and requirements for stablecoin issuers to efficiently manage complaints. According to the European Banking Authority (EBA), a framework for cryptocurrencies should promote innovation and fair competition while protecting retail holdings and market integrity.

According to the EBA paper, the stablecoin regulatory framework is the result of a collaboration between the EBA and the European Securities and Markets Authority (ESMA), the EU’s market regulator. Both institutions held consultations between July and October 2023.

This regulatory framework is scheduled for submission to the European Commission for approval by the end of June. The European Parliament and the European Council will then examine these standards before they are published in the Official Journal of the European Union, the bloc’s authoritative archive of existing laws. The MiCA regulatory system within the bloc classifies stablecoins tied to various fiat currencies or other assets, including cryptocurrencies, as ARTs. 

Prior to this, the EU closely monitored stablecoins under the MiCA law. The collapse of Terra’s UST sparked concerns about the systemic consequences of stablecoins, prompting the call for monitoring. Independently, the EBA had already proposed restrictions for stablecoin issuers.

Another provision of the MiCA legislation also necessitates rigorous vetting of shareholders and board members for crypto asset service providers (CASPs). These guidelines aim to authorise CASPs while maintaining the separation of customer assets and trade. The purpose is to avoid the commingling of client and corporate funds, as with FTX.

The full implementation of MiCA is expected by December, with the stablecoin regulation set to start in the summer. The MiCA legislation aims to create a comprehensive framework for cryptocurrency issuers, service providers, and users.

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