What Is the Purpose of the Proposed MiCA Regulation in the EU regarding Stablecoins?

The Markets in Crypto-Assets (MiCA) regulation in the European Union aims to establish a comprehensive legal framework for crypto assets, including stablecoins. Its primary purpose is to ensure consumer protection, market integrity, and financial stability.

For stablecoins, MiCA imposes strict requirements on issuers, demanding high-quality, liquid reserves, regular audits, and clear redemption rights. It seeks to prevent the systemic risk associated with depegging and to classify stablecoins into specific categories with corresponding regulatory burdens.