MiCA 2.0: Europe Overhauls Stablecoin Rules to Match U.S. Framework
In brief
- MiCA undergoes first major review three years post-enactment, with MiCA 2.0 planned update.
- EU Commission considers reserve-requirement changes to align with U.S. GENIUS Act model.
- Dollar-pegged stablecoins dominate at $310B of $311B total; ECB concerned about eurozone control.
- Banking lobbies blocked stablecoin yield payments in both regions due to deposit-flight risk.
- European authorities debate regulation of multi-issuance stablecoins like USDC.
The Rethink Begins
MiCA was first proposed six years ago and enacted three years ago. The framework was designed as a comprehensive rulebook for crypto assets, but early implementation has exposed friction points. The European Central Bank has repeatedly stated that dollar-pegged stablecoins could damage its control over monetary conditions in the eurozone. Yet some policymakers have moderated their opposition, opening the door to pragmatic adjustments.
The catalyst for change is partly transatlantic. The U.S. last year passed the GENIUS Act, which creates a definition for payment through stablecoins and assigns regulatory oversight to the Federal Reserve and the Office of the Comptroller of the Currency. This framework allows reserve holders to park capital in U.S. government debt—a flexibility MiCA does not currently permit.
Reserve Rules and Market Realities
Dollar-denominated stablecoins account for $310 billion of the $311 billion stablecoin market. Non-dollar stablecoins represent less than 0.5% of the market. This concentration reflects global demand for dollar-pegged assets, a reality that pressures European regulators to adapt.
One key friction: MiCA requires stablecoin deposits to be returned to the banking system, while GENIUS Act reserves can be held in U.S. government debt. The EU Commission is considering reviewing reserve requirements to enable a GENIUS-Act-like model for stablecoins. This could reduce friction with the banking system while preserving capital efficiency.
Yield and Multi-Issuance Debates
The banking lobby in the U.S. and Europe has fought convincingly to prevent stablecoins from paying yield because of the risk of deposit flight. The EU Commission wants to revisit this rule, though change remains unlikely in the near term.
European authorities are also debating how to treat multi-issuance stablecoins, such as Circle Internet's USDC. Meanwhile, Qivalis, a group of banks and other financial institutions, is developing a euro-denominated stablecoin. These parallel efforts suggest the EU is preparing for a more diverse stablecoin ecosystem than MiCA's initial design anticipated.
