Circle CEO on Europe's MiCA Law: 'Banks Could Face Increased Risk'

IconCryptoNewsTerminal Staff16 Jul, 2024

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Circle CEO on Europe's MiCA Law: 'Banks Could Face Increased Risk'

Jeremy Allaire, the CEO of Circle, the issuer of USDC, has stated that "banks may face significant risks" due to the implementation of Europe's MiCA (Markets in Crypto-Assets) regulatory framework. Under MiCA, issuers of fiat-backed stablecoins are required to maintain a minimum of 30% of their reserves in cash in bank accounts within the EU. This requirement has raised concerns that banks could become vulnerable to credit risks, counterparty risks, and other issues. European regulators are aware of these concerns and are exploring ways to address them. One potential solution is to allow stablecoin issuers to hold a portion of their reserves in other forms of liquid assets, such as bonds or short-term government debt. Overall, the implications of MiCA for banks are still evolving. However, it is clear that the new regulation has the potential to increase the risks faced by financial institutions that participate in the crypto-asset market.

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