The European Union’s Markets in Crypto Assets (MiCA) law aims to regulate the crypto asset market, but it hasn’t significantly increased Euro-denominated crypto transactions as of now. According to an ESMA report, the MiCA regulation may not boost Euro transaction volumes immediately but could serve as a catalyst for growth in the future. Despite being the first legislation for crypto assets and stablecoins in the EU, its impact on transaction volumes remains uncertain.
Starting in 2024, a new regulation aims to enhance consumer protection in the EU crypto market. This rule will introduce a framework for crypto assets and specific guidelines for stablecoins. The ultimate goal is to create a more secure and regulated environment for crypto trading over time. However, the euro’s influence on cryptocurrencies remains limited following the MICA announcement.
Euro’s Insignificant Role in Cryptocurrency Transactions
In 2023, global trading volumes for converting fiat currency to cryptocurrencies dropped from 30% in 2021 to 20%, marking a significant decrease during the crypto winter. However, the market has bounced back since then. One reason for this change is the rise of stablecoins, which are linked to national currencies and enable adjustments in spreads within the crypto marketplace. Despite these global trends, the euro still accounts for only around 10% of transactions in the industry.
Today, Stablecoins make up more than half (60%) of all cryptocurrencies in existence. Furthermore, a significant proportion (around 90%) of all trading activity takes place on just ten exchanges. Binance, in particular, handles almost half of the global volume for cryptocurrency trades. This high concentration of trading among major platforms gives them significant influence in the cryptocurrency market.
Public Input Sought on MiCA Regulations
On March 25, ESMA released its latest MiCA regulation report, adding to the developing crypto regulatory framework in the EU. Now, ESMA moves forward to the third round of consultations, where all proposed rules are open for public feedback. This action is part of ESMA’s broader objective to create a safe and regulated cryptocurrency marketplace within the EU. The most recent draft of the law outlines the regulatory measures already adopted across Europe.
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2024-04-10 22:27