European crypto regulation faces challenges under MiCA

The implementation of the Markets in Crypto-Assets (MiCA) regulation in Europe has revealed significant regulatory gaps and inconsistencies. While MiCA provides a unified framework, its complexity has led to divergent interpretations among legal experts and supervisors. This is evidenced by the varying timelines used by exchanges to delist Tether’s stablecoin, USDT, after the issuer declined to seek authorization under the new rules. While platforms like Coinbase and Kraken acted early, others like Revolut delayed the process until mid-2024.

Furthermore, the European System of Central Banks (ESCB) is pushing for stricter limitations on the sector. In a response to a public consultation, the ESCB requested that Brussels extend the existing MiCA ban on interest payments for stablecoin holders to include lending, borrowing, and DeFi staking. The central banks argue that electronic money is intended for payments rather than savings; providing yields on such assets makes them resemble deposit accounts, which are subject to different regulations. The proposal would impact various protocols, particularly within the Solana ecosystem, by targeting rewards from platforms such as Jito, Marinade, or Kamino.