Sunday, July 21, 2024

Circle clears MiCA hurdle to become licensed stablecoin issuer in EU

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  • Circle has won an electronic money institutions licence from French regulators.
  • The news comes a day after EU stablecoin rules went live.

Crypto firm Circle is now registered as an electronic money institution, giving it a key licence to issue stablecoins under the European Union’s one-day-old crypto assets regulation.

The approval in the EU signals a “move into the mainstream phase of adoption of digital currency technology,” Circle CEO Jeremy Allaire said at a press conference in Paris on Monday.

Circle needs the licence to be able to issue stablecoins under the EU’s Markets in Crypto-Assets, or MiCA, regulation, which went live on Sunday.

The firm is best known for issuing the dollar-pegged USDC — the world’s second-largest stablecoin, with a market cap of about $33 billion, behind Tether’s USDT at $113 billion — and the euro-pegged EURC stablecoin.

Circle said on Monday that its French-registered Circle Mint will allow users to mint USDC and EURC throughout the European market.

Circle first filed an application with French regulators to become a licensed electronic money institution in April 2023.

Because it now has the licence in France, Circle will no longer need to apply for a MiCA licence when the next phase of the regulation — which targets so-called crypto asset service providers — goes into effect in December.

That’s because MiCA allows companies registered in one location to “passport” their services to the rest of the EU.

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Electronic money

MiCA defines e-money tokens as electronic money.

That may overlap with another European regulation, the Payment Services Directive — and crypto lawyers say that could affect businesses that don’t hold a licence under both regulations.

This regulation’s second iteration, or PSD2, has been enforced since 2016. It requires platforms handling e-money to comply with onerous rules that are far stricter even than those for crypto asset platforms.

The lawyers say there’s no certainty yet if stablecoins count as electronic money. Few crypto firms hold a licence under PSD2.

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