Key takeaways:
- The European Commission is reportedly looking to put strict limitations on stablecoins
- Under the new plan, issuers of any stablecoin that surpasses €200 million and €1 million in trading volume could be ordered to stop issuing new coins by the authorities
- The European Union parliament, similar to its US and UK counterparts, is pursuing a softer approach, which would see stablecoins integrated within the existing banking framework
EU officials want to curb the popularity of stablecoins
The European Commission, the leading executive branch of the European Union (EU), is considering putting severe restrictions on large market cap stablecoins. According to CoinDesk, which first reported the news, the EU officials are in favor of regulating the sector with strict measures.
If the rules the officials are considering will come into effect, regulators could have the authority to order stablecoin issuers to stop new stablecoins from being issued once the circulating supply reaches the €200 million mark ($211 million) and daily transactions volume exceeds €1 million.
It is worth noting that the position held by the European Commission is not in any way legally binding. The decision to consider stablecoin regulation at this time could very well be related to Terra’s UST recent collapse, which saw the stable digital asset lose its stablecoin peg amidst the broader market sell-off.
While the European Commission is reportedly looking to reign in the stablecoin industry completely, the European Union parliament maintains a more soft position. Namely, the parliament wants to regulate the sector under the existing banking regulations, which would subject stablecoin issuers to the oversight of the European Banking Authority.
According to recent reports, the United States and the UK are also looking to regulate the stablecoin sector under the existing banking rules, which would effectively integrate companies that issue stable digital currencies in the existing banking framework.
