The Potential of Stablecoins and the Impact of MiCA Regulation

The Potential of Stablecoins and the Impact of MiCA Regulation

Panelists in this stablecoins discussion include Yves-Michel Leporcher, lecturer at European Tech School, Ewoud Barink, Business Development Director at Worldpay, Avishkar Sharma, Head of Crypto Partnerships at, Teana Baker-Taylor, VP of Policy & Regulatory Strategy at Circle, and Radoslav Albrecht, Founder & CEO of Bitbond.

Stablecoins are one of the intense focus areas in the Markets in Crypto Assets (MiCA) Regulation that just got approved by the European Parliament in April 2023. In spite of the restrictions that MiCA may impose on the issuance of stablecoins, experts at the 8th European Blockchain Convention still support the merits of stablecoins and express optimism about the unlimited financial potential that stablecoins unlock.

Not All Stablecoins Are Created Equal

In the wake of Terra’s collapse in 2022, Teana states that the term “stablecoins” is misleading. She prefers to use different terms to refer to this asset based on its stabilizing mechanisms, such as tokenized cash, e-money tokens, or asset-referenced tokens.

The term stablecoin is terrible. We should stop saying it. It infers that a lot of different types of assets are similar and I think last year has shown us that not all stablecoins are created equal.

Teana Baker-Taylor, VP of Policy & Regulatory Strategy at Circle
Teana from Circle shared her opinion on stabecoins at the 8th EBC.
Teana from Circle shared her opinion on stabecoins at the 8th EBC.

Stablecoins Are Here To Stay 

Stablecoins unlock endless possibilities for the financial world, especially for the unbanked that have long been excluded from the financial systems. Radoslav foresees a future where 40% of the total payments volume is very likely to be transacted in stablecoins. 

They believe that the adoption of stablecoins is not cannibalizing the current financial markets but creating a bigger ecosystem that brings in people that have long been excluded from financial institutions. It unlocks a more inclusive financial world, as Teana states, “This is new economic activities, it’s not replacing or eating anyone’s lunch.”

Due to its open-source characteristics, experts highlight how stablecoins provide access to a new rail that can easily integrate with traditional banking infrastructure while offering constant upgrades.

Yves-Michel, lecturer at the European Tech School, moderated this panel of stablecoins.
Yves-Michel, lecturer at the European Tech School, moderated this panel of stablecoins.

Regulatory Challenges and the Impact of MiCA

During the 8th European Blockchain Convention, the panelists discussed the challenges of regulations in shaping the future of stablecoins. The focus was on MiCA, which has emerged as a prominent regulatory topic. The concerns about the restrictions and market disruptions that MiCA may bring to stablecoins were also discussed in the panel “MiCA and the Challenges of Regulating Crypto.

MiCA aims to bring an end to the unregulated crypto market in Europe. Under MiCA, stablecoins are classified as either e-money tokens or asset-referenced tokens. While stablecoins are not banned, MiCA sets essential rules such as the requirement for private stablecoin issuers to maintain appropriate minimum liquidity as a reserve.

Teana emphasizes the value of establishing standards through MiCA. Sharma shares the aspiration for global consensus among regulators, even though it may seem like an ambitious utopian dream. Regulations provide clarity and comfort for institutions to step into the crypto ecosystem. However, Teana highlights that while MiCA exists as a regulatory framework on paper, its implementation is pending, leaving many aspects yet to be resolved. 

Dive into the TradFi and banks’ viewpoints on MiCA and stablecoins in this article: Decoding Banks and Laws in the Crypto Realm!

EBC panelists discussed MiCA and the future of stablecoins.
EBC panelists discussed MiCA and the future of stablecoins.

The Evolving Landscape of Stablecoins

According to Radoslav, the future holds a lot more use cases for stablecoins. Their usage will extend beyond payments and remittances as institutions will also utilize them to make transactions. Both B2B and B2C sectors are expected to embrace stablecoins in the years to come.

Radoslav also anticipates the increasing emergence of non-fiat-based stablecoins, pegged to a diversified basket of assets. This approach aims to safeguard the purchasing power of the currencies. He emphasizes the need for competition to determine the optimal combination of assets that form the basket.

Teana acknowledges the inherent unpredictability of the market’s future. However, she highlights that the introduction of asset baskets will introduce complexity to stablecoins. Ultimately, the success of stablecoins will come down to their use cases and under what scenario are they designed to be used. 

More EBC insights on the future of tokenization and crypto market marking:

Watch the full discussion to understand the potential of stablecoins!

Future of CBDCs: Achieving Interoperability and Collaboration

Shaping CBDCs for Consumers and Businesses

This panel of CBDCs was moderated by Erwin Voloder, Senior Policy Fellow at European Blockchain Association. Panelists include James Wallis, VP of Ripple, Nadia Filali, Head of Blockchain Programs at Caisse des Dépôts, and Laurent Marochini, Head of Innovation at Société Générale.

Along with stablecoins and native cryptocurrencies, Central Bank Digital Currencies (CBDCs) are one of the three key pillars of the digital money landscape. With CBDCs, the efficiency and speed of settlement can be improved, reducing settlement times from T+2 to T+0 or even T+15-minutes. The adoption of CBDCs facilitates cross-border payments and also plays an important role from the risk management perspective. 

When these three currencies co-exist in the future, what will happen? Will CBDCs be adopted in both wholesale and retail? What are the challenges lying ahead? Read on to find out!

Financial experts discussed the importance of CBDCs in the capital markets at EBC23.

Intermediaries Will Continue to Be Relevant in the Future

All panelists agree that intermediaries will continue to exist in capital markets, although the degree of their importance may vary depending on the country’s specific circumstances. The primary reason is that not all segments of the population can swiftly adopt emerging technologies, necessitating the presence of intermediaries for certain groups. 

However, panelists indicate that different countries will establish different CBDCs to better meet their needs. James believes that in some emerging countries where central banks do not function properly and a significant portion of the population remains excluded from the existing financial system, there will be other actors, such as startups or fintech companies, that assume a more prominent role in catering to the retail sector.

Nadia further emphasizes that banks’ role extends beyond currency issuance, encompassing services such as loans, savings, and a diverse array of products. In her opinion, intermediaries will still exist, but the products and business models might undergo changes

Laurent concludes that at the end of the day, the regulations and the conceptions of CBDCs will provide greater clarity regarding the role banks can play in the future capital market.

More EBC insights on CBDCs and regulations:

EBC23 convened esteemed speakers who provided insights on CBDCs and intermediaries.

Collaboration Is Key to the Interoperability of CBDCs

James points out that there are three types of interoperability: interoperation with existing payment schemes, technical interoperability between protocols, and cross-border interoperability for seamless transactions across different countries’ CBDC systems. 

He stresses the importance of identifying the specific goals to be achieved, as different methods, whether from a business or technical standpoint, will be required to attain different elements of interoperability. Nadia thinks that defining responsibilities and establishing bridges between networks will also be vital. 

All panelists unanimously agree that collaboration is crucial for addressing these topics effectively. Standardization is indispensable and there needs to be a willingness from different jurisdictions to enhance trade and business relations with one another. 

Laurent and James also point out that there have been CBDC developments and research worldwide. They emphasize the need for cooperation among actors, particularly in Europe, to avoid being surpassed by different countries across the world. Working with each other is the only way to achieve the goal!

Watch the full panel discussion to understand CBDCs from retail and wholesale perspectives!