The forthcoming European Union (EU) rules for stablecoins, known as Markets in Crypto Assets (MiCA), will focus on ensuring that issuers have diverse reserves, manage conflicts of interest, and do not transmit risks to other players. The rules are set to take effect in 2024, but crypto market players are encouraged to adjust their operations now to ensure sound risk management. The Chair of the European Banking Authority (EBA), José Manuel Campa, highlighted the importance of stablecoin issuers diversifying their reserves and mapping connections to custodians and trading platforms to mitigate risks within the crypto ecosystem. The collapse of algorithmic stablecoin terraUSD and the murky relationship between crypto conglomerates has drawn regulators' attention to governing cryptocurrencies tied to fiat currency or other assets.

(By Jack Schickler)