Binance CEO Changpeng “CZ” Zhao said that Europe’s Market in Crypto Assets (MiCA) regulatory framework, though demanding, could become a global standard for .
During a fireside chat on Sept. 14 at the Binance Blockchain Week in Paris, CZ said that the proposed regulatory guidelines in MiCA were “fantastic” and could become a global standard for other regulators to copy.
Under the proposed MiCA regulation, crypto companies need to apply for only one license to operate across 27 blocs of the European Union.
CZ, however, added that MiCA was a little bit strict by restricting access to dollar-backed stablecoins.
“The drafts are not adopting USD-based stablecoins which have 75% of the liquidity in the market.
Given that dollar-backed stablecoins are the major source of liquidity for the global crypto market, limiting its access in the EU could potentially limit investors from accessing deep liquidity to execute their transactions.
CZ commended the role of the France Ministry of Technology in drafting the MiCA regulation and expressed optimism about the future of crypto in France.
Paris is “probably… the financial hub of crypto in Europe and a larger part of the world.”
The Binance CEO also hinted at expanding the Binance team in Paris by a “hundred more” owing to the country’s friendly employment and tax laws.
Europe’s MiCA regulation
On June 30, 2022, EU lawmakers agreed to adopt the Market in crypto-assets (MiCA) regulation as a framework to regulate stablecoins and crypto asset providers.
According to the proposals, stablecoins must be backed 1:1 by reserves that are “fully protected in case of insolvency.” Consequently, algorithmic stablecoins like UST are not allowed in the EU.
The proposal also placed limitations on stablecoin issuance and trade limits. Stablecoins with over 10 million users or 5 billion euros worth of circulating supply will be regulated by the European Banking Authority (EBA). MiCA also capped the daily trading volume of stablecoins at 200 million euros.
As a result, dollar-backed stablecoins such as Tether (USDT) and USD Coin (USDC) with daily trading volumes of 48.13 billion euros and 5.4 billion euros, respectively, will be subject to the EBA’s regulation.
Crypto-asset service providers are required to register with the European Securities and Market Authority (ESMA) and EBA. A single license from the regulators will allow the crypto exchanges to operate across the European Union.