The following is a guest post and an opinion of Sveinn Valfells, co-founder of the Monerium.
Mario Draghi is right. Europe bumps itself with substantial rates, including regulations for “the most innovative part of the service sector – digital”. The European Union has done exactly that by creating rates on Stablecoins, a practical form of digital money can offer a significant positive effect on GDP.
The promise of stablecoins for Europe
Stablecoins are digital money in blockchains – dollars, euro or sterling as cryptographic coins. They are the new “Killer App” from Fintech, programmable money that peer-to-peer without intermediaries relocates, on the other hand, to feed on virtually no cost-that worldwide payments and applications, such as automated loans and securities trade.
Stablecoins allow fintechs to build new applications faster and cheaper than ever before. They make ‘Open Banking on Steroids’ twice possible by disconnecting money from banks, payment providers and their closed, own fintech technologies. They are “Chamber temperature Super conductors for financial services” that remove barriers to the money flow, so that the GDP is considerably stimulated.
Stablecoins are more than an abstract financial innovation. They had a Polish employee in France immediately sent his euro home for cent instead of paying several euros and waiting for two days. They enable German startups to efficiently attract capital through automated issue of in accordance with digital shares and debts instead of slow, duration and insidious manual paperwork.
To unlock the potential of Stablecoins, the European currencies in their own country and internationally accessible must be as euros, zloty and krona onchain. The good news is that Europe has a proven legal framework for digital money called E-Money, introduced in 2000. The bad news is that Europe has thrown itself by wrapping E-money with a thick layer of unnecessary bureaucracy.
How Mica creates unfair barriers to innovation
E-money is a great innovation of the regulations. It is a digital instrument for cash wearer for payments. Dozens of companies, including PayPal, Revolut and Wise, have successfully used E-money to serve millions of customers in billions online, mobile and card transactions. E-money is the ultimate form of stablecoin, as if made for the onchain economy.
The newly adopted EU market in Crypto-Asset regulations (MICA) requires that Stablecoins are e-money. This is very logical because e-money block chains and mica dates as a “technically neutral” form of digital money.
Mica, however, violates the technical neutrality of E-money and imposes rates and anti-competitive disabilities by creating additional requirements for E-money Onchain.
Mica, for example, changes from banks to gatekeepers for E-money of E-money onchain. In contrast to the normal E-money that 100% can be protected directly in high-quality liquid assets such as government bonds, Mica requires that Stablecoin emissioners protect at least 30% of their customers with banks, so that they have to share their income with the banks. That is a direct rate that owes the banks.
The Mica-Bank security requirement also makes E-Money Onchain more risky because it inserts the banks and their balance sheets where they don’t have to be. The higher risk of keeping money with banks is a rate because it requires E-money publishers to keep larger reserves.
The security of the Mica Bank is also illegal. It immediately violates the European E-money directive that explicitly states that one of the most important goals is to guarantee “fair competition” and a “level of playing field” between E-money rates and banks. The required requirement of Mica Bank does exactly the opposite: it shifts the playing field in favor of the banks.
Nivelling of the playing field
Americans love bashing European regulations and have no stablecoin regulations. Nevertheless, the Trump government has given priority to passing a Stablecoin account with a reflection of the European E-money to ‘guarantee the American dominance internationally’ [and] To increase the use of the US dollar digitally. “
In the meantime, the EU humps itself more competitive, expensive and risky for European Stablecoins by making the proven e-Money regulations. As Draghi says: “A fundamental change in mindset” is needed.
The solution is simple. Firstly, the EU must remove all blockchain-specific requirements for E-money and tear the unnecessary hassle from the otherwise predominantly sensible mica instructions.
Secondly, the ECB (and other central banks of the EU) would have to level the playing field between banks and E-funding.
How? The ECB has recently granted non-bank fintechs, including E-money publisher, direct access to ECB payment systems. This helps E-money publishers by giving them direct access to the same key payment systems as the banks.
The ECB has to take another step and give E-money publishers direct access to the security facilities. Leading IMF economists have already presented this idea. That would remove and help all unnecessary gatekeepers and rates between the ECB and the EURO Stablecoins emitting with the accessory of the full potential of the Onchain -Economy for Europe and the Euro.