The European Banking Authority (EBA) has finalized the technical standards for the prudential matters under the Markets in Crypto-Assets (MiCA) regulation. This move aims to enhance the stability of the crypto market, regulate liquidity, and boost the adoption of EUR-stablecoins.

The EBA has completed the draft of the technical standards for the prudential matters, ensuring that all firms in the EU adhere to high financial standards. This is a significant step in governing the rapidly growing crypto industry, following the implementation of MiCA last year.

The finalized technical standards outline measures considered prudent for crypto asset issuers and service providers. These include changes in own funds requirements, liquidity provisions, and strict recovery plans for issuers. Notably, issuers of Alternative Trading Systems (ARTs) and Electronic Money Tokens (EMTs) must conduct stress tests in specific financial stress conditions to manage operations during market fluctuations.

The regulatory technical standards (RTS) also provide for processes to impose enhanced financial requirements on issuers based on risk outlook and stress test results. Issuers must make necessary adjustments to own funds within a set period of 25 working days.

The RTS enhance financial stability and transparency by specifying minimum liquidity levels for crypto assets and reserve asset ratios by daily and weekly maturity. This ensures issuers can fulfill financial obligations during periods of stress. The EBA has also outlined prescriptions for managing highly liquid financial instruments, such as concentration limits by issuers to address risks of exposure to single entities.

These detailed standards are expected to improve the financial soundness of the crypto market within the EU by ensuring proper management and accountability through consistent financial practices.

The MiCA framework has also boosted the adoption of EUR-stablecoins, which are gaining popularity in the market. This is due to the legal certainty and consumer protection provided under MiCA, making them more appealing to investors and the general public. The use of EUR-stablecoins is anticipated to continue rising, driven by their increasing use in euro-based transactions and the development of related services and products. This trend reflects growing confidence in digital currencies and underscores the effectiveness of the MiCA framework in fostering a secure and thriving digital asset market in Europe.