MiCAR review: Same regulatory goals, better instruments

The review of the Markets in Crypto-Assets Regulation (MiCAR) takes place in European policy environment shaped by competitiveness and a global payment landscape shaped by geoeconomic competition. This paper contributes to the ongoing political discussion on stablecoins with a number of recommendations. First, it advocates for alignment of reserve-requirements of MiCAR-compliant stablecoins with rules similar to the US-GENIUS Act, thereby replacing the need to hold reserves in bank deposits with high-quality liquid assets (HQLAs). Second, it calls for an equivalence and recognition regime to mitigate the financial stability risk arising from multi-issuance; third, it emphasizes that stablecoins and the digital euro are not mutually exclusive. The digital euro remains an important tool to prevent dollarisation and to achieve strategic payments autonomy. Finally, it proposes to shift supervision of crypto-asset service providers (CASPs) to the European Securities and Markets Authority (ESMA) as stress-testing and reliable data collection can be undertaken more efficiently at Union level.