Europe Plans 'MiCA 2.0' to Update Crypto Rules on Stablecoins and DeFi

Europe is getting ready to update its crypto rulebook, and the changes could shape how digital money works across the continent.

What's happening? In May, the European Commission (the EU's executive branch that proposes laws) asked the public and industry for feedback on its crypto regulations. This is the first step toward updating a major law called MiCA (Markets in Crypto Assets) — the EU's rulebook for cryptocurrency. People are already calling the updated version "MiCA 2.0."

The original MiCA started being fully enforced on December 30, 2024, putting the EU ahead of the United States in creating clear crypto rules. Now officials want to refine it.

Stablecoins are the hot topic. Stablecoins are cryptocurrencies designed to keep a steady value, usually tied to a regular currency like the euro or dollar. The big question regulators face is: should stablecoins be treated as investment tools (focusing on protecting investors) or as payment systems (focusing on whether people can reliably get their money back)?

Coinbase, a major crypto exchange, wants the new rules to make euro stablecoins more competitive. Key requests include:

• Allowing more stablecoin reserves (the backup money that guarantees each coin's value) to be held in safe government assets
• Permitting rewards like cashback and loyalty programs, which are currently banned for these tokens

DeFi and prediction markets are also under review. DeFi (Decentralized Finance) means crypto services that run without a company or middleman in charge. Current rules don't cover fully decentralized platforms, partly because it's hard to define what "fully decentralized" even means.

Prediction markets — platforms where people bet on future events — are another gray area. They're banned in some EU countries, and regulators are now deciding whether they offer real value and which laws should apply to them.

The bottom line: MiCA 2.0 is still in early discussion, but it could bring clearer rules for stablecoins, DeFi, and new crypto products across Europe. For now, the industry is watching closely.

This is an AI-generated summary. Read the original article at: https://cointelegraph.com/features/crypto-industry-stablecoins-defi-mica?utm_source=rss&utm_medium=rss&utm_campaign=rss