Hello! Today, I want to highlight something pretty interesting in the world of crypto: the regulation of stablecoins. Now, you may be wondering, "Why stablecoins?" Well, let me break it down for you.
Stablecoins are part of a class of cryptocurrencies with stable value. Unlike Bitcoin or Ethereum, whose prices fluctuate wildly, stablecoins remain steady. This makes it much safer for many people using crypto for everyday payments or sending money across borders. Because of this stability, the new MiCA regulation has chosen to begin with stablecoins.
You know, last year was the time of the stablecoins. According to Chainalysis, in 2023, they accounted for 60% of the $10 trillion worth of transactions done in cryptocurrency. That's huge! It just goes on to prove that many people are using stablecoins for all manner of things, from grocery shopping in a supermarket to sending money home to family abroad. Every day, about 1.5 million stablecoin transfers take place. That is much trust from people doing everyday transactions in stablecoins.
What is also interesting is that 91% of these transactions are less than $10,000. It's people using stablecoins to fund everyday expenses like shopping and paying bills. It's not some big business or investor; it's regular folks like you and me.
The new rule is trying to make stablecoins even safer. How? By providing that the companies behind stablecoins have proper security measures, enough reserves, and transparency of operations. This means they have to hold enough money to back up the coins they are issuing and must be open regarding how they run their business.
This could be a game-changing regulation. It might incentivize traditional financial institutions, namely banks, to finally jump on the wave of stablecoin usage. Banks usually consider stablecoins as much safer, as their value does not swing wildly like that of other cryptocurrencies. Thus, with precise regulations in place, they may become more willing to participate.
According to Chainalysis data, as I mentioned earlier, stablecoins play a huge role—in the future of crypto, mainly during small transactions. With regulation, undoubtedly, there will be incurred improved protection against fraud occasions. That means that your money is much safer and creates more consumer rights.
The other big win of this regulation is transparency. If companies are open about how they operate, it builds trust. More people might start using stablecoins if they know the companies behind them have your back and are rule-abiding.
The new regulation came into effect on 30 June 2024. This is a massive step for crypto assets within the EU. It does prove that regulators care about making the crypto space a much safer and more reliable arena for all people involved.
Posted Using InLeo Alpha
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