Austin Campbell, CEO of WSPN US, expressed concerns regarding the European Union's (EU) Markets in Crypto-Assets Regulation (MiCA), which he says governs stablecoins in a manner that poses risks to issuers. Campbell shared his views with Federal Newswire on February 10.
"MiCA has the problem of requiring the majority of the funds to be held in onshore, non-interest paying bank deposits," said Campbell. "This is a large subsidy to EU banks and creates significant risk for the stablecoin issuer. Essentially a massive handout to them."
According to International Policy Digest, MiCA mandates that 60% of stablecoin reserves be held in EU banks. This requirement, while seemingly aimed at enhancing security, could potentially hinder innovation and lead to instability. The European government bond market reportedly has less trading volume and depth compared to U.S. Treasuries, raising concerns about challenges in liquidating stablecoins during market stress. By relying on the traditional banking system, stablecoin issuers may face risks related to liquidity, access issues, potential recapitalization of failing banks, and a lack of transparency around reinvestments.
International Policy Digest further reported that major stablecoin issuers who have incorporated U.S. Treasuries and other U.S. dollar-denominated assets into their reserve strategies might find compliance with MiCA's requirements costly or complex. As a result, these issuers may choose to limit their EU operations, leading to a fragmented global stablecoin market. Such fragmentation could hinder innovation and capital flow within the EU digital asset ecosystem while creating high entry barriers and regulatory burdens for new stablecoin projects.
Campbell said in Congressional testimony on February 6 that the EU's regulatory framework for stablecoins is "barely workable" and "mostly being ignored." He noted that other jurisdictions like Hong Kong, Singapore, and the UAE are implementing their own regulations for stablecoins. Campbell emphasized the importance of the U.S. establishing its own regulations to attract stablecoin projects because whichever jurisdiction becomes the global hub will also receive associated investments and data. He warned that if Hong Kong were to become this hub, it would place control of the blockchain dollar system and customer data in China's hands rather than those of the U.S.
On February 4, U.S. Senators Bill Hagerty, Tim Scott, Kirsten Gillibrand, and Cynthia Lummis introduced the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. According to a press release from the senators' offices, this act aims to create a clear regulatory framework for stablecoins as previous administrations' lack of clarity harmed innovation in this sector within the U.S. A clear framework is expected to expand financial inclusion, bolster the U.S. dollar's status as a global reserve currency, and enhance transaction efficiency.
Campbell assumed his role as CEO of WSPN US in October and serves as an adjunct professor at NYU Stern School of Business according to LinkedIn information. His prior experience includes managing stablecoin reserves for Paxos.
