MiCA Regulation May Trigger Stablecoin Crisis Instead of Preventing It

The Markets in Crypto-Assets (MiCA) framework, designed to regulate digital assets across the European Union, may inadvertently create conditions for a stablecoin crisis rather than preventing one. Experts warn that stringent requirements could destabilize major stablecoins like USDT and USDC, potentially impacting the broader crypto market including Bitcoin (BTC) and Ethereum (ETH). The regulatory approach focuses on compliance but may overlook systemic risks inherent in stablecoin operations and their connections to traditional finance. This analysis suggests that without careful implementation, MiCA could amplify vulnerabilities instead of mitigating them, raising concerns among investors and industry participants about future market stability and regulatory effectiveness in the crypto space.