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Usha Yadav
Jul 11, 2022
by Usha Yadav

ECB Report Says Stablecoins Are Not Practical As A Mode Of Payment

ECB Stablecoins

Table of contents

  1. ECB Rejected Stablecoins
  2. Market in Crypto-Assets (MiCa)
The expansion of the cryptocurrency market over the past ten years and the threats it poses to the current financial system has been examined in a report published by the European Central Bank (ECB). The report's section on stablecoins covered its crucial position in the present ecosystem.

Stablecoins are vital in providing liquidity to the decentralized finance (DeFi) ecosystem and are increasingly used to connect multiple blockchain networks. The report also considered whether these stablecoins would fit into the established financial system. Still, it concluded that the recent failure of algorithmic stablecoin ecosystems like Terra and a lack of regulatory oversight point to the potential adverse effects of stablecoins on the financial system.

ECB Rejected Stablecoins

Stablecoins were also rejected by the ECB as a viable payment option, citing that their speed, cost, and redemption terms and conditions have shown them to be "inadequate for use in unreal economy payments." To ensure that stablecoins don't endanger the financial stability of European nations, the ECB suggested implementing the proper supervisory and regulatory measures.

Nevertheless, the survey did point out that stablecoin adoption in the area is only somewhat widespread because European payment service providers haven't been very active in stablecoin marketplaces up to this point.

Market in Crypto-Assets (MiCa)

The Markets in Crypto-Assets (MiCa) framework, which provides direction for crypto asset service providers (CASPs) to operate within the Europe region, was recently authorized by the European Union. The interim agreement contains regulations that apply to stablecoin, trading platforms, cryptocurrency wallets, and issuers of unbacked digital assets.

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stablecoins European Central Bank Decentralized Finance (DeFi) MiCA
ECB Report Says Stablecoins Are Not Practical As A Mode Of Payment
Usha Yadav
Usha is a diehard crypto enthusiast and has been actively writing on different facets of the blockchain and crypto world. She has authored many research articles on cryptocurrency and aims to provide informational and quality content to readers. She firmly believes that crypto has a great potential to redefine the world of finance and blockchain.

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