“Stablecoins do not benefit from any protection provided by the public deposit insurance system”
Diogo Pereira Duarte and André Alfar Rodrigues state that stablecoin deposits are not guaranteed. In a statement to Expresso, partner and of counsel, respectively, at Abreu Advogados explained that the MiCA regulation, in force in Europe, establishes that stablecoins do not constitute deposits and “do not benefit from any protection provided by the public deposit insurance system.”
Stablecoins are digital currencies similar to cryptocurrencies, with the particular feature of being pegged to another asset, such as the dollar or the euro, which gives them less volatility.
In the United States, a new law allows major private companies (such as Amazon, Citi or PayPal) to issue their own stable digital currencies, paving the way for a structural change in the financial system. In Europe, the MiCA regulation imposes limits and rules on the use of these currencies, under the supervision of entities such as the ECB.
The benefits include faster and cheaper international transactions, especially useful in developing countries. The risks include competition with bank deposits, instability in times of crisis, and the weakening of the role of central banks.
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