Patrick Hansen, senior policy manager at Circle, the issuer of USD and Euro stablecoins, is confident that Euro-based stablecoins will continue to rise in the coming days. Take X, Hansen note that the number of transactions carried out using euro stablecoins is 1.1%.
Will the use of the Euro Stablecoin regain strength from July?
This figure, the executive noted, is at an all-time high, rising from almost zero a few years ago. Although US dollar-based stablecoin transactions account for over 90%, this figure will likely decline as more issuers look to expand outside of Europe, issuing euro stablecoins.
Currently, USDT is the largest stablecoin following USD. Tether Holdings issues it and has a market capitalization of over $112 billion, according to CoinMarketCap.
However, unlike Bitcoin or Ethereum, every USDT in circulation is pegged to USD, meaning it is not volatile. At the same time, regardless of the issuance platform, the token is theoretically backed by cash and cash equivalents such as US Treasury bills.
However, slow progress in the development and implementation of stablecoin laws in the United States poses a major obstacle to growth. Until now, the United States Securities and Exchange Commission (SEC) and its chairman, Gary Gensler, have been accused of deliberate enforcement rulings, particularly regarding crypto companies.
Things are different in the European Union. After years of refinement, the region is poised to significantly change its relationship with crypto and stablecoins. The Markets in Crypto Assets (MiCA) Regulation, a comprehensive framework designed to govern the digital asset market in member states, will come into force on June 30 after being approved in April 2023.
MiCA will be applicable from June 30: a boost for Circle?
The MiCA framework is overseen by the European Securities and Markets Authority (ESMA). This regulation will expressly bring order and, above all, transparency to the European crypto scene. MiCA imposes stricter regulatory requirements for stablecoins issued by entities operating from the EU.
Although its implementation is gradual, the first deadline, June 30, requires compliance from asset service providers and crypto businesses like exchanges operating in the zone. For example, all exchanges, including Binance or Kraken, must register and enforce KYC and AML requirements. Failure to do so could result in huge fines or even outright bans.
Hansen sees this as a positive for the stablecoin scene and will only see the share of Euro-dominated stablecoins increase throughout 2024.
By December 2024, all EU stablecoin issuers will have to implement strict capital and reserve requirements. This requirement will not only affect Circle. Tether Holdings and other companies operating outside the EU but serving EU residents must comply.
As MiCA becomes a reality, Binance, the world’s largest exchange by number of customers, has said it will. restrict “unauthorized” stablecoins for its EU customers from June 30. Meanwhile, OKX announced that it would ban USDT trading between EU users in March.
Featured image from Canva, chart from TradingView
