MiCA Might Push EUR Stablecoin to Challenge Dominance of USD Variants

UTC by Godfrey Benjamin · 3 min read
MiCA Might Push EUR Stablecoin to Challenge Dominance of USD Variants
Photo: Depositphotos

Tether CEO Paolo Ardoino raised concerns that MiCA’s requirements could make EU-licensed stablecoins extremely vulnerable and riskier to operate.

The crypto market is rife with speculations that the MiCA’s entry into the industry could propel EUR stablecoin to challenge the dominance of USD variants. Notably, Markets in Crypto-Assets (MiCA) is the regulatory framework proposed by the European Union, with an implementation timeline set for June 30.

EUR Stablecoin Hits an All-Time High

The speculation regarding the EUR stablecoin dominance in relation to its USD counterparts was spearheaded by recent data shared by Patrick Hansen, Director of Strategy and Policy at Circle.

Hanson highlighted in a post on social media X that Euro stablecoins have hit an all-time high (ATH), as regards euro-dominated crypto transactions. Specifically, 1.1% of euro-denominated crypto transactions are done using EUR-stablecoins.

While this is comparatively lower than the 90% used by the USD-backed coins, it marks a notable uptick from the zero percentage observed a few years ago. This shift in position indicates a rising momentum for the euro-backed stablecoins.

The Circle Director believes this momentum will continue to rise going forward, fueled by MiCA’s full implementation into application. “Let’s check again in 6-12 months,” Henson concluded the post. His projection is hinged on the potential increase in liquidity and volume of the EUR stablecoin upon implementation of MiCA.

Hanson’s view regarding euro-backed stablecoin has been met with mixed reactions from the crypto community. One commenter agreed with Hanson, noting that “the CEXs don’t earn anything holding customer fiat. With EUR stables, they can strike rev. share agreements with issuers and gain another revenue source. High interest rates and MiCA coming into force are the catalyst here”.

In a contrary opinion, another commenter stated:

“Ideally new regulation (MICA) would make the asset (EUR stablecoins) more attractive to hold and use globally. Seems to me the opposite is likely here – the burdensome nature of MICA means those outside the EU will stick with USD stablecoins. And EU residents get a smaller mkt cap EUR coin.”

What to Expect from the MiCA Implementation

Essentially, the MiCA regulation is regarded as a functional crypto rulebook for the European Union. MiCA has received global attention as the most comprehensive framework for digital assets. MiCA covers basically different areas including token offerings, stablecoin issuance, crypto asset services like exchange and custody, plus new market abuse rules for the entire space. In general, it aims to streamline processes in the crypto market.

Following the approval of MiCA, major banks in Europe like LBBW have announced plans to venture into crypto. Lukas Enzersdorfer-Konrad, deputy CEO of Bitpanda crypto exchange noted in a previous Coinspeaker report that the attraction stems from clarity in regulation.

Despite these achievements, the EU’s regulatory framework has received criticism from market experts. Tether CEO Paolo Ardoino raised concerns that MiCA’s requirements could make EU-licensed stablecoins extremely vulnerable and riskier to operate.

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