As a seasoned crypto investor with a keen interest in the regulatory landscape, I’m excited about the prospect of Euro-based stablecoins gaining traction in the coming days. Patrick Hansen, a senior policy executive at Circle, has made a compelling case for this trend based on the rising usage of Euro stablecoins and the imminent implementation of the European Union’s Markets in Crypto-Assets (MiCA) regulation.
Patrick Hansen, a top policy executive at Circle – the company behind USD and Euro stablecoins – is optimistic about the growth of Euro stablecoins in the near future. In a recent interview on X, Hansen shared that approximately 1.1% of all transactions are being processed using Euro stablecoins.
Will Euro Stablecoin Usage Pick Up Steam From July?
As an analyst, I’ve observed that the number of USD-based stablecoin transactions has reached an unprecedented peak, surging from virtually insignificant levels just a few years ago. However, given the increasing trend among issuers to expand their operations outside of the United States and issue Euro stablecoins, it is reasonable to anticipate that this figure will decrease in size over time. Despite currently accounting for more than 90% of all transactions, the dominance of USD-based stablecoins may be challenged by the growing Euro stablecoin market.
At present, USDT, issued by Tether Holdings, holds the title as the largest stablecoin that mirrors the value of the US dollar. With a market capitalization surpassing $112 billion, as reported by CoinMarketCap.
Just as with Bitcoin and Ethereum, USDT represents a digital token. However, unlike these cryptocurrencies, each USDT in circulation maintains a stable value tied to the U.S. dollar. This means it doesn’t experience the same volatility as other cryptocurrencies. Furthermore, regardless of the platform issuing the token, USDT is theoretically backed by real-world assets, specifically cash and cash equivalents like U.S. Treasuries.
Despite the lack of progress in creating regulations for stablecoins in the US, this remains a significant barrier to their advancement. Critics argue that the Securities and Exchange Commission (SEC) and its chairman, Gary Gensler, have adopted a controversial approach by primarily enforcing rules rather than establishing clear guidelines for crypto businesses.
In the European Union, the landscape for crypto and stablecoins is set to undergo a major shift. Following extensive development over the years, the EU is now poised to redefine its interaction with these digital assets. The Markets in Crypto-Assets (MiCA) regulation, an all-encompassing set of rules intended to manage the crypto market within member states, will take effect from June 30, having been adopted in April 2023.
MiCA Will Be Enforceable From June 30: A Boost For Circle?
The European Securities and Markets Authority (ESMA) oversees the MiCA framework, which will instill order and essential transparency in the European cryptocurrency market. The MiCA regulation demands more stringent regulatory guidelines for stablecoin issuers based in the EU.
In the designated region, asset service providers and crypto businesses, including exchanges such as Binance and Kraken, are required to meet the initial compliance deadline on June 30. This means registering and implementing Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures. Neglecting this obligation could result in hefty penalties or outright prohibition.
According to Hansen’s perspective, the increasing trend towards Euro-dominated stablecoins is a favorable development for the stablecoin market, and he anticipates that their market share will continue to grow significantly through 2024.
Beginning December 2024, European Union (EU) regulators mandate that all stablecoin issuers adhere to stringent capital and reserve regulations. This rule applies not only to Circle but also to Tether Holdings and other relevant entities based outside the EU yet catering to EU residents.
As a crypto investor, I’m keeping a close eye on the regulatory landscape, particularly the Markets in Crypto-Assets (MiCA) regulation. Binance, the exchange with the most clients globally, announced that it will prohibit trading of “unauthorized” stablecoins for EU users starting from June 30. On the other hand, OKX has already taken action and banned USDT trading among its EU user base since March.
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2024-06-15 01:11