Regulation
EUR stablecoin volume hits all-time high amid tightening EU cryptocurrency regulation
Euros (EUR) stablecoins are gaining popularity in cryptocurrency exchanges and among cryptocurrency traders in Europe and all over the world. This rally could test the US dollar (U.S. dollar) dominance of stablecoins in cryptocurrency marketfueled by the hardening of the European Union regulations.
Overall weekly volume of euro-backed stablecoins has consistently exceeded $40 million since March, marking the longest such run on record. The data comes from Kaiko Smart Data research relationship published on June 10.
Notably, the report suggests that demand for these stablecoins is finally recovering in European markets, despite Europe traditionally lagging behind the United States. and Asia-Pacific (APAC) in cryptocurrency trading.
Average daily volume of EUR trading pairs. Source: Kaiko
MiCa and a regulatory crackdown on cryptocurrencies in Europe
The upcoming regulation in Europe, known as Markets in Crypto Assets (Not), is set to shake up the stablecoin market.
Binance recently revealed plans to restrict stablecoins that do not meet MiCA standards. In the meantime, Kraken has been actively reviewing which stablecoins comply with European Union standards. This could lead to non-compliant stablecoins being removed from the list for their EU users.
Despite regulatory challenges, Kraken has no plans to delist Tether’s USD stablecoin (USDT) at this time, as reported by Finbold. However, the company will follow all legal requirements, according to Mark Greenberg, global head of Kraken’s growth and asset management business.
Let’s be clear: @krakenfx continues to list USDT in Europe and we have no plans to delist it at this time.
We know that our European customers value access to USDT and we continue to explore all options for offering USDT under the next regime.
Obviously we will follow all legal regulations…
— Mark Greenberg (@marklg) May 18, 2024
Stablecoins supported by rising EUR, still behind USD
Interestingly, Anchored AEUR has taken the EUR stablecoin market by storm, holding over 50% of the total volume. This EUR-backed stablecoin launched on Binance in December.
However, dollar-backed stablecoins continue to dominate the cryptocurrency market. These dominants cryptocurrencies they have almost 90% of all transactions executed against the US dollar. On the other hand, according to Kaiko’s report, euro-backed stablecoins hold a 1.1% share against the euro.
Patrick Hansen, senior director of EU strategy and policy at Circle (USDC stablecoin issuer), commented on Kaiko’s report. Hansen said the 1.1% figure for euro-denominated crypto transactions using EUR stablecoins is an all-time high. In a X send on June 13, the director of Circle also commented on his forecasts on the stablecoin market in Europe.
“It was practically zero a few years ago. In my opinion, it will continue to grow from here and the implementation of MiCA will help create more attractive EUR stablecoin liquidity and volumes. We’ll check back in 6-12 months.
– Patrick Hansen, Circle
Stablecoins MiCa and EUR
It is important to note that, contrary to popular belief, MiCA does not introduce entirely new regulations for fiat-backed stablecoins. Instead, it confirms that stablecoin issuers must be regulated as electronic money institutions (EMIs) under the current Electronic Money Directive (EMD).
In this regard, Jón Egilsson explained misunderstandings about MiCa and stablecoins for CoinDesk’s Consensus Magazine of February 6th. Egilsson is co-founder and chairman of Monerium and former chairman of the Supervisory Board of the Central Bank of Iceland.
“The comprehensive EU guidance on cryptocurrencies does not introduce entirely new rules for fiat-backed stablecoins. Instead, it states existing rules that many current issuers are not yet following.”
– Jon Egilsson
Furthermore, he warned that the lack of regulatory enforcement in Europe has allowed unregulated fiat stablecoins to be listed on European exchanges, putting compliant European companies at a disadvantage and European consumers at risk. The apparent reward for U.S. issuers taking a “break things first, fix them later” approach creates an unfair competition dynamic.
As the European Union prepares to implement MiCA later this year, the EUR stablecoin market is likely to continue to grow. Therefore, compliant issuers will potentially gain an advantage over those operating without the necessary e-money licenses, the former central banker concluded.