Regulation
Euro Stablecoins Explode Despite EU
2pm ▪ 4 minute read ▪ by Evans S.
The cryptocurrency universe is constantly evolving, and euro (EUR) stablecoins are currently making significant progress despite tightening European regulations. These digital assets, designed to maintain a stable value by being pegged to the euro, are seeing their popularity increase exponentially. This phenomenon raises questions about the traditional dominance of US dollar (USD) stablecoins and the implications of new European Union regulations.
Growing popularity of cryptocurrencies despite regulations
Euro stablecoins have recently reached record volume levels, surpassing $40 million in weekly transactions since March.
This impressive performance is reported by Kaiko Smart Data Research, indicating growing adoption of these resources in Europe and beyond. Although Europe has historically lagged behind the US and the Asia-Pacific (APAC) region in terms of cryptocurrenciesexchangesthis trend shows a significant change.
The growing demand for euro stablecoins could be attributed to several factors, including the perception of greater economic stability in the Eurozone and the diversification of investors’ crypto portfolios.
Furthermore, European regulation, while aiming to strictly regulate crypto-assets, could paradoxically stimulate investor confidence and encourage the use of these stablecoins.
MiCA and strengthening the rules of the game
The European regulatory framework, known as Markets in Crypto Assets (Not), is about to shake up the cryptocurrency market.
This legislation aims to establish rigorous standards to ensure the transparency and security of crypto transactions. However, the impact of these regulations is twofold: while they may hinder some actors, they also provide the opportunity for compliant entities to increase their legitimacy.
Platforms like Binance and Kraken have already started adjusting their offerings to comply with the new standards.
For example, Binance has announced restrictions on stablecoins that do not meet MiCA criteria, while Kraken is actively reviewing its assets for compliance. This proactive adaptation by major exchanges could strengthen the position of compliant stablecoins, including those backed by the euro.
A challenge to the dollar’s dominance by the euro
Despite their impressive growth, euro stablecoins still remain a minority compared to dollar ones. Dollar-backed stablecoins continue to account for nearly 90% of global transactions. However, the success of stablecoins like Anchored’s AEUR, which accounts for more than 50% of euro stablecoin transaction volumes, shows a promising emerging trend.
Patrick Hansen, Director of European Strategy and Policy at Circle, noted that euro stablecoin transactions have reached an all-time high of 1.1% of total trades, a figure that was virtually zero a few years ago. This progression could accelerate with the implementation of MiCA, creating a more favorable environment for euro transactions.
The euro stablecoin market is experiencing notable expansion despite regulatory challenges imposed by the European Union. This growth raises questions about the future balance between euro- and dollar-backed stablecoins and the ability of regulations to effectively govern this market while encouraging innovation.
The implementation of MiCA will be a crucial test for the sector. Players that manage to navigate this complex regulatory landscape could not only survive but thrive, attracting investors looking for reliable and compliant stablecoin options. It remains to be seen whether this dynamic will be enough to challenge the historical dominance of dollar stablecoins or whether it will simply usher in a new era of diversification and greater competition in the cryptocurrency universe. Regardless, the rise of euro stablecoins is a fascinating development to watch in the months and years ahead.
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Evans S.
Fascinated by bitcoin since 2017, Evariste has not stopped researching on the topic. If his first interest is in trading, the wise man is desperate to discover all the advanced cryptocurrency centers. As an editor, he aspires to consistently provide high-quality work that reflects the state of the industry as a whole.
DISCLAIMER
The views, thoughts and opinions expressed in this article are solely those of the author and should not be relied upon as investment advice. Do your research before making any investment decisions.