Regulation
MiCA Increases Usage of EUR Stablecoins, Will It Cast a Shadow on USD-Backed Coins?
MiCA, the European Union (EU) regulatory framework, is spurring the use and adoption of EUR-backed stablecoins, challenging the dominance traditionally held by USD-backed coins. In particular, the regulatory initiative, Notcovers various aspects of crypto-assets, including transparency, authorization and oversight of transactions.
Furthermore, it also aims to strengthen market integrity and financial stability while safeguarding consumers’ interests.
MiCA to power EUR-backed stablecoin
According to Patrick Hensen, director of strategy and policy at Circle, the issuer behind the USDC stablecoin, Markets in Crypto-Assets (MiCA) has already shown promising effects on EUR stablecoins. In a recent post on
While the figure seems negligible compared to the 90% used by dollar-backed coins, the Circle director pointed out that 1.1% is “actually an all-time high.” Furthermore, he noted that even before a few years, no EUR stablecoin transactions were being conducted, underscoring the growing momentum of the market stablecoins in the EU.
On the other hand, Patrick Hensen further highlighted the potential for further growth in EUR stablecoin liquidity and transaction volumes with the full implementation of MiCA. Considering the potential positive impact of MiCA on the EU stablecoin sector, several experts predict that it will be a tough competitor to USD stablecoins.
Source: Patrick Hensen,
Read also: Coinbase CEO Commits to Clear Crypto Rules and Meets with Democratic and Republican Senators
Potential impact and criticism in the stablecoin debate
As the EU prepares for the implementation of MiCA Regulation, with a key deadline set for June 30th, notable changes are expected in the EU cryptocurrency market. As previously mentioned, this regulatory framework could further stimulate the adoption of EUR-backed stablecoins, positioning them as a viable alternative to USD-backed stablecoins.
It is worth noting that the regulation aims to simplify operations in the cryptocurrency landscape. Furthermore, it also focuses on strengthening investor confidence while offering transparency cryptographic regulation to ensure user safety.
However, the EU regulatory framework has recently attracted criticism also from market experts. For context, CEO of Tether Paolo Ardoino took aim at the upcoming MiCA regulation claiming that the 60% reserve requirement in bank deposits could impact the stablecoin sector. In particular, several cryptocurrency exchanges such as Binance they are also moving their operations to Europe due to the impending regulatory impact of MiCA.
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