Tuesday, July 16, 2024
Home Cryptocurrency Circle exec says euro stablecoin set to boom after MiCA goes live within two weeks

Circle exec says euro stablecoin set to boom after MiCA goes live within two weeks

by xyonent
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Patrick Hansen, senior policy officer at Circle, which issues USD and EUR stablecoins, is optimistic that euro-based stablecoins will continue to rise in the coming days. I got it. The number of transactions made using euro stablecoins is 1.1%.

EUR vs USD stablecoins | Source: @paddi_hansen via X

Will euro stablecoin usage pick up in July?

The figure is at an all-time high, up from near zero a few years ago, the executive noted. USD-denominated stablecoin transactions account for more than 90% of total transactions, but this figure is likely to shrink as more issuers outside of Europe launch euro-denominated stablecoins.

Currently, USDT is the largest stablecoin pegged to the US dollar. Issued by Tether Holdings, it has a market capitalization of over $112 billion. CoinMarketCap.

Yet, unlike Bitcoin and Ethereum, each USDT in circulation is pegged to the US Dollar and is not volatile, and at the same time, regardless of the issuing platform, the token is theoretically backed by cash and cash equivalents such as U.S. Treasury bills.

Ethereum price daily chart for June 14 | Source: ETHUSDT on Binance, TradingView
Ethereum price daily chart for June 14 | Source: ETHUSDT on Binance and TradingView

However, delays in drafting and enacting stablecoin laws in the U.S. have been a major obstacle to growth. In the past, the U.S. Securities and Exchange Commission (SEC) and its Chairman, Gary Gensler, have been accused of deliberate enforcement arbitrage, especially with regard to cryptocurrency companies.

The situation is different in the European Union. After years of refinement, the region is on the brink of a major shift in its relationship with cryptocurrencies and stablecoins. The Markets in Crypto Assets Regulation (MiCA), a comprehensive framework designed to govern digital asset markets across member states, was approved in April 2023 and will come into effect from June 30.

MiCA goes into effect on June 30th: a boon for Circle?

The MiCA framework is overseen by the European Securities and Markets Authority (ESMA). The regulation will bring order and, most importantly, transparency to the European cryptocurrency industry. MiCA mandates stricter regulatory requirements for stablecoins issued by entities operating in the EU.

Implementation will be gradual, but the first deadline, June 30, will require asset service providers and crypto businesses, such as exchanges, operating in the region to comply. For example, all exchanges, including Binance and Kraken, will have to register and implement KYC and AML requirements, failing which could result in heavy fines and immediate bans.

Hansen sees this as a positive for the stablecoin world, and believes the share of euro-backed stablecoins will only increase throughout 2024.

By December 2024, all stablecoin issuers in the EU will have to implement strict capital and reserve obligations. This requirement doesn’t just affect Circle: Tether Holdings and other companies that operate outside the EU but serve EU residents will also have to comply.

As MiCA becomes a reality, Binance, the world’s largest exchange by number of clients, announced it would restrict “permissionless” stablecoins to EU customers starting June 30. Meanwhile, OKX announced in March that it would ban USDT trading between EU users.

Featured image from Canva, chart from TradingView

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