Regulation
EUR stablecoin volume hits record high as EU crypto regulations tighten
euros (EUR) stable coins gaining popularity in cryptocurrency exchanges and among crypto traders in Europe and around the world. This increase could call into question the American dollar (USD) dominance of the stablecoin in the cryptocurrency marketfueled by the tightening of the European Union regulations.
The combined weekly volume of euro-backed stablecoins has consistently exceeded $40 million since March, marking the longest period on record. Data comes from a Kaiko Smart Data search report published June 10.
Notably, the report suggests that demand for these stablecoins is finally picking up in European markets, although Europe has traditionally lagged behind the United States. and Asia-Pacific (APAC) in cryptocurrency trading.
Average daily volume of EUR trading pairs. Source: Kaiko
MiCa and a tightening of crypto regulations in Europe
Impending regulation in Europe, known as crypto asset markets (Mica), is poised to shake up the stablecoin market.
Binance recently revealed plans to restrict stablecoins that do not meet MiCA standards. In the meantime, Kraken actively examined which stablecoins complied with European Union standards. This could therefore lead to the delisting of non-compliant stablecoins for their EU users.
Despite regulatory challenges, Kraken has no plans to delist USD stablecoin from Tether (USDT) at this time, as reported by Finbold. However, the company will comply with 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 our European customers value access to USDT and we continue to review all options to offer USDT under the next regime.
We will of course follow all legal rules…
–Mark Greenberg (@marklg) May 18, 2024
Euro-backed stablecoins on the rise, still behind those of the dollar
Interestingly, Anchored’s AEUR has taken the EUR stablecoin market by storm, accounting for over 50% of the total volume. This EUR-backed stablecoin was launched on Binance in December.
Yet, USD-backed stablecoins continue to dominate the crypto market. These dominate cryptocurrencies have almost 90% of all trades executed against the US dollar. On the other hand, euro-backed stablecoins have a 1.1% share against the euro, according to the Kaiko report.
Patrick Hansen, Senior Director of European Strategy and Policy at Circle (USDC stablecoin issuer), commented on the Kaiko report. Hansen said the 1.1% figure for euro-denominated crypto transactions using EUR stablecoins is an all-time high. In a X job On June 13, the Circle director also commented on his predictions for the stablecoin market in Europe.
“A few years ago, he was practically zero. If you ask me, it will only continue to grow from here on out, and the implementation of MiCA will help create more attractive liquidity and EUR stablecoin volumes. Let’s check again in 6-12 months.
– Patrick Hansen, Circle
MiCa and EUR stablecoins
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 existing Electronic Money Directive (EMD).
With that, Jón Egilsson explain misunderstandings about MiCa and stablecoins for CoinDesk’s Consensus magazine on February 6. Egilsson is co-founder and chairman of Monerium and former chairman of the supervisory board of the Icelandic Central Bank.
“The EU’s comprehensive crypto directives do not introduce entirely new regulations for fiat-backed stablecoins. Instead, it confirms existing rules that many current issuers do not yet follow.
– 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 putting European consumers at risk. The apparent reward given to U.S. issuers who adopt a “break things first, fix them later” approach creates a dynamic of unfair competition.
As the European Union prepares to implement MiCA later this year, the EUR stablecoin market is expected to continue to grow. Therefore, compliant issuers will potentially enjoy an advantage over those operating without the necessary e-money licenses, the former central banker concluded.