MiCA Could Propel EUR Stablecoin to Compete with USD Coins

The introduction of MiCA could propel EUR Stablecoin which would trigger a new competition for USD coins currently dominating the market.

The crypto market is awash with rumors that the MiCA’s entry into the industry could encourage EUR stablecoin to challenge the industry’s dominance of USD variants. Markets in Crypto-Assets (MiCA) is the regulatory framework the European Union has proposed, with an implementation timeline of June 30. This is particularly noteworthy.

EUR Stablecoin Achieves an All-Time High

The recent data shared by Patrick Hansen, Director of Strategy and Policy at Circle, sparked speculation regarding the dominance of EUR stablecoins compared to their USD counterparts.

Euro stablecoins have reached an all-time high (ATH) in euro-dominated crypto transactions, as Hanson emphasized in a post on social media platform X. EUR-stablecoins are utilized in 1.1% of euro-denominated crypto transactions.

Although this is significantly lower than the 90% utilized by USD-backed coins, it represents a substantial increase from the zero percent observed a few years ago. This change in position suggests that the euro-backed stablecoins are gaining momentum.

The Circle Director is confident that the momentum will persist in the future due to the complete integration of MiCA into the application. Henson concluded the post by suggesting we revisit the matter in six to twelve months. The prospective increase in liquidity and volume of the EUR stablecoin due to the implementation of MiCA is the foundation of his projection.

The crypto community has responded to Hanson’s perspective on euro-backed stablecoins in various ways. Hanson’s assertion that “the CEXs don’t earn anything holding customer fiat” was endorsed by a commenter. Using EUR depots, they can negotiate rev. Share agreements with issuers and generate an additional revenue stream. Here, the catalyst is the implementation of MiCA and elevated interest rates.

An additional commenter expressed a view that was in opposition:

“Ideally new regulation (MICA) would make the asset (EUR stablecoins) more attractive to hold and use globally. Seems to me the opposite is likely here – the burdensome nature of MICA means those outside the EU will stick with USD stablecoins. And EU residents get a smaller mkt cap EUR coin.”

What to Anticipate from the MiCA Implementation

The MiCA regulation is considered a functional crypto rulebook for the European Union. MiCA has garnered worldwide recognition as the most comprehensive framework for digital assets. MiCA encompasses a variety of topics, such as stablecoin issuance, token offerings, and crypto asset services, such as exchange and custody. Additionally, it introduces new market exploitation regulations for the entire industry. Generally, its objective is to optimize procedures within the cryptocurrency market.

Central European banks, including LBBW, have announced their intention to enter the cryptocurrency market following MiCA’s approval. In a previous Coinspeaker report, Lukas Enzersdorfer-Konrad, the deputy CEO of the Bitpanda crypto exchange, observed that the appeal is derived from the clarity of regulation.

Despite these accomplishments, the EU’s regulatory framework has been criticized by market experts. Paolo Ardoino, the CEO of Tether, expressed apprehension that the requirements of MiCA could render EU-licensed stablecoins significantly more susceptible to risk and vulnerability.