EUR stablecoin volume reaches record high amidst tightening regulations on crypto in the European Union
Euro stablecoins are becoming increasingly popular on cryptocurrency exchanges and among crypto traders in Europe and globally. This surge in popularity could potentially challenge the dominance of the USD stablecoin in the cryptocurrency market, driven by the EU’s stricter regulations.
According to a report from Kaiko Smart Data Research published on June 10, the combined weekly volume of Euro-backed stablecoins has consistently surpassed $40 million since March, marking a record period. Interestingly, the report indicates that there is a growing demand for these stablecoins in European markets, despite historically lagging behind the US and APAC regions in crypto trading.
The impending implementation of the Markets in Crypto Assets (MiCA) regulation in Europe is expected to shake up the stablecoin market. Binance has announced plans to restrict stablecoins that do not meet MiCA standards, while Kraken is actively reviewing compliance with EU standards, potentially leading to the delisting of non-compliant stablecoins for their E.U. users.
Despite these regulatory challenges, Kraken currently has no plans to delist Tether’s USD stablecoin (USDT), as reported by Finbold. However, the company will ensure compliance with all legal requirements, as stated by Mark Greenberg, Global Head of Kraken’s Asset Growth & Management Business.
Anchored’s AEUR stablecoin has emerged as a dominant player in the EUR stablecoin market, capturing over 50% of the total volume since its launch on Binance in December. Nonetheless, USD-backed stablecoins continue to dominate the crypto market, accounting for nearly 90% of all transactions relative to the USD. Euro-backed stablecoins, on the other hand, hold a 1.1% share against the EUR, according to Kaiko’s report.
In a post on June 13, Patrick Hansen, Senior Director of EU Strategy and Policy at Circle, commented on the Kaiko report, noting that the 1.1% figure for euro-denominated crypto transactions using EUR-stablecoins is at an all-time high. Hansen also expressed optimism about the growth potential of the EUR stablecoin market, particularly with the implementation of MiCA.
Contrary to popular belief, MiCA does not introduce entirely new regulations for fiat-backed stablecoins. Instead, it reinforces the requirement for stablecoin issuers to be regulated as electronic money institutions (EMIs) under existing directives. Jón Egilsson, co-founder of Monerium and former chairman of the Icelandic Central Bank’s supervisory board, clarified misunderstandings about MiCA and stablecoins in an article for CoinDesk’s Consensus Magazine on February 6.
As Europe prepares to enforce MiCA later this year, compliant EUR stablecoin issuers are likely to have a competitive advantage over those without the necessary e-money licenses. This regulatory framework aims to level the playing field and protect European consumers from potential risks associated with unregulated stablecoins listed on European exchanges.