EUR Stablecoin Volume Reaches Record High Amid Tightening Regulation in the European Union
Euro (EUR) stablecoins are seeing a surge in popularity among cryptocurrency exchanges and traders in Europe and around the world. This increase in demand could potentially challenge the dominance of the U.S. dollar (USD) stablecoins in the cryptocurrency market, driven by the stricter regulations imposed by the European Union.
Data from a recent report by Kaiko Smart Data Research, published on June 10, shows that the combined weekly volume of Euro-backed stablecoins has consistently surpassed $40 million since March, marking a record-breaking streak. Interestingly, the report highlights a growing interest in these stablecoins within European markets, a market that has traditionally lagged behind the United States and the Asian-Pacific (APAC) region in terms of crypto trading.
The impending regulatory framework in Europe, known as the Markets in Crypto Assets (MiCA), is expected to shake up the stablecoin market. Both Binance and Kraken have announced plans to restrict stablecoins that do not meet the MiCA standards, potentially leading to the delisting of non-compliant stablecoins for European users.
Despite these regulatory challenges, Kraken has stated that they have no immediate plans to delist Tether’s USD stablecoin (USDT) in Europe. Mark Greenberg, Global Head of Kraken’s Asset Growth & Management Business, emphasized the company’s commitment to complying with all legal requirements.
While Euro-backed stablecoins like Anchored’s AEUR have gained significant market share, USD-backed stablecoins continue to dominate the crypto market with nearly 90% of all transactions conducted in relation to the USD. According to Kaiko’s report, Euro-backed stablecoins currently hold a 1.1% share against the EUR.
Patrick Hansen, Senior Director of EU Strategy and Policy at Circle, the issuer of the USDC stablecoin, commented on the growing popularity of EUR stablecoins in Europe. He noted that the 1.1% figure for euro-denominated crypto transactions using EUR-stablecoins is at an all-time high, predicting further growth in the market with the implementation of MiCA.
Contrary to common misconceptions, 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 the existing electronic money directive (EMD). Jón Egilsson, co-founder of Monerium and former chairman of the Icelandic Central Bank’s supervisory board, clarified these misconceptions in an article for CoinDesk’s Consensus Magazine.
As European regulators gear up to implement MiCA later this year, compliant issuers are poised to gain an advantage over those operating without the necessary e-money licenses. This shift is expected to further fuel the growth of the EUR stablecoin market while promoting a safer and more regulated environment for European consumers.
