Patrick Hansen, a senior policy executive at Circle, an issuer of USD and EUR stablecoins, believes that euro-based stablecoins will continue to rise in the coming days. Moving on to X, Hansen male The number of transactions made using Euro stablecoins is 1.1%.
Will the use of the European stablecoin increase from July?
That number is at an all-time high, up from almost zero a few years ago, the executive noted. Although USD-based stablecoin transactions account for more than 90%, this number is likely to shrink as more issuers seek to exit Europe and issue stablecoins in euros.
Currently, USDT is the largest stablecoin tracking the US dollar. It is issued by Tether Holdings and has a market capitalization of more than $112 billion, according to CoinMarketCap.
However, unlike Bitcoin or Ethereum, each USDT in circulation is pegged to the US dollar, meaning it is not volatile. Meanwhile, regardless of the issuing platform, the token is theoretically backed by cash and cash equivalents such as US Treasury securities.
However, slow progress in drafting and implementing stablecoin regulations in the US poses a major impediment to growth. So far, the US Securities and Exchange Commission (SEC) and its chairman, Gary Gensler, have been accused of intentional governance by enforcement, especially with regard to cryptocurrency companies.
Things are different in the European Union. After years of improvement, the region is on the cusp of a major change in its relationship with cryptocurrencies and stablecoins. The Markets in Cryptoassets (MiCA) Regulation, a comprehensive framework designed to manage the digital assets market across member states, will be enforceable from June 30 after its approval in April 2023.
MiCA will be enforceable from June 30: will it strengthen the department?
The MiCA framework is supervised by the European Securities and Markets Authority (ESMA). This regulation will explicitly bring order and, more importantly, transparency to the European cryptocurrency landscape. MiCA imposes stricter regulatory requirements on stablecoins issued by entities operating from the European Union.
Although its implementation is being phased in, the first deadline, on June 30, requires compliance from asset service providers and cryptocurrency companies such as exchanges operating in the region. For example, all trading platforms, including Binance or Kraken, must register and implement KYC and AML requirements. Failure to do so could result in huge fines or even an outright ban.
Hansen sees this as positive for the stablecoin landscape and will only see the share of stablecoins dominated by the euro rise throughout 2024.
By December 2024, all EU stablecoin issuers must impose strict capital and reserve obligations. This requirement will not affect the department alone. Tether Holdings and other companies operating outside the EU and serving EU residents must comply.
With MiCA becoming a reality, Binance, the world's largest exchange by number of clients, said it will restrict “permissionless” stablecoins for its EU clients starting June 30. Meanwhile, OKX said it would ban USDT trading among EU users in March.
Featured image from Canva, chart from TradingView
