EUR-Stablecoin Vs USD-Stablecoin Utilization

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MiCA Boosts EUR-Stablecoin Utilization, Will It Cast A Shadow On USD-Backed Coins? – Crypto News

Published

10 months ago

June 13, 2024

Dripp

MiCA, the regulatory framework by the European Union (EU), is boosting the utilization and adoption of EUR-backed stablecoins, challenging the dominance traditionally held by USD-backed coins. Notably, the regulatory initiative, MiCA, covers various aspects of crypto-assets, including transparency, authorization, and supervision of transactions.

In addition, it also aims to strengthen market integrity and financial stability while safeguarding consumer interests.

MiCA To Boost EUR-Backed Stablecoin

According to Patrick Hensen, Director of Strategy and Policy at Circle, the issuer behind USDC stablecoin, Markets in Crypto-Assets (MiCA) has already shown promising effects on EUR-stablecoins. In a recent X post, Hensen highlighted that EUR-stablecoins are used in about 1.1% of the total euro-denominated crypto transactions now.

Although the number seems negligible as compared to the 90% used by the USD-backed coins, the Circle director emphasized that the 1.1% is “actually an all-time high”. Besides, he noted that there used to be no transactions using the EUR-stablecoins even before a few years, noting the rising momentum of the stablecoins in the EU.

On the other hand, Patrick Hensen further emphasized the potential for further growth in EUR-stablecoin liquidity and transaction volumes with MiCA’s full implementation. Considering the potential positive impact of MiCA on the EU’s stablecoin sector, several experts anticipate it to be a tough competitor to the USD-stablecoins.

Also Read: Coinbase CEO Rallies Efforts For Clear Crypto Rules, Meets Dem & GOP Senators

Potential Impact & Criticism Amid Stablecoin Debate

As the EU gears up for the implementation of the MiCA regulations, with a key deadline on June 30, notable changes are anticipated in the crypto market in the EU. As said earlier, this regulatory framework could further boost the EUR-backed stablecoins adoption, while placing it as a viable alternative to the USD-stablecoins.

It’s worth noting that the regulation aims to streamline operations within the crypto landscape. Besides, it also focuses on enhancing investors’ confidence while offering transparent crypto regulation to ensure users’ safety.

However, the EU’s regulatory framework has also attracted criticism from market experts recently. For context, Tether CEO Paolo Ardoino took aim at the upcoming MiCA regulation arguing that the requirement of 60% of reserves in bank deposits could impact the stablecoin sector. Notably, several crypto exchanges like Binance are also shifting their operations in Europe due to the upcoming MiCA regulatory impact.

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