MiCA has the potential to challenge the dominance of USD variants by pushing EUR stablecoin

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.

There are a lot of rumors in the cryptocurrency market that MiCA’s entry into the field could help EUR stablecoin compete with USD versions. Markets in Crypto-Assets (MiCA) is the regulatory framework that the European Union has proposed, with an implementation timeline of June 30.

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

Euro stablecoins have reached an all-time high (ATH) in terms of euro-dominated crypto transactions, as Hanson emphasized in a post on social media platform X. EUR-stablecoins accommodate 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 of the opinion that the momentum will persist in the future, as a result of the complete integration of MiCA into the application. Henson concluded the post by suggesting that we revisit the matter in six to twelve months. The prospective increase in liquidity and volume of the EUR stablecoin as a result of the implementation of MiCA is the foundation of his projection.

The crypto community has responded to Hanson’s perspective on euro-backed stablecoins with a variety of responses. In agreement with Hanson, one commenter observed that “the CEXs do not generate any revenue from holding consumer fiat.” 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, the asset (EUR stablecoins) would be more appealing to possess and use on a global scale as a result of the new regulation (MICA).” It appears that the opposite is more probable in this case: individuals who reside outside of the EU will continue to utilize USD stablecoins due to the burdensome nature of MICA. Additionally, EU citizens receive a EUR coin with a lower market capitalization.

In essence, 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.

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