Circle’s Jeremy Allaire capitalizes on advantageous MiCA regulations to promote USDC and EURC development in the EU.
There are various types of stablecoins, such as algorithmic, commodity-backed, and fiat-backed. They offer users a secure store of value, price stability, and the ability to use them as a medium of exchange. With the development of regulatory frameworks, stablecoins are progressively establishing themselves as a recognized payment mechanism.
In accordance with this endeavor, the EU’s Markets in Crypto-Assets (MiCA) stablecoin regulations, which were implemented in June, impose stringent compliance obligations on issuers in order to establish a more organized stablecoin market. As a consequence, stablecoins that are compliant, such as Circle’s USDC and EURC, are now more advantageously situated for widespread adoption throughout the regional market.
In the region, MiCA’s stablecoin regulations establish a legal framework for issuers to operate. Circle CEO Jeremy Allaire is presently in Europe to advocate for the use of EURC and USDC as lawful electronic money that is compliant.
Allaire emphasized that EURC’s market capitalization has increased by 70% since the implementation of MiCA regulations in June. In the interim, USDC continues to be the most prominent dollar-backed compliant stablecoin in Europe.
USDC’s market capitalization has consistently increased from $25 billion to $35.8 billion since the beginning of 2024, as per CoinMarketCap.
Conversely, EURC encountered an adverse beginning in 2024, experiencing a decline from an initial market capitalization of $57.4 million to a low of $35.1 million in July. Nevertheless, it has since experienced a substantial recovery, nearly doubling to $62.88 million, indicating that the implementation of MiCA regulations has been advantageous to EURC.
The objective of MiCA’s stablecoin regulations is to improve investor protection by mandating that issuers adhere to stringent criteria prior to receiving approval. Proper segregation of funds, regular reporting requirements, appropriate custody arrangements, and maintaining sufficient reserves are among these.
Major stablecoin issuers are required to maintain a minimum of 60% of their reserves in currency with a commercial bank, which is a critical requirement under MiCA. Nevertheless, Tether CEO Paolo Ardoino has criticized this, contending that having substantial currency reserves increases the risk of banking failures due to the uninsured nature of deposits. He argued that it is safer to invest the entirety of the reserves in treasury bills.
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