The emergence of stablecoin market in the EU under MiCA regulation
EU news: A euro-backed stablecoin is set to launch in the market through a collaboration between French and Irish fintech companies, scheduled to be introduced on the Stellar blockchain one month after the MiCA stablecoin laws become effective.
Read on for more details.
The launch on the Stellar blockchain post-MiCA of the EU stablecoin in the market
The European Union’s new regulatory framework, known as MiCA (Markets in Crypto-Assets Regulation), is gradually being implemented as planned. The initial regulations, effective as of July 1st, specifically focus on stablecoins and their issuers.
These regulations have helped clean up the market by removing operators that do not meet regulatory standards, creating a more favorable environment for stablecoins pegged to local currencies. This has boosted investor confidence and interest in digital currencies.
An example of the impact of MiCA on the market is the partnership between French fintech company Next Generation and Irish electronic money institution Decta. These two entities have announced the launch of a euro-backed stablecoin called EURT on the Stellar blockchain, scheduled for August 5th, in full compliance with MiCA regulations.
Next Generation, in collaboration with the Stellar Foundation, had previously launched EURT in 2017 but had to suspend the project due to the lack of a clear regulatory framework. Now, under MiCA, stablecoins are categorized as electronic money tokens (EMT), requiring issuers to hold an EMI license or be a credit institution.
The rebirth of euro-backed stablecoins
The regulatory clarity introduced by MiCA has transformed the euro-backed stablecoin market, making it more predictable and attractive for investors. Following the implementation of MiCA, there is a predicted increase in demand for euro-backed stablecoins in European markets.
Decta, authorized by the Central Bank of Ireland as an EMI, will utilize this license to issue EURT, ensuring full regulatory compliance. The partnership aims to bridge the demand-supply gap in the market, anticipating substantial growth for EURT.
The market for euro-pegged stablecoins currently includes key players like Circle with its stablecoin EURC, and Tether with EURT. Hayriyan, president of Next Generation, sees them as main competitors but believes that their strong regulatory compliance and technological infrastructure position Next Generation and Decta well in the emerging market.
Future prospects
Next Generation and Decta aim to launch EURT by October, while Circle, the first global stablecoin issuer to comply with MiCA, has selected France as its European base due to the country’s progressive stance on digital asset regulation.
Forecasts suggest significant growth in the euro-backed stablecoin sector with market capitalization estimated to reach at least 15 billion euros by 2025, expanding to 70 billion euros by 2026 and potentially exceeding 2 trillion euros by 2028.
As of July 31, the market capitalization of stablecoins has been on the rise, increasing by 2.1% to 164 billion dollars in July, reaching the highest levels since April 2022. Notably, stablecoins like USD Coin have seen a surge in trading volume, indicating a growing interest and confidence in the stablecoin market.
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