Will MiCA’s boosting of EUR-Stablecoin usage overshadow USD-backed coins?
MiCA, the regulatory framework by the European Union (EU), is driving the utilization and adoption of EUR-backed stablecoins, challenging the dominance traditionally held by USD-backed coins. The regulatory initiative covers various aspects of crypto-assets, including transparency, authorization, and supervision of transactions.
Furthermore, MiCA aims to enhance 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 had a positive impact on EUR-stablecoins. Hensen highlighted in a recent post that EUR-stablecoins are now used in about 1.1% of total euro-denominated crypto transactions.
Although this percentage is small compared to the 90% used by USD-backed coins, the Circle director pointed out that 1.1% is actually an all-time high. He mentioned the increasing momentum of stablecoins in the EU, noting that there were no transactions using EUR-stablecoins a few years ago.
Patrick Hensen also emphasized the potential for further growth in EUR-stablecoin liquidity and transaction volumes with the full implementation of MiCA. Experts anticipate that MiCA could make EUR-stablecoins a tough competitor to USD-stablecoins in the future.
Source: Patrick Hensen, X
Potential Impact & Criticism Amid Stablecoin Debate
As the EU prepares for the implementation of MiCA regulations, with a key deadline on June 30, significant changes are expected in the crypto market in the EU. The regulatory framework could boost the adoption of EUR-backed stablecoins and position them as a viable alternative to USD-stablecoins.
The regulation aims to streamline operations within the crypto landscape and enhance investor confidence by providing transparent crypto regulation for user safety.
However, the EU’s regulatory framework has faced criticism from market experts. Tether CEO Paolo Ardoino raised concerns about the requirement of 60% of reserves in bank deposits, stating that it could impact the stablecoin sector. Some crypto exchanges, such as Binance, are shifting their operations in Europe due to the expected regulatory impact of MiCA.
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