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06/11/2024

MiCA could allow euro-backed stablecoins in the Eurozone

06/11/2024
4,8

The forthcoming Crypto Assets (MiCA) rules are set to beneficially reshape the landscape of stablecoins, especially those pegged to the euro, according to insights from Kaiko Research. Binance has initiated limits on stablecoins not meeting the new MiCA criteria, and Kraken is revising its stablecoin lineup to align with the European Union's regulations, potentially leading to the removal of non-compliant stablecoins for EU users.

While Europe has been slower on the uptake compared to the US and APAC areas, euro-pegged stablecoins have experienced a significant boost in trading activity since the beginning of the year. This growth signals an increasing interest from the European market. The aggregate weekly trading volume of key euro stablecoins, including Tether's EURT, Stasis's EURS, and Circle's EURCV, has climbed beyond $40 million since March, achieving a historically prolonged period of elevated activity.

Introduced by Binance in December, AEUR has swiftly captured the lion's share of the euro stablecoin market, contributing to more than half of the total trade volume. Despite the dominance of USD-pegged stablecoins, which boast an average weekly trading volume of $270 billion in 2024, euro-pegged stablecoins now represent a 1.1% share of transactions, a noteworthy jump from practically zero in 2020.

Trading pairs of USDT with the euro have emerged as some of the most popular trading pairs, even surpassing Bitcoin trades denominated in EUR on platforms like Binance and Kraken. This underscores the critical role these platforms play as primary fiat conduits for European traders.

The exact stablecoins that will be identified as non-compliant remain to be revealed. Yet, the scrutinization of Tether's USDT by Kraken, given its history of regulatory hurdles, stands out. Despite the majority of its trading volume occurring in US trading hours, USDT continues to be a crucial currency for European traders.

The report indicates that while over-the-counter (OTC) trading may still support USDT-EUR trading, a trend towards regulated alternatives like USDC might become the preferred choice for numerous traders.

 


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