The Future of Euro Stablecoins After MiCAR
- Stablr Euro
- Stablecoins
- Regulations
- EURR
- Euro
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Less competition from non-MiCAR-compliant stablecoins
The status quo of the stablecoin world has long been the USD-backed variants. Euro-denominated stablecoins saw marginal shares until June 2024, when they reached an all-time high (1.1%). Though a tiny percentage, this share is a leap compared to historical data.
In fact, Euro stablecoin can benefit much more from dwindling competition in the EU. Earlier this year, crypto exchanges delisted non-euro stablecoins, and they plan to weed out more of those in the coming days. This leaves USD stablecoins with a decision to make: comply with MiCAR or lose out on the EU as a market.
Different USD stablecoin issuers have responded to MiCAR in different ways. Circle announced its new HQ in France and secured the EMI license required under MiCAR. Tether, one of the largest stablecoin issuers in the world, has expressed its wish not to be governed by MiCAR, which strongly signals its exit from the EU market.
Regardless, while USD stablecoin companies decide on their course of action, Euro stablecoin organizations are in a better position to grow in the upcoming years. For example, StablR has its HQ in Malta, an EU member state, and has recently secured its EMI license around the same time as Circle. As Tether’s EU exit looms closer, StablR sees great potential in developing its Euro stablecoin, EURR, further.
More use cases for stablecoins
One of the goals of stablecoins is to bridge the gap between traditional and decentralized finance (DeFi) by introducing a reliable means of exchange that enjoys the benefit of blockchain technology. With MiCAR in place, we can expect a wider adoption of Euro stablecoins for everyday uses.
Similar to how both Visa and Mastercard support USDC settlements or Stripe allows USDC payments, we could potentially see the same opportunities for Euro stablecoins. At the moment, Euro stablecoins or stablecoins in general are not prevalently accepted, but there are grounds to believe this will change in the future.
For businesses, Euro stablecoins offer an interesting avenue for raising private debt without running the risk of FX. Stablecoins can potentially offer a lower interest rate for loaners due to the blockchain’s efficiency. Beyond businesses, as consumers understand more about stablecoins, we can expect even more widespread use of stablecoins in e-commerce due to the faster transaction times they offer.
Better transparency for consumers
One thing is certain: MiCAR introduced more measures to protect Euro stablecoin consumers. More stringent regulations for issuers provide more clarity to stablecoin holders, which increases their confidence in this new form of cryptocurrency. Now more than ever, consumers can rely on Euro stablecoins as a means of exchange, knowing that their transactions are secure and transparent. In turn, stablecoin has the ability to become a cornerstone in the Eurozone.
For example, users of StablR’s EURR stablecoin can rest assured in the token’s ability to meet the highest standards of transparency and safety as required by the new European crypto regulations (MiCAR). By fully backing each EURR with real Euros and providing daily proof of these reserves, StablR aims to build trust and confidence in the digital currency market. Overall, StablR contributes to building trust and adoption of stablecoins in Europe amongst consumers.
The US lags behind in crypto and stablecoin regulation
The U.S. and EU have adopted distinct approaches to crypto and stablecoin regulation, leading to notable differences in their regulatory environments. In the US, the regulatory landscape is fragmented, with various agencies such as the SEC, CFTC, and FinCEN overseeing different aspects of the crypto industry. This piecemeal approach often results in regulatory uncertainty, particularly concerning stablecoins, as comprehensive, unified rules are still in development. The US tends to rely on enforcement actions and guidance, which can stifle innovation due to the lack of clear regulatory standards.
In contrast, the EU has proactively developed a unified regulatory framework through its MiCA regulation, which aims to standardize rules for crypto assets and stablecoins across member states. MiCAR includes detailed provisions for stablecoin issuance, reserve requirements, and consumer protection, offering a more structured and predictable regulatory environment. This comprehensive approach helps balance market integrity and consumer protection with fostering innovation, providing a clearer and more stable environment for crypto businesses and investors in the EU.
Rising adoption can close the gap between Euro stablecoin and USD stablecoins
Euro stablecoins currently only account for a fraction of the total stablecoin volume worldwide. However, with dwindling competition from their USD counterparts, more possible uses, and better transparency, the potential for growth for Euro stablecoins is high. More is to come in the stablecoin world, though MiCAR is ushering in a whole new lane for the development of Euro stablecoins in the EU and around the world.
More developments to come
The future of Euro stablecoins remains to be determined in the months and years to come. However, there are strong indications that Euro stablecoin’s importance and prevalence will increase in the foreseeable future as the demand for transparency in crypto is increasing. MiCAR is giving crypto investors more confidence and protection while the market matures with more experienced players. For consumers, this might be the prime time to invest in Euro stablecoins.
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