Crypto: Euro stablecoins booming despite the EU
The crypto universe is in constant evolution, and euro (EUR) stablecoins are currently making a remarkable breakthrough despite the tightening of European regulations. These digital assets, designed to maintain a stable value by being pegged to the euro, are seeing their popularity increase exponentially. This phenomenon raises questions about the traditional dominance of US dollar (USD) stablecoins and the implications of new European Union regulations.
Growing crypto popularity despite regulations
Euro stablecoins have recently reached record volume levels, surpassing 40 million dollars in weekly transactions since March.
This impressive performance is reported by Kaiko Smart Data Research, indicating a growing adoption of these assets in Europe and beyond. Although Europe has historically lagged behind the United States and the Asia-Pacific (APAC) region in terms of crypto- exchanges, this trend shows a significant change.
The growing demand for euro stablecoins could be attributed to several factors, including the perception of greater economic stability in the euro area and the diversification of crypto investors’ portfolios.
Moreover, European regulation, while aiming to strictly frame crypto-assets, could paradoxically stimulate investor confidence and encourage the use of these stablecoins.
MiCA and the strengthening of game rules
The European regulatory framework, known as Markets in Crypto Assets (MiCA), is on the verge of shaking up the crypto market.
This legislation aims to establish strict standards to ensure transparency and security in crypto transactions. However, the impact of these regulations is twofold: while they may hinder some actors, they also offer an opportunity for those who comply to increase their legitimacy.
Platforms like Binance and Kraken have already begun to adjust their offerings to comply with the new standards.
For example, Binance has announced restrictions on stablecoins that do not meet MiCA criteria, while Kraken is actively reviewing the compliance of its assets. This proactive adaptation by major exchanges could strengthen the position of compliant stablecoins, including those pegged to the euro.
A dominance contested by the Euro
Despite their impressive growth, euro stablecoins are still a minority compared to those in dollars. USD-pegged stablecoins continue to represent nearly 90% of global transactions. However, the success of stablecoins like Anchored’s AEUR, which accounts for more than 50% of EUR stablecoin transaction volume, shows a promising emerging trend.
Patrick Hansen, Director of Strategy and European Policy at Circle, noted that EUR stablecoin transactions have reached a historic record of 1.1% of total exchanges, a figure that was virtually zero a few years ago. This progression could accelerate with the implementation of MiCA, creating a more favorable environment for euro transactions.
The euro stablecoin market is experiencing notable expansion despite regulatory challenges imposed by the European Union. This growth raises questions about the future balance between euro-pegged and dollar-pegged stablecoins, and the ability of regulations to effectively frame this market while encouraging innovation.
The implementation of MiCA will be a crucial test for the industry. Actors who succeed in navigating this complex regulatory landscape could not only survive but thrive, attracting investors seeking reliable and compliant stablecoin options. It remains to be seen whether this dynamic will be sufficient to challenge the historical dominance of dollar stablecoins or if it will simply open a new era of diversification and increased competitiveness in the crypto universe. In any case, the rise of euro stablecoins is a fascinating development to watch in the coming months and years.
