The European Union’s Markets in Crypto-Assets (MiCA) regulations, which took effect on December 30, are poised to significantly influence the landscape of euro-denominated stablecoins, as highlighted in a recent research report from JPMorgan (JPM).
According to analysts led by Nikolaos Panigirtzoglou, under the MiCA framework, only compliant stablecoins can be utilized as trading pairs in regulated markets. This mandate is prompting EU exchanges to reassess and adapt their offerings accordingly.
As a result of these regulatory changes, compliant stablecoins like Circle’s EURC are gaining traction, while non-compliant alternatives, such as Tether’s EURT, are encountering notable challenges. This differentiation underscores the regulatory impact on the stablecoin market.
A stablecoin is a cryptocurrency designed to maintain a stable value, typically pegged to the U.S. dollar, although other currencies and commodities, such as gold, may also serve as collateral.
The new rules stipulate that stablecoin issuers, including Tether, are required to uphold substantial reserves in European banks and secure appropriate licenses for trading operations. This regulatory framework has compelled Tether to announce the discontinuation of its EURT stablecoin and has led to the delisting of USDT from several EU-based exchanges, according to JPMorgan’s findings.
In November, Tether disclosed plans to phase out its euro stablecoin, permitting users to redeem tokens for a period of up to 12 months.
Nevertheless, Tether continues to assert its position as a dominant player in the global stablecoin arena, despite facing regulatory hurdles. The bank notes that Tether remains extensively utilized in Asian markets, where regulations are comparatively less stringent.
Additionally, Tether’s investments in MiCA-compliant stablecoin issuers, such as Quantoz Payments, reflect its commitment to maintaining a foothold within the European market. Furthermore, in December, the firm reported that it had invested in European stablecoin issuer StablR.
For further insights, read more about Tether’s investments in MiCA-compliant stablecoin issuers here.
