JPMorgan analyst Nikolaos Panigirtzoglou recently pointed out that with the implementation of EU regulations (MiCA), it will promote the development of the euro and its stablecoins, attract financial institutions to participate, and is expected to reshape the global crypto market.
(European lawmakers reject the digital euro! Calling to align with El Salvador and the US to establish Bitcoin reserves)
With the MiCA regulations coming into effect, the adoption rate of euro stablecoins may increase.
Facing the EU MiCA legislation that officially took effect at the end of December last year, JPMorgan analysts believe that the regulation may drive the adoption rate of euro-pegged stablecoins in the market:
Coingecko: Market capitalization ranking of euro stablecoins
Currently, euro stablecoins only account for 0.12% of the stablecoin market share. However, MiCA can encourage European banks and financial institutions to adopt euro stablecoins to meet customer needs and for blockchain-based financial settlements, further expanding its market share.
Citing two bank cases for reference
In this context, JPMorgan analysts specifically mentioned the EURCV stablecoin launched by Société Générale and the stablecoin planned for issuance in collaboration with Visa by BBVA, providing representative cases for the market:
These projects symbolize the proactive response of financial institutions to comply with MiCA regulations and provide references for the development of euro stablecoins.
(BBVA and Visa will jointly promote the euro stablecoin next year, to be used for settlement in the tokenized asset market)
The impact of the new regulations on market participants: compliance participation or market exit.
Tether: Shifting to indirect investments, not directly participating in the market.
According to MiCA regulations, only stablecoins that comply with the regulation can circulate in regulated markets. In other words, existing stablecoin issuers, including Tether, face compliance challenges.
In response, Tether has stopped issuing its EURT stablecoin, and its flagship product USDT has also been delisted from most exchanges in the EU; it is shifting towards strategic investments in local compliant companies like 'Dutch blockchain company Quantoz Payments' and 'European stablecoin issuer StablR' in hopes of continuing to participate and maintain its indirect influence in the European market.
(USDT market value shrinks due to the effectiveness of MiCA, Tether chooses to invest rather than sacrifice yields to indirectly participate in the EU market)
Circle: Entering the EU Market
In contrast to Tether, Circle, the world's second-largest stablecoin issuer, became the first company to obtain an EMI license in the EU back in July, allowing Circle to legally issue its stablecoins, including USDC and EURC, in the EU market.
(Circle becomes the first MiCA-compliant stablecoin issuer, will Tether's leading position be shaken?)
Coinbase: Doing everything possible to comply
For the largest exchange in the United States, Coinbase, due to the stricter regulatory requirements set by the legislation for stablecoin yields, it announced in December that it would stop providing services including USDC yield and other non-compliant stablecoins to users in the European Economic Area (EEA).
(Coinbase exits the Turkish crypto market, suspending USDC yield services for European users due to MiCA impact)
The US may follow with new laws under Trump’s administration.
JPMorgan analysts believe that although MiCA brings higher compliance costs, its long-term impact on the cryptocurrency market could be positive; as the EU takes the lead in regulating the crypto market, they also predict that the US will likely formulate its own cryptocurrency regulations under the upcoming Trump administration.
(News: Crypto-friendly congresswoman Cynthia Lummis will lead the proposed digital asset subcommittee)
The implementation of MiCA regulations paves the way for the marketization of euro stablecoins and encourages mainstream institutions to participate. Although it raises the compliance threshold in the market, it is expected to change the competitive landscape of global stablecoins in the long run. As countries follow suit in drafting relevant regulations, the global crypto market is moving towards a more regulated development stage.
This article from JPMorgan: EU MiCA regulations promote the development of euro stablecoins, and the US may follow with new laws under Trump’s administration. First appeared in Chain News ABMedia.
