With the entry into force of MiCA, European authorities hope that stablecoins pegged to the euro will replace tether trading
With the imminent entry into force of the Regulation for the Cryptoasset Market (MiCA), a series of rules are being implemented for the stablecoin ecosystem, which seek to promote currencies anchored to the euro, above those backed by dollars.
The repercussions of these measures are already evident with the very probable departure of tether (USDT) from the European Union, starting next July. The popular dollar-pegged stablecoin has, until now, dominated the region's market.
Remaining in its place is USDC, another stablecoin anchored to the dollar that will continue to operate in the European market after having registered with the EU authorities last year. It stands out for being the main competition of USDT.
It is accompanied by a group of euro stablecoins that may also seek to replace the place that USDT has occupied in the region, dominating more than 90% of the market.
Currently, the CoinGecko platform registers a total of 16 stablecoins referenced to the European currency, a figure that reflects a growth of more than 200% compared to 2020. However, its percentage in the total market capitalization is very low (close to 0 .33%).
The most capitalized are Stasis Euro (EURS), Eurc (EURC), Euro Tether (EURT) and Eura (EURA). These four digital currencies concentrate 93% of the total value of stablecoins in euros, calculated at a total of USD 246 million
USDC
USDC is the world's second largest stablecoin pegged to the dollar, issued by the American company Circle. It now stands as one of the leading candidates to take the place of USDT, once the MiCA rules come into effect in the coming weeks.
The company issuing the Circle stablecoin – unlike Tether – managed to obtain an EMI license granted by France in December 2023. This means that Circle's stablecoins, USDC and EURC, are authorized to be traded on exchanges operating in Europe.
It is therefore expected that in the coming months USDC will experience a significant increase in its market capitalization, currently estimated at USD 32,622 million.
Stasis Euro (EUR)
It was launched in 2018 with the aim of "combining the potential and opportunities of the European market with the cryptocurrency industry." Its issuing company, Stasis, notes that EURS fiat reserves are kept secured in accounts chosen by members of the Stasis Foundation.
At the time of writing, EURS is the most capitalized euro stablecoin in the European market, with a total value of USD 134.9 million.
EURC
Euro Coin is a stablecoin issued by Circle under the same reserve model as USDC. It is backed by bank accounts denominated in euros.
It is mainly offered to institutions to offer connection of payments and financial services in euros. Coins are accessed through Avalanche, Ethereum, Solana and Stellar. Since 2023 it has been replacing USDT's position in the market. With a capitalization of USD 39.4 million, EURC has positioned itself as the second most traded euro-pegged stablecoin.
Being issued by Cicle (the same company that issues USDC) many expect that tether's departure from Europe will also boost its position in the market.
Euro Tether (EURT)
Created in 2015 by Tether Limited, the same company that develops Tether (USDT), it became the first stablecoin linked to the euro. It is compatible with Bitcoin and Ethereum networks. In addition to facilitating trade against other crypto assets, it allows you to send or receive cross-border money, remittances and digital payments.
Like USDT, its value is backed by reserves held by Tether Limited in the United States. EURT ranks third in market capitalization with USD 34.1 million. A position it reaches after losing the dominance it had in the euro stablecoin market until a year ago.
EUR
Previously known as agEUR (AGEUR), since last March this stablecoin began to be called EURA. EURA tokens can mainly be traded on decentralized exchanges, which is why their use stands out in the DeFI market. Its current capitalization is USD 23.5 million.
Are there possibilities for euro stablecoins?
The question remains open, although the trend indicates that, although it is very likely that many will manage to increase their participation, euro stablecoins will have to overcome obstacles to cover more space in the market.
Currently, dollar stablecoins have achieved a significant market share in Europe, exceeding 90%. More than half of transactions are made with USDT. Even the physical euro has a more significant presence than euro-pegged stablecoins
Among the difficulties that stablecoins anchored to the euro face, and that make it difficult for them to compete at the same level as their dollar counterparts, is the dominance of the US currency in international trade.
According to analysts, the perception of stability and security that the dollar still has, and the dominant role that the United States plays in the cryptocurrency industry, also influence.
Even so, European authorities, through regulation, are betting on a boom in euro stablecoins in order to maintain the financial stability of the fiat currency in the region. We still have to wait for the reconfiguration of the European market, once the stablecoin ecosystem follows the MiCA rules in the coming months.
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