Could Euro-pegged stablecoins replace USDT trading in Europe?

With the European Union (EU) set to tighten the rules applying to stablecoins or stablecoins from next June, analysts debate the effects the regulation’s application to the cryptoasset market will have on its ecosystem. Is.

As such, some expect MiCA to represent the exile of the most popular US dollar-pegged stablecoins – such as Tether (USDT) and USD Coin (USDC) – to Europe. Such a situation is expected given announcements made by exchanges such as OKEx and Binance that will halt trading of the pair in USDT.

But it is also believed that there will be other native currencies backed by the euro Greater opportunities to benefit from the EU market, There are those who think that new private initiatives for stablecoins in the euro are emerging the scenario may change,

These are the two positions that are in the public spotlight, creating uncertainty as to which of the two will prevail.

This all comes as the timeline for the implementation of the first phase of MiCA has waned, forcing stablecoin issuers to request authorization from regulators to provide the service to their users across the region’s 27-nation bloc. Does matter.

They hope MiCA will boost the euro stablecoin market

There are many people who are now pinning their hopes in stablecoins pegged to the euro. even if currently They are of little use in the Eurozone, Compared to stablecoins pegged to the dollar.

According to statement From Sven Wulfels, co-founder and CEO of Euro stablecoin Monerium, the new regulations will boost the launch of stablecoin projects backed by the EU currency.

“Many industry observers and analysts, including Cumberland’s recent report, are predicting an explosion of euro-pegged stablecoins in the coming years,” says Walfels.

This idea is supported by Jonas Frederiksen. Expert in EU policy and government affairs who Hope those european companies The percentage of transactions with stablecoins backed in euros will increaseAt the same rate because those backed by dollars are limited in circulation.

The growth of Euro stablecoins generated in 2023 after the approval of the MiCA law is taken as an example. In this sense, it is noted that although stablecoins linked to the euro are associated with lower trading volumes than those linked to the dollar, They represent the second largest sector of this market,

Some of the barriers that prevent them from competing on an equal footing with their counterparts in dollars have not been cast aside. These include the dominance of the US currency in international trade; And the fact is that the infrastructure of the cryptocurrency industry is largely concentrated in the United States.

However, these two facts are currently under question, This is due to the number of countries that are seeking de-dollarization, and companies in the ecosystem that are fleeing the US due to the regulatory onslaught by that country’s authorities.

As a result, analysts believe that It will be possible to increase the volume of transactions based on stable coins Backed in euros until replaced by dollars.

Market capitalization of stablecoins in euros from 2021 to 2023. Source: CCData.

Difficulties in matching USDT trading in Europe

But there are also analysts who find it difficult to replace the trading of currencies like USDT for stablecoins in Euros and fear that their momentum will continue. represents a negligible share of the market,

In this regard, it is said that due to low turnover of these currencies This is not realistic Expect them to reach the levels that those backed in the dollar have And convert them into transaction pairs.

This is how he reveals it a report of the Blockchain Association for Europe and the Digital Euro Association. The study conducted by both bodies ensures that it will be difficult to match the volume of operations with stablecoins in dollars in the near future, “and even less so within the 12-month period following the implementation of MiCA.”

Trading data appears with stablecoins in Euro, such as Euro Coin, Euro Tether, Stasis Euro, AGEEUR and Iron Bank Euro. Data from the analytical company CCData are cited, according to which the market share of stable coins of this type is is at 0.34%,

Since then, comparison of stablecoins in dollars with European market share has marked It is estimated at about 90%, More than half of those transactions are executed with Tether. In fact, even the Eurozone’s fiat currency far outperforms euro-pegged stablecoins.

Dollar-pegged stablecoins are used more frequently than their euro-pegged counterparts. Source: Research kaiko

the figure prompt Europe represents approximately 20% of the global cryptocurrency trading market, with the EUR being the third most used fiat currency on exchanges after the US dollar and the Korean Won. More than 99% transactions denominated in EU currency,

Situation It is different for the US dollarWhere approximately 90% of transactions are conducted in dollar-pegged stablecoins, primarily USDT and USDC.

As a result, there have been calls for measures to help mitigate the negative effects of regulations governing stablecoins, while preserving the tools the EU wishes to use to protect its monetary sovereignty.

In any case, the question of what will happen to stablecoins in the Eurozone remains up in the air. still we have to wait To evaluate the dynamics that will occur in the coming months after the implementation of MiCA in the region.

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