Crypto exchange Uphold recently announced its decision to discontinue support for several stablecoins, including Tether (USDT), Dai (DAI), Frax Protocol (FRAX), Gemini Dollar (GUSD), Pax Dollar (USDP), and TrueUSD (TUSD) effective July 1. The move is in response to the forthcoming Markets in Crypto Assets (MiCA) regulations scheduled to come into force in the European Economic Area (EEA) on June 30. As a precautionary step, these stablecoins will be automatically converted to USDC by June 28.
Antony Welfare, a key consultant for CBDC Europe and Global Partnerships at Ripple, recently shared this news and highlighted the impact of MiCA on the stablecoin market in the region. However, the standards set by MiCA focus on boosting transparency and stability, particularly favoring stablecoins backed by the euro. Analysis from Kaiko Research suggests that these regulations could catalyze growth for euro-backed stablecoins, potentially reshaping the dynamics of the European market.
Binance, a prominent player in the cryptocurrency exchange market, has recently revealed intentions to impose restrictions on stablecoins that do not comply with MiCA standards. Similarly, Kraken is currently reassessing its selection of stablecoins, potentially resulting in the removal of non-compliant options for its European clientele. These strategic adjustments mirror a broader industry trend, with exchanges adapting their practices to align with impending regulatory mandates.
Euro-backed Stablecoins Poised for Growth
In the realm of crypto trading, Europe has historically lagged behind the US and Asia-Pacific regions. However, a significant upsurge in euro-backed stablecoin trading volumes has emerged since the year’s commencement.
The collective weekly trading volume of Tether’s EURT, Stasis EURS, Société Générale’s EURCV, Anchored’s AEUR, and Circle’s EURCV has consistently exceeded $40 million since March, marking a peak in growth. Despite a turbulent launch on Binance in December, AEUR now commands over half of the euro stablecoin market’s total volume.
Despite the surging interest in euro-based stablecoins, the dominance of USD-backed stablecoins remains unchallenged in the digital currency arena. By 2024, these stablecoins commanded a staggering 90% of all crypto transactions, boasting a weekly average trading volume of $270 billion, overshadowing their European equivalents. Nonetheless, the market presence of euro-based stablecoins has surged from a mere blip in 2020 to a record high of 1.1% of total transactions.
USDT trading pairs against the EUR stand out as top performers on leading exchanges like Binance and Kraken, surpassing trading volumes of Bitcoin in EUR. This highlights the pivotal role these exchanges serve as fiat off-ramps for traders based in Europe.
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