Circle Becomes Europes First Fully Compliant Stablecoin Provider Can USDC Overtake USDT on the Curve

Circle Becomes the First Stablecoin Issuer to Obtain EU MiCA Regulation Approval
On July 1, 2024, Jeremy Allaire, co-founder and CEO of Circle, announced that Circle became the first stablecoin issuer to obtain approval under the Markets in Crypto Assets Regulation (MiCA) in the European Union.
This means that the stablecoins USDC and EURC issued by Circle will be the first fully compliant digital tokens under the crypto assets market regulation. This means that businesses can legitimately list these tokens, and investors do not need to redeem or sell their stablecoin assets to comply with regulations.
Stablecoins are a critical element of the digital asset market infrastructure and are the most commonly used tokens for user transactions and remittances. Currently, Circle’s USDC is the second-largest stablecoin globally, with a market value of $32 billion, and the gap between USDC and USDT, the market leader with a market value of $110 billion, continues to widen.
Circle’s move to obtain regulatory status in Europe is a major opportunity for USDC to overtake the competition.
Considering France’s forward-thinking approach to digital asset regulation, and Circle’s partnership with the French Prudential Supervisory Authority (ACPR), Circle ultimately chose France as its European headquarters.
Allaire stated, “The concept of fiat digital currency was almost unheard of in the early days of the crypto industry. Now, seeing major legal systems globally incorporate stablecoins into the financial system is truly remarkable.”
Richard Teng, CEO of the world’s largest exchange, Binance, also congratulated Circle and stated that the stablecoin USDC becoming an Electronic Money Token (EMT) compliant with MiCA standards represents a positive step forward for the crypto ecosystem in the European Economic Area. He expects to see more EMTs that comply with MiCA standards in the near future.
Impact of MiCA Regulation on the Stablecoin Market
The Markets in Crypto Assets (MiCA) reform in the European Union is historically significant as it is the first comprehensive regulatory framework for digital assets.
According to the plan, the MiCA regulation will officially take effect in December 2024.
The implementation of MiCA regulation presents several challenges for the EU’s cryptocurrency market. MiCA requires stablecoins pegged to fiat currency to have sufficient liquidity reserves, obtain an “electronic money license,” and mandates that exchanges delist all non-compliant Euro stablecoins, including Tether’s EURT, by June 30th.
Most European exchanges have begun to take action to comply with these regulations. Bitstamp was the first to delist Tether’s EURT stablecoin at the end of June, and cryptocurrency exchanges Kraken, Uphold, and OKX have also started delisting Tether’s USD and Euro stablecoins. Binance has adopted a more moderate approach, implementing a “sell-only” strategy for certain stablecoin products in the European market.
Jón Egilsson, former Chairman of the Supervisory Committee of the Central Bank of Iceland, stated in an interview with the media outlet “Cointelegraph” that non-compliant stablecoin issuers may completely exit the EU market, and as demand in the European market grows, there may be a shift to Euro-backed stablecoins.
The implementation of the EU MiCA regulation and Circle’s groundbreaking move mark a significant milestone for the digital asset market. This not only demonstrates the increasing importance of digital assets in the global financial system but also reflects the efforts of regulatory authorities to protect investors and maintain market stability.
With changes in regulatory environments worldwide, the crypto market will continue to undergo rapid transformations and adjustments, and market participants will need to continually adapt to these changes to remain competitive in this dynamic environment.