Circle becomes the first stablecoin issuer to receive approval under the EU’s MiCA regulation.
On July 1, 2024, Jeremy Allaire, the co-founder and CEO of Circle, announced that Circle had become the first stablecoin issuer in the EU to receive approval under the Markets in Crypto-Assets Regulation (MiCA). This milestone means that Circle’s stablecoins, USDC and EURC, will be the first fully compliant digital tokens under the crypto-assets market regulation. Businesses can now legitimately list these tokens, and investors do not need to redeem or sell their stablecoin assets to comply with regulations.
Stablecoins are crucial elements of the digital asset market infrastructure, commonly used for user transactions and remittances. Currently, Circle’s USDC is the world’s second-largest stablecoin, with a market capitalization of $32 billion, closing the gap with Tether’s USDT, the market leader with a market cap of $110 billion.
By securing compliance status in Europe ahead of others, Circle sees this achievement as an opportunity for USDC to make significant progress. Considering France’s forward-thinking approach to digital asset regulation and Circle’s partnership with the French Prudential Supervision and Resolution Authority (ACPR), Circle has chosen France as its European headquarters.
Allaire remarked, “The concept of fiat digital currencies was nearly absent in the early days of the crypto sphere. Seeing major jurisdictions worldwide integrating stablecoins into the financial system is truly remarkable.”
Richard Teng, CEO of Binance, the world’s largest exchange, congratulated Circle and highlighted USDC’s compliance with MiCA standards as an Electronic Money Token (EMT), signifying a progressive step for the European Economic Area’s crypto ecosystem. He anticipates more EMTs compliant with MiCA standards to emerge in the near future.
Impact of the MiCA Regulation and Changes in the Stablecoin Market
The enforcement of the European Union’s Markets in Crypto-Assets Regulation (MiCA) reform holds historical significance as the first comprehensive regulatory framework for digital assets.
Scheduled to take effect in December 2024, MiCA poses challenges for the EU’s cryptocurrency market. It mandates that stablecoins tethered to fiat currencies must maintain sufficient liquidity reserves, obtain an “Electronic Money License,” and requires exchanges to delist all non-compliant Euro stablecoins by June 30, including Tether’s EURT.
Most European exchanges have begun taking action for compliance. Bitstamp led by delisting Tether’s EURT stablecoin at the end of June, while cryptocurrency exchanges Kraken, Uphold, and OKX started delisting Tether’s USD and Euro stablecoins. Binance opted for a milder 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, mentioned in an interview with Cointelegraph that non-compliant stablecoin issuers may potentially exit the EU market entirely, paving the way for Euro-backed stablecoins to meet the growing demand in the European market.
The enforcement of the EU’s MiCA regulation and Circle’s pioneering move mark a significant milestone for the digital asset market. It showcases the increasing importance of digital assets in the global financial system and the efforts of regulatory authorities to safeguard investors and maintain market stability.
As regulatory landscapes evolve globally, the cryptocurrency market will continue to undergo rapid transformations and adjustments. Market participants will need to adapt continually to these changes to stay competitive in this dynamic environment.
