share_log

MiCA 能否推动欧元稳定币的复兴?

Can MiCA promote the resurgence of euro stablecoins?

Jinse Finance ·  Jan 6 05:33

Author: Macauley Peterson, Blockworks; Translated by: Bai Shui, Golden Finance

By December 30, 2024, MiCA will officially take effect, marking a turning point in the EU's attitude towards cryptos.

Despite the euro's important role in TradFi — accounting for 20-30% of global Forex reserves, SWIFT transactions, and trade flows — it represents less than 0.5% of the global stablecoin circulation.

Industry experts, Circle's EU policy head Patrick Hansen, expect this situation to change. He emphasized the significance of MiCA as "the most comprehensive regulatory framework for crypto assets in the world."

The EU has a unique opportunity to position itself as a global hub for crypto innovation, Hansen pointed out.

Reasons for the euro lagging in stablecoins

Hansen attributes the differences between on-chain euros and dollars to several factors:

1. Dollar-dominated liquidity: "The network effects surrounding dollar stablecoins are something euro stablecoins cannot catch up to. European users interacting with the global crypto market will opt for the cheapest and most liquid currency."

2. Historical negative interest rates: "For a long time, in the Eurozone, negative interest rates have called into question the business model of stablecoins."

3. Regulatory uncertainty: Before MiCA, Euro stablecoins lacked a dedicated regulatory framework, hindering the development of institutional participants.

MiCA addresses this third point by creating a clear framework for stablecoins. Hansen pointed out that the enactment of this legislation has sparked interest among institutions, with major banks and other participants across Europe exploring or launching Euro stablecoin products. He emphasized that Circle has launched the EURC under MiCA conditions, with its reserves managed entirely by France-regulated entities, noting, "We have seen the supply of EURC grow by 60-70%, thanks to launches on multiple blockchains."

MiCA requires that the reserves held by stablecoin issuers are proportional to the tokens in circulation in the EU. Hansen explained that Circle uses a "dynamic rebalancing" model to comply with the regulations.

"If we see the amount of USDC held in the EU increase, we will correspondingly increase the European reserves," he said.

Integrating on-chain Euro use cases.

Hansen believes there are two main drivers for the adoption of Euro stablecoins: regulated crypto Capital Markets and the practical applications of stablecoins.

"Only stablecoins authorized under EU rules will ultimately be used as trading pairs in the regulated crypto market," Hansen stated. "I would not be surprised by significant growth in this area."

This change has prompted crypto Exchanges to delist USDT from trading pairs for EU clients.

Hansen stated that business use cases like cross-border payments and tokenized financial instruments are gaining attention. "Suppliers in the Eurozone will inevitably demand risk management in euro-denominated Assets," he said.

However, while MiCA provides a solid foundation, Hansen warned that it is merely "version 1.0" and must continuously evolve to address emerging challenges. He also cautioned that the EU's travel rules (TFR) require additional user verification for certain trades, which could create friction—especially for self-custody wallets.

Ultimately, the success of MiCA will depend on whether it can strike a balance between promoting innovation and protecting consumers while creating a competitive local market.

As Hansen put it, "Only time (and the market) will tell if MiCA can achieve its goals."

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy. Read more
    Write a comment