According to Bloomberg, cryptocurrency analytics firm Kaiko Research believes that the US dollar stablecoin USDC issued by Circle may become the biggest beneficiary under the new European digital asset management regulations set to take effect in July, and the stablecoin is expected to capture a larger market share from its competitor Tether’s USDT.
In March this year, the OKX exchange took measures to change its support for USDT in Europe, canceling the function for users in the European Economic Area (EEA) to trade USDT for other cryptocurrencies, but these users can still deposit or withdraw their USDT, conduct over-the-counter trades, and convert them into Euros. Kraken exchange also stated last month that it is “actively reviewing” related plans, which may include discontinuing its support for Tether on its exchanges in the EU based on the upcoming EU guidance (the Markets in Crypto-Assets Regulation, MiCA).
Kaiko analyst Anastasia Melachrinos said in a phone conference on Tuesday (18th) that “Kraken and OKX will definitely delist all EURO/USDT trading pairs” to comply with the new regulations.
European regulators have been refining the technical guidelines for MiCA, which is expected to be fully implemented in early 2025. The European Banking Authority (EBA) is responsible for overseeing the rules in the region regarding stablecoins, which require issuers of Asset-referenced tokens and e-money tokens to hold a license issued by a national financial institution of a member state by June 30th. Issuers will also be required to meet higher standards in terms of corporate governance, conflicts of interest, and reserve management, such as depositing at least one-third of all funds in an independent credit institution.
Tether CEO Paolo Ardoino expressed concerns about certain requirements of MiCA in April this year, stating that stablecoins should be able to keep 100% of reserves in treasury bills rather than holding large reserves in uninsured cash deposits, exposing themselves to the risk of bank failures. Tether also stated that it will continue to engage with regulatory authorities.
Kaiko’s data shows that the daily average trading volume of USDT to Euro trading pairs on Kraken exchange is approximately $4.3 billion, far exceeding the trading volume of all other cryptocurrency to Euro trading pairs, while the daily average trading volume of USDC to Euro trading pairs on Kraken is approximately $400 million.
