According to Bloomberg, cryptocurrency analysis 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 of this year, OKX exchange has taken measures to change its support for USDT in Europe, cancelling the functionality for users in the European Economic Area (EEA) to trade other cryptocurrencies with USDT, but these users can still deposit or withdraw their USDT, conduct over-the-counter trades, and convert them to euros. Kraken exchange also stated last month that it is “actively reviewing” relevant plans, which may include discontinuing its support for Tether on exchanges in the European Union based on the upcoming EU guidance (referred to as the Markets in Crypto-Assets Regulation, or MiCA).
Kaiko analyst Anastasia Melachrinos said in a conference call 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 supervising the rules regarding stablecoins in the region, which require issuers of Asset-referenced tokens and e-money tokens to hold at least one license issued by a national financial institution of a member state before June 30. Issuers will also be required to meet higher standards in terms of corporate governance, conflicts of interest, and reserve management, such as keeping at least one-third of all funds in an independent credit institution.
Tether CEO Paolo Ardoino expressed concerns about some requirements of MiCA in April this year, stating that stablecoins should be able to hold 100% of reserves in treasury bills rather than keeping large reserves in uninsured cash deposits, exposing themselves to the risk of bank insolvency. Tether also stated that it will continue to engage in dialogue with regulatory authorities.
Data from Kaiko 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.