According to Bloomberg, the cryptocurrency analysis company 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, the OKX exchange took measures to change its support for USDT in Europe, canceling the functionality for users in the European Economic Area (EEA) to trade other cryptocurrencies using USDT. However, these users can still deposit or withdraw their USDT, engage in over-the-counter trading, and convert it to euros. Kraken exchange also stated last month that it is “actively reviewing” plans, which may include discontinuing its support for Tether on exchanges in the EU based on the upcoming EU guidance (known as the Markets in Crypto-Assets Regulation, or MiCA).
Kaiko analyst Anastasia Melachrinos stated 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 regulatory authorities have been refining the technical guidance for MiCA, with the regulation 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 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 corporate governance, conflicts of interest, and reserve management, such as holding 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 instead of holding large reserves in uninsured cash deposits, exposing themselves to the risk of bank failures. Tether also stated that they will continue to engage with regulatory authorities.
Data from Kaiko shows that the average daily 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 average daily trading volume of USDC to euro trading pairs on Kraken is around $400 million.
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