The recent proposed Markets in Crypto Assets law has made Circle, the USDC issuer, bullish on growth in the European Union. In late September, the EU lawmakers finalized the legal text of the bill, and if effected, it will create stricter rules for crypto firms.
Speaking at the Blockchain for EU Summit in Brussels on Tuesday, Circle’s EU policy head, Patrick Hansen, acknowledges that there is now a regulated path for stablecoins in Europe.
He adds that the Euro is the largest world currency. Therefore, as we move from speculation to utility, the incentives grow to use Euro stablecoins.
Circle Launches Euro Coin as the Firm Seeks to Expand Its Offerings to Euro Users
Hansen’s statement does not come as a surprise since, in June, Circle launched an ERC-20 token on Ethereum dubbed Euro Coin(EUROC). At that time, Circle’s CEO Jeremy Allaire said that the company would issue Euro Coin under a regulated framework for money transmission similar to that which regulates USDC, with reserves in Euro.
At the time of writing, Euro Coin’s market cap stands at about $75 million and has remained steady since August. Most times, Stablecoins market caps mirror circulation, as they maintain a 1:1 peg with their backing fiat currency. New tokens get created when users buy them or destroyed when they are redeemed.
Regulatory Clarity in Europe Could Set Standards for Crypto Industry Globally
The Market in Crypto Assets(MiCA) bill is headed for one final vote in the European Parliament very soon before it becomes a law and takes effect in 2024. MiCA’s main aims include protecting consumers, harmonizing the market, and setting regulatory standards.
Hansen believes clear regulations are healthy for the crypto industry. According to the Chainalysis report, Europe will play a significant role in this crypto space as it is the largest crypto economy globally.
The report reveals that European users received nearly $1.2 trillion worth of crypto assets from July 2021 to June 2022, followed closely by the United States, where users received $1.1 trillion within the same period.
Chainalysis cites the MiCA regulatory framework and the Financial Action Task Force’s clarification on the “Travel Rule,” meant to obtain the receivers’ and senders’ identities conducting large transactions, as reasons that the industry has found enhanced regulatory clarity in Europe.
One area that requires European Union to create a regulatory framework for crypto is decentralized finance(DeFi). That said, the text of the MiCA framework gives the commission less than two years to develop specific regulations for DeFi.