The EU’s MiCA regulations, effective as of December 30, are expected to provide significant support for euro-denominated stablecoins, according to a research report by JPMorgan (JPM) released on Wednesday.
“Under MiCA, only compliant stablecoins can be utilized as trading pairs within regulated markets, prompting EU-based exchanges to adjust their listings,” wrote analysts led by Nikolaos Panigirtzoglou.
This shift has bolstered compliant stablecoins like Circle’s EURC, while presenting hurdles for non-compliant offerings such as Tether’s EURT, the report noted.
Stablecoins, which are cryptocurrencies designed to maintain a stable value, are typically pegged to the U.S. dollar but can also be tied to other currencies or commodities like gold.
MiCA imposes stringent requirements on stablecoin issuers, including the need to maintain substantial reserves within European banks and secure proper trading licenses. These rules have forced Tether to discontinue its EURT stablecoin and led to the removal of USDT from several EU-based exchanges, JPMorgan said.
In November, Tether announced plans to phase out its EURT stablecoin, allowing users to redeem tokens over the next 12 months. Despite these regulatory challenges, Tether remains a dominant player in the global stablecoin market, particularly in less-regulated regions like Asia, the bank added.
Tether has also shown a commitment to maintaining its presence in the EU market by investing in MiCA-compliant stablecoin issuers. In December, the company announced investments in European stablecoin providers, including Quantoz Payments and StablR, demonstrating its intent to adapt to the new regulatory landscape.
