Author: Weilin, PANews
The regulatory rules for stablecoin issuers under the EU's Crypto Asset Markets (MiCA) Regulation came into effect on June 30 and are planned to be fully implemented by December 30 this year. As the EU's first comprehensive regulatory framework for the crypto industry, the implementation of MiCA not only affects the euro stablecoin market, but also provides a reference for the regulatory model of global stablecoins.
However, Tether, the issuer of USDT, is facing urgent challenges in this context. As it has not yet obtained a stablecoin issuance license under the MiCA framework, Tether is actively seeking ways to cope by investing in emerging projects. On November 18, Tether announced an investment in the Dutch company Quantoz, which will launch two MiCA-compliant stablecoins.
Circle takes the lead in compliance, with 21 issuers vying for the market
On November 18, the Dutch blockchain company Quantoz announced the launch of two stablecoins, USDQ and EURQ, pegged to the US dollar and euro respectively, which meet the standards of the EU's MiCA regulation. These stablecoins will be listed on the crypto exchanges Bitfinex and Kraken on November 21. It is reported that Tether, Kraken and Fabric Ventures have invested an undisclosed amount of funds in Quantoz.
Quantoz's compliance layout indicates that Tether is trying to expand its presence in the euro stablecoin market by supporting projects that comply with the MiCA regulation. This investment may be seen as a key step for Tether to find a "proxy" in the euro stablecoin field.
As of November 20, according to Coingecko data, the top 5 participants in the euro stablecoin market by market capitalization are:
Stasis (EURS): $131 million market cap
Circle (EURC): $89.49 million market cap
SG-Forge, a subsidiary of Societe Generale (EURCV): $41.91 million market cap
Tether (EURT): $26.99 million market cap
Angle (EURA): $21.18 million market cap
According to Coingecko data, as of November 20, with a total market capitalization of $326 million for euro stablecoins, Circle's EURC and SG-Forge's EURCV together account for 40% of the euro stablecoin market. This market concentration poses a challenge for new players, but also provides an entry point for Quantoz, which has compliance advantages.
MiCA imposes strict requirements on stablecoin issuers, including the following key provisions: First, a licensing requirement - issuers must obtain an Electronic Money Institution (EMI) license or be registered as a credit institution in at least one EU member state. Second, a reserve asset requirement - they must hold at least 60% of their reserve assets in European banks. In addition, there are transaction volume limits - if the daily transaction volume of a stablecoin exceeds 1 million transactions or 200 million euros, the issuer will be prohibited from issuing more stablecoins.
Major issuers such as Circle and SG-Forge have already met these requirements by registering EMI licenses in France. For example, SG-Forge's EURCV, which is based on Ethereum, recently announced plans to launch on Ripple's XRP Ledger (XRPL) to expand its market coverage.
With Tether's investment in Quantoz, Tether may have the opportunity to further stabilize its share in the euro stablecoin market through a "proxy". Finding new companies with EMI licenses has also become a latest emerging trend.
On November 19, blockchain and token infrastructure platform Paxos announced that it has agreed to acquire Membrane Finance (Membrane), a licensed Electronic Money Institution (EMI) headquartered in Finland. This acquisition is subject to regulatory approval. Upon completion, Paxos will become a fully licensed EMI in Finland and the EU.
Tether CEO expresses concerns about MiCA, more companies seek competitive "proxies"
For Tether, the new requirements brought by MiCA pose an urgent challenge. According to previous public reports, Coinbase Global Inc. will delist all unauthorized stablecoins from its European crypto exchanges by the end of the year, which could impact tokens like Tether's USDT.
Currently, major crypto exchanges, including Uphold, Bitstamp, Binance, Kraken and OKX, are taking measures to comply with the EU's new crypto regulations. OKX has already delisted all USDT trading pairs in Europe. Other major exchanges, such as Binance and Kraken, have not yet delisted USDT, but are considering restricting its functionality.
Tether's CEO Paulo Ardoino previously stated that the regulatory framework soon to be introduced in Europe will bring bank-related issues for stablecoin issuers, which could threaten the broader stability of the crypto market. This is because under the MiCA regulations, stablecoin issuers need to hold at least 60% of their reserve assets in European banks. Ardoino said that considering banks can lend up to 90% of their reserves, this could introduce "systemic risk" for stablecoin issuers.
Some major stablecoin issuers have faced bank-related issues in the past. For example, in March 2023, Circle's USD Coin (USDC) experienced an event where it became depegged from the US dollar. At the time, Circle was unable to withdraw $3.3 billion in reserves held at Silicon Valley Bank, which had previously managed $40 billion in reserves for the stablecoin issuer before the bank ceased operations.
In Ardoino's view, the bank reserve requirements imposed by MiCA mean that an increasingly large portion of stablecoin reserves will be held on bank balance sheets. If a bank goes bankrupt, this could have a significant impact. Ardoino pointed out: "If you deposit 100,000 euros in a bank account in Europe, the maximum federal deposit guarantee is 100,000 euros. If the bank goes bankrupt, you can get back 100,000 euros, and the rest of the funds will go into the bankruptcy process, because the money you deposited has been recorded on the bank's balance sheet."
However, Ardoino added that under the new MiCA rules, stablecoin issuers can protect themselves from potential bankruptcy risks by holding securities: "The protective measure is to buy securities like Treasury bills or government bonds. If the bank goes bankrupt and you own the securities, these are nominal assets, so they will be returned to you, and you only need to transfer them to another bank."
The crypto industry calls for an extension of the MiCA transition period
Recently, the crypto industry has written to the European Securities and Markets Authority (ESMA), pointing out that ESMA has been slow to finalize the regulatory details, making it difficult for companies to complete the certification process in a short time, potentially forcing them to suspend services.
In the implementation process, MiCA currently has an 18-month regulatory transition period, but the duration chosen by each member state varies. For example, France and Greece have 18 months, while Lithuania only has 5 months, which may lead to interruptions in cross-border services, affecting users' trading capabilities and causing financial losses.
In addition, crypto industry organizations have stated that the uneven implementation of MiCA rules threatens the "passport mechanism". The core advantage of MiCA is the "passport mechanism", which allows companies to provide services across the entire EU after being certified in one member state. However, the inconsistency in rule enforcement may undermine this advantage.
Crypto industry representatives have called on ESMA to extend the authorization transition period to the end of June 2025, or require member states to coordinate a unified timetable, in order to alleviate the compliance pressure on companies and avoid service interruptions.
According to previous estimates, the implementation of MiCA is expected to drive significant growth in the euro-backed stablecoin sector. By 2025, the market capitalization of euro stablecoins is expected to reach at least 15 billion euros, growing to 70 billion euros by 2026, and potentially exceeding 2 trillion euros by 2028.
In summary, with the full implementation of MiCA, traditional financial institutions like Societe Generale, blockchain companies like Circle and Stasis, as well as emerging issuers like Quantoz, are all actively positioning themselves to compete for this market. In the future, compliance and technological innovation will be the key factors determining market success. For stablecoin issuers, MiCA can be seen as a turning point with both risks and opportunities.
