EURT Stablecoin Makes a Comeback with Full MiCA Compliance

EURT Stablecoin Makes a Comeback with Full MiCA Compliance

The European Union’s Markets in Crypto-Assets Regulation (MiCA) framework is gradually rolling out, with its initial phase coming into effect on July 1. This first set of regulations primarily targets stablecoins and their issuers, providing much-needed clarity and structure to a previously uncertain market. As a result, the market has seen a purge of entities unable to meet the new regulatory standards, paving the way for stablecoins tied to local currencies to thrive.

A notable development in this evolving landscape is the collaboration between the France-based fintech company, Next Generation, and the Ireland-based electronic money institution (EMI), DECTA Ltd. The two entities have unveiled plans to reintroduce a euro-pegged stablecoin, EURT, on the Stellar blockchain. This initiative, launched on August 5, is fully compliant with MiCA regulations, according to the companies involved.

MiCA’s Impact and the Return of EURT

Next Generation has close ties with the prominent fintech player Tempo France, which initially launched EURT in 2017 in partnership with the Stellar Foundation. Despite being one of the first euro-pegged stablecoins, the project was put on hold due to the lack of a regulatory framework at the time. Now, under MiCA, stablecoins are classified as electronic money tokens (EMTs), aligning them with traditional e-money and requiring issuers to hold an EMI license or be a recognized credit institution.

This newfound regulatory clarity has revitalized the euro-backed stablecoin market, making it more predictable and appealing to investors. At the time MiCA was enacted, an industry analyst noted to Cointelegraph the potential shift toward euro-backed stablecoins as demand increases across European markets.

The Growth Potential of Stablecoins

DECTA, already authorized by the Central Bank of Ireland as an EMI, plans to use its license to issue EURT, ensuring the stablecoin’s full compliance with MiCA. Suren Hayriyan, president of Next Generation, highlighted the current gap in the market, noting that while the demand for euro-backed stablecoins is estimated at $30 billion, the supply is currently less than $300 million. The partnership between Next Generation and DECTA aims to address this gap, with significant growth anticipated for EURT.

Currently, major players in the euro-backed stablecoin market include Circle with its EURC and Tether’s EURT. Hayriyan acknowledged these as their “main competitors,” but emphasized that their strong regulatory compliance and advanced technological infrastructure position them well in this rapidly evolving market. Next Generation and DECTA are targeting a launch of EURT by October 2024.

Circle, the first global stablecoin issuer to comply with MiCA, selected France as its European headquarters, citing the country’s “forward-looking” approach to digital asset regulation. The activation of MiCA is expected to drive significant growth in the euro-backed stablecoin sector, with market forecasts predicting a minimum market capitalization of €15 billion by 2025, rising to €70 billion by 2026, and potentially exceeding €2 trillion by 2028.

As of July 31, the market capitalization of stablecoins saw a 2.1% increase, reaching $164 billion—the highest levels since April 2022. Stablecoins like USD Coin also experienced a surge in trading volume, up 48%.