Circle USDC Stablecoin May Be The Biggest Beneficiary Under New European Guidelines

Key Points:

• Circle USDC stablecoin is expected to gain market share from Tether’s USDT due to new EU digital asset regulations (MiCA).
• By 2025, MiCA will enforce strict licensing and governance standards for stablecoin issuers in Europe.
• The SEC’s scrutiny over USDC’s classification as security complicates Circle’s plans for a multi-billion dollar IPO.

Circle USDC stablecoin stands to gain significantly from upcoming European guidelines on digital assets, set to be enforced in July, according to crypto analytics firm Kaiko Research, reported by Bloomberg.

EU Regulations Boost Prospects for Circle USDC Stablecoin

Kaiko analyst Anastasia Melachrinos highlighted that USDC could capture market share from its larger competitor, Tether’s USDT, particularly as traders use stablecoins to move digital assets between exchanges or to store wealth amid volatile token prices.

The regulatory shift is already influencing major crypto exchanges. OKX has curtailed trading support for USDT in the European Union, although users can still deposit, withdraw, conduct over-the-counter transactions, and exchange USDT for euros. Similarly, Kraken is reviewing plans that might include delisting USDT under the new EU regulations, known as MiCA (Markets in Crypto-Assets).

“For sure Kraken and OKX are going to delist all the EURO/USDT pairs,” Melachrinos noted during a conference call.

MiCA will be fully implemented by early 2025, with the European Banking Authority overseeing the rules on stablecoins. Issuers of asset-referenced and e-money tokens will need to hold a license from a national financial authority by June 30 and meet stringent requirements on corporate governance, conflicts of interest, and reserve management, including maintaining a third of all funds at an independent credit institution.

SEC Scrutiny Impacts Circle’s IPO Plans

Meanwhile, Circle USDC stablecoin faces regulatory scrutiny from the U.S. Securities and Exchange Commission (SEC) as it pursues a multi-billion dollar initial public offering (IPO).

The SEC has expressed concerns over classifying USDC as a security, which previously stalled Circle’s attempt to go public via a special-purpose acquisition company (SPAC) in 2021. Circle has addressed most of the SEC’s issues but continues to navigate the regulatory landscape as it seeks approval for its IPO.