French and Irish fintech companies have partnered to introduce a euro-backed stablecoin as the EU’s Markets in Crypto-Assets Regulation (MiCA) framework is progressively implementing itself.
The market has been cleansed of participants who cannot comply with regulatory requirements, and a favorable environment has been established for stablecoins pegged to local currency due to these explicit guidelines.
One example is a new partnership between the France-based fintech company Next Generation and the Ireland-based electronic money institution (EMI) Decta. The two organizations have announced their intention to reintroduce a euro-pegged stablecoin, EURT, on the Stellar blockchain.
The initiative, which occurred on August 5, is entirely MiCA compliant, per the parties involved.
Rebirth of MiCA
Tempo France, a prominent fintech provider, is a significant partner of Next Generation. In 2017, this corporation collaborated with the Stellar Foundation to introduce EURT, one of the first euro-pegged stablecoins.
Nevertheless, the initiative was suspended due to the need for a regulatory framework. Nonetheless, stablecoins are classified as electronic money tokens (EMTs) under MiCA, which aligns them with traditional e-money and requires that issuers either hold an EMI license or identify as a credit institution.
This regulatory clarity has revolutionized the euro-backed stablecoin market, rendering it more predictable and appealing to investors.
One industry analyst informed Cointelegraph that they foresaw a potential transition to euro-backed stablecoins as demand in European markets increased at the time of MiCA’s implementation.
Are stablecoins experiencing an increase in popularity?
The Central Bank of Ireland has already granted Decta authorization as an EMI, which it will leverage to obtain a license to issue EURT, guaranteeing complete regulatory compliance.
According to Suren Hayriyan, the president of Next Generation, the current demand for euro-backed stablecoins is approximately $30 billion, with a supply of less than $300 million. EURT is expected to experience substantial development in the future as the partnership endeavors to resolve this disparity.
Hayriyan referred to Circle’s EURC stablecoin and Tether’s EURT as their “main competitors” in the euro-backed stablecoin market.
“Nevertheless, our technological infrastructure and robust regulatory compliance establish us as a strong player in this rapidly changing market,” he stated. Next Generation and Decta are in the process of preparing for the launch of EURT by October.
Circle became the first global stablecoin issuer to comply with MiCA and selected France as its European headquarters, citing the country’s “forward-thinking” posture on digital asset regulation.
The euro-backed stablecoin sector will likely experience substantial development due to MiCA’s activation.
According to market predictions, the market capitalization will reach a minimum of 15 euros by 2025, rise to 70 billion euros by 2026, and potentially surpass 2 trillion euros by 2028.
In July, the stablecoin market capitalization increased by 2.1% to $164 billion as of July 31. This was the highest level since April 2022, and stablecoins like USD Coin experienced a 48% increase in trading volume.
