Only 3 of the top 50 stablecoins comply with MiCA

The European stablecoin market has two faces. On one hand, the number of regulated providers within the EU is growing steadily. On the other hand, only a handful of the 50 largest stablecoins in the world comply with MiCA rules. That is noted by Patrick Hansen, Senior Director of EU Strategy and Policy at Circle, in a comprehensive analysis of the current state of affairs.

35 Regulated Tokens, But a Big Gap in the Market

According to Hansen, there are now about 35 regulated e-money tokens active in the EU, issued by 21 different parties spread across 12 countries. Big names like Circle, Société Générale and Paxos participate, as do smaller regional providers. This shows that MiCA’s framework for local issuers is working well and that implementation is on track. Moreover, it is expected that in the coming 12 months more large European companies will make the move to the stablecoin market.

At the same time, there is a striking problem. Of the 50 largest stablecoins worldwide, only three are MiCA-compliant: USDC, USDG and EURC. The rest fall outside the scope of the European framework, meaning that EU users either have no protection for the most popular stablecoins or simply have no access to them. For regulation that is intended to bring the global stablecoin market under European supervision, that is a significant shortcoming, according to MiCA experts.

Recognition Regime for Foreign Stablecoins as a Solution

Hansen advocates a fundamental adjustment of MiCA during the upcoming revision of the framework. According to him, locally issued tokens should not only serve the European market but also be able to scale internationally. Cross-border payments and tokenised trade are the real opportunities in that regard, not serving a local payment market that already functions well.

Additionally, he proposes a recognition regime for foreign stablecoins. That would give global issuers the ability to operate under MiCA without being required to establish a local entity in the EU. Such a pragmatic approach could, according to him, ensure that more of the global stablecoin activity falls under European oversight. More background on which stablecoins are already MiCA-certified in the EU has been extensively discussed previously. MiCA will only become a real success, Hansen concludes, if local tokens grow globally and if large international stablecoins find a regulated path to the European market.