The MiCA Effect: Euro Stablecoins Take Center Stage

Welcome back to our Institutional Top of Mind with 10x Research, with the kick-off of our Macro Shifts series examining the forces reshaping the crypto landscape in 2025. Each analysis offers institutional investors a data-driven perspective on the regulatory environment, political influences, market infrastructure development, and macroeconomic drivers that matter most. Join us as we analyze these macro shifts through an institutional lens, providing deeper insights for sophisticated market participants navigating this rapidly evolving space.

In our first installment, we examine how MiCA's full implementation is reshaping Europe's digital asset landscape, from the surge in Euro-backed stablecoin volumes to the strategic repositioning of major market participants adapting to the new regulatory framework.

With the full implementation of MiCA, Euro-backed stablecoins have experienced a significant uptick in trading volumes. The regulatory clarity provided by MiCA has allowed stablecoin issuers such as Circle and exchanges like OKX to capitalize on the growing demand for compliant digital assets across Europe.

The Markets in Crypto-Assets Regulation (MiCA), adopted by the European Union in May 2023, establishes a comprehensive regulatory framework for crypto assets, including stablecoins. MiCA outlines clear guidelines for two types of stablecoins: asset-referenced tokens (ARTs) and e-money tokens (EMTs).

• Asset-referenced tokens (ARTs) are stablecoins backed by a basket of assets, which may include commodities or a combination of currencies.

• E-money tokens (EMTs) are pegged to a single fiat currency (USD or EUR) and designed to function similarly to electronic money.

Issuers of stablecoins are required to secure authorization from regulatory authorities before offering their products in the EU market. Additionally, MiCA prohibits the payment of interest on stablecoin holdings to avoid competition with traditional banks and preserve stablecoins' function as a medium of exchange rather than as an investment vehicle.

The implementation of MiCA began in June 2024, initially applying to stablecoin issuers and certain crypto-asset service providers. In December 2024, MiCA’s full scope extended to the broader crypto-asset markets, encompassing exchanges, wallets, and other services. Thus, it provides a consistent regulatory framework across the EU for the entire crypto ecosystem.

This phased approach gave the industry time to adjust while ensuring that consumer protection, transparency, and financial stability were prioritized.

With MiCA’s full implementation, there has been a surge in acquisitions of European crypto service providers, primarily by American companies looking to expand their footprint. For instance, Robinhood acquired Bitstamp, one of the oldest crypto exchanges, in a $200 million deal to capture retail and institutional investors across Europe. Similarly, in September 2024, Kraken purchased Coin Meester B.V. (BCM), a Dutch digital asset broker, to strengthen its European presence. Bitwise Asset Management also strategically acquired London-based ETC Group, a major crypto exchange-traded products (ETPs) issuer, allowing Bitwise to broaden its crypto offerings in the European market.

These acquisitions underscore the increasing interest in Europe’s well-regulated and rapidly expanding crypto industry, particularly as MiCA regulation establishes a more transparent and cohesive framework for digital assets. The moves also reflect Europe's strategic importance as a key growth market, offering the advantage of a single currency and a unified regulatory environment. Companies like Robinhood, Kraken, and Bitwise are positioning themselves to capitalize on the region's potential as MiCA paved the way for greater clarity and investor confidence in crypto.

USD stablecoins dominate the market, making up 99.3% of the total market cap for fiat-linked stablecoins. In contrast, Euro-backed stablecoins and other non-USD stablecoins represent only a tiny fraction of the market, almost negligible in comparison. However, there is growing interest in expanding the use of non-USD stablecoins for applications such as FX trading and cross-border remittances, particularly in regions like Europe, where regulatory frameworks like MiCA could provide more clarity and support for their development.

Exhibit 1: Trading volumes (LHS, $ millions) for EURC-USD pair (RHS)

November and December were important months ahead of the full MiCA implementation in December 2024. Circle’s EURC has seen a sharp increase in volume for its European stablecoin EURC, with the 30-day average volume data point shooting straight up. However, volumes remain low and have contracted with the strength of the US dollar. Circle and the French Société Générale both offer MiCA-compliant EUR stablecoins.

Some crypto exchanges, like OKX, have phased out USDT trading pairs in the European Union in response to MiCA regulations. Coinbase proactively delisted USDT in mid-December, citing concerns about compliance with its MiCA regulations. This decision contributed to a significant decline in USDT's market capitalization, with approximately $4 billion being shed. However, it is worth noting that European regulators, including the European Securities and Markets Authority (ESMA), have not explicitly declared USDT as non-compliant under MiCA. This lack of definitive regulatory guidance has led to varying responses from exchanges.

Tether has voiced concerns over specific aspects of MiCA, particularly the reserve management requirements, which it believes could challenge its operating model. Despite these obstacles, Tether has reaffirmed its commitment to the European market and is actively working on solutions to align with MiCA's compliance standards.

MiCA mandates that 60% of stablecoin reserves must be held in cash deposits – those deposits tend to be uninsured for amounts exceeding €100,000. This poses a risk of bank runs, potentially creating instability for both traditional banks and stablecoin operators. However, stablecoin issuers have no choice but to comply if they wish to continue serving European clients. At the same time, exchanges like OKX and compliant stablecoin issuers like Circle could emerge as key beneficiaries. The market dynamics are shifting, as seen in the recent surge of the EURC-USD stablecoin, signaling changing tides in Europe.

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