European-linked stablecoin use is increasing amid new European crypto regulations being phased in over time, according to digital asset analytics firm Kaiko.
In a new report, Kaiko says the European crypto market is facing major changes as regulations affecting stablecoins in the Markets in Crypto Assets (MiCA) Act 2023 come into effect later this month.
Says Kaiko,
“Upcoming regulations in Europe are about to shake up the stablecoin market. Binance last week unveiled plans to restrict stablecoins that do not meet the bloc’s Markets in Crypto Assets (MiCA) standards. Elsewhere, reports suggest that Kraken has been actively investigating which stablecoins comply with European Union standards, potentially leading to the removal of non-compliant stablecoins for their EU users.
Kaiko suggests that the new crypto regulations could be a “boon” for MiCA-compliant Euro-backed stablecoins as their use in Europe suddenly increases.
“While Europe has traditionally lagged behind the US and APAC when it comes to crypto trading, euro-backed stablecoins have consistently grown in volume since the start of the year, indicating that demand in European markets is finally picking up. Their average weekly volume in 2024 was $270 billion, which is 70 times higher than that of their EU counterparts. In contrast, only 1.1% of all transactions are carried out using euro-backed stablecoins. However, it is striking that this share has risen from almost zero in 2020 and is currently at a record high.”
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Generated image: Midjourney