French and Irish fintech companies have collaborated to introduce a euro-backed stablecoin, set to launch on the Stellar blockchain, a month after the MiCA stablecoin regulations came into effect.
French and Irish fintech companies have collaborated to introduce a euro-backed stablecoin, set to launch on the Stellar blockchain, a month after the MiCA stablecoin regulations came into effect. The European Union’s Markets in Crypto-Assets Regulation (MiCA) framework is gradually being implemented as per the planned timeline, with the initial regulations focusing on stablecoins and their issuers taking effect on July 1.
These clear guidelines have streamlined the market by removing non-compliant players and creating a favorable environment for stablecoins pegged to local currencies.
A prime example is the new partnership between France’s Next Generation and Ireland’s electronic money institution (EMI) Decta, which plans to reintroduce the euro-pegged stablecoin EURT on the Stellar blockchain. This initiative, which launched on August 5, is fully MiCA compliant.
MiCA’s Influence on the Stablecoin Market
Next Generation has strong connections with Tempo France, a well-known fintech company. Tempo France initially launched EURT in 2017 in collaboration with the Stellar Foundation, pioneering one of the first euro-pegged stablecoins. However, the lack of a regulatory framework at that time led to the project’s suspension. With MiCA now classifying stablecoins as electronic money tokens (EMTs) and requiring issuers to hold an EMI license or be a credit institution, the regulatory clarity has made the euro-backed stablecoin market more predictable and attractive to investors.
An industry analyst told Cointelegraph that the enactment of MiCA might lead to a shift toward euro-backed stablecoins as demand grows in European markets.
The Rise of Euro-Backed Stablecoins
Decta, authorized by the Central Bank of Ireland as an EMI, will use its license to issue EURT, ensuring full regulatory compliance. Suren Hayriyan, president of Next Generation, highlighted that the current demand for euro-backed stablecoins is around $30 billion, with a supply of less than $300 million. The partnership aims to bridge this gap, with projections indicating significant growth for EURT.
Currently, the euro-backed stablecoin market features major players such as Circle with its EURC stablecoin and Tether’s EURT, which Hayriyan identified as their main competitors. “Our robust regulatory compliance and technological infrastructure position us strongly in this evolving market,” he stated. Next Generation and Decta are targeting an October launch for EURT.
Circle became the first global stablecoin issuer to comply with MiCA, choosing France as its European headquarters due to the country’s progressive stance on digital asset regulation.
The activation of MiCA is expected to drive substantial growth in the euro-backed stablecoin sector, with market capitalization predictions ranging from 15 billion euros by 2025 to potentially surpassing 2 trillion euros by 2028.
As of July 31, the market capitalization of stablecoins was on the rise, increasing by 2.1% to $164 billion in July, the highest levels since April 2022. Stablecoins like USD Coin also saw their trading volumes surge by 48%.
