JPMorgan says EU's MiCA regulation could boost euro stablecoins

The European Union's landmark Markets in Crypto-Assets (MiCA) regulation, which came into effect on Dec. 30, 2024, could boost the market share of euro-pegged stablecoins, according to JPMorgan analysts.

Currently, euro-pegged stablecoins hold just 0.12% of the stablecoin market share, but MiCA can improve this by encouraging European banks and financial institutions to adopt euro stablecoins for customer needs and blockchain-based financial settlements, JPMorgan analysts, led by Nikolaos Panigirtzoglou, said in a report on Wednesday.

Notable examples include Societe Generale's EURCV stablecoin and BBVA's planned stablecoin launch in collaboration with Visa, the analysts said.

Under MiCA, only compliant stablecoins can be used in regulated markets, forcing issuers like Tether to either adapt or exit. For instance, Tether has discontinued its EURT stablecoin and seen USDT delisted from exchanges operating in the EU. Despite these challenges, Tether remains globally dominant, driven by demand from regions with fewer regulatory constraints, such as Asia, the analysts said. They also noted Tether's strategic investments in MiCA-compliant firms like Quantoz Payments, signaling its intent to maintain an indirect presence in Europe.

Overall, while MiCA introduces higher compliance costs, its long-term impact on the crypto market could be positive, attracting institutional investors and encouraging the adoption of euro-pegged stablecoins, the analysts said. As the EU takes this regulatory leap, the U.S. is likely to follow suit with its own crypto legislation under the incoming Donald Trump administration, they added.