The European MiCA regulation, which took effect on December 30, will likely boost euro-denominated stablecoins, JPMorgan (JPM) said in a research report published Wednesday.
“Under MiCA, only compliant stablecoins can be used as trading pairs on regulated markets, providing incentives for EU exchanges to adjust their offerings,” wrote analysts led by Nikolaos Panigirtzoglou.
This allowed compliant stablecoins such as Circle’s EURC to strengthen, while non-compliant stablecoins like Tether’s EURT faced challenges, the Wall Street bank said.
A stablecoin is a type of crypto designed to maintain a stable value and is typically pegged to the US dollar, although other currencies and commodities such as gold are also used.
Under the new rules, stablecoin issuers such as Tether are required to maintain significant reserves at banks based in Europe and must obtain trading licenses, the report said.
This led Tether to abandon its EURT stablecoin and resulted in USDT being delisted from a number of EU-based exchanges, JPMorgan said.
The stablecoin issuer announced in November that it would phase out its euro stablecoin, with users able to trade tokens for up to 12 months.
Despite these challenges, Tether remains a “dominant force” in the global stablecoin market, the bank said, adding that it is widely used in Asian markets where there are fewer restrictions.
Tether’s investment in MiCA-compliant stablecoin issuers, such as Quantoz Payments, shows its commitment to maintaining a presence in the EU, the report adds.
The company said in December that it had also invested in European stablecoin issuer StablR.
Learn more: Tether invests in StablR, MiCA-compliant stablecoin issuer
