Europe at the stablecoin war: why we run the risk of missing another train in financial innovation
The EU policy is pushing stablecoin giants towards the USA, leaving European users in a sort of digital limbo.
The regolamentazione UE is pressing the giants of stablecoins towards the USA, leaving European users in a kind of digital limbo. The cryptocurrency environment is going through an essential phase in the regulative procedure that could identify its future for the coming years. At the center of this process are stablecoins, cryptocurrencies pegged to steady worths like the euro or the dollar: a facilities now essential to the whole crypto market, with over 160 billion dollars in capitalization. The regulative methods of the EU and the USA are in contrast: rigid the European one of MiCAR, more versatile the American GENIUS Act. A game that Europe appears to have currently started to lose.
Summary
The European regulative wall: MiCAR and its rigidness
The chains that suffocate innovation and development
The Tether Case: The Durability of the Huge
The American approach: the GENIUS Act and the course of flexibility
The Outcomes for the European market: a fragmented ecosystem
The D.Lgs. 129/2024: a completely Italian complexity
Monetary Sovereignty vs Innovation and Market Openness: A False Problem?
What future for European stablecoins? The game is still open
The European regulatory wall: MiCAR and its rigidities
With the entry into force of the MiCAR guideline, the impact on stablecoins in the European Union was disruptive and immediate: several exchanges announced the delisting of Tether (USDT ), the largest stablecoin in the world, from their listings for European consumers. Brave New Coin reported, highlighting the useful effect of a policy that, although produced with protective intents, is creating significant barriers for European investors. The MiCAR has actually divided stablecoins into 2 classifications: E-Money Token (EMERGENCY MEDICAL TECHNICIAN), anchored to a single official currency, and Asset-Referenced Token (ART), connected to baskets of assets. The point is that for both, it has enforced such rigid requirements that lots of operators have actually left the European market. Ledger Insights summarized, discussing the reasoning of monetary sovereignty underlying the European restrictions.
The chains that suffocate innovation and development
The MiCAR imposes a series of restrictions that make operations excessive for global stablecoin companies: 1. Quantitative limits on use: the issuance must cease when usage as a cash goes beyond 1 million daily transactions and 200 million euros– absurd figures in a market where Tether moves everyday between 15 and 67 billion dollars. 2. Reserve localization requirements: for emergency medical technician, at least 60% of the reserves must be kept in European banks; for ART, a minimum of 30%. This forces companies to fragment the international management of their reserves. 3. Limitations on eligible instruments: Reserves can just be bought extremely conservative instruments, with restrictions that go beyond those used to standard banks. 4. Quasi-banking authorization routine: Issuers need to undergo complex authorization processes and a double level of supervision including both European authorities (EBA, ESMA) and nationwide authorities (in Italy, Banca d’Italia and Consob). 5. Complex crisis management procedures: In case of problems, providers must follow treatments borrowed from banking regulation, consisting of the possibility of extraordinary administration and compulsory administrative liquidation.
The Tether Case: The Resilience of the Giant
The reaction of Tether to the European impositions was emblematic. Paolo Ardoino, CEO of the business, revealed a substantial disinterest in adhering to European guidelines, choosing to focus on less regulated and more successful markets such as the Asian and Latin American ones. This choice has instant effects for European users, who are progressively being cut off from access to the most liquid of stablecoins, with consequences on their capability to operate efficiently in the global crypto market.
The American approach: the GENIUS Act and the path of flexibility
On the other side of the Atlantic, the USA follows a drastically various approach. The GENIUS Act (Guiding and Developing National Development for US Stablecoins Act), recently approved by the Senate with broad bipartisan assistance (66-32), outlines a more pragmatic and well balanced regulative structure.
The Consequences for the European market: a fragmented community
The de facto exclusion of global stablecoins like Tether from the regulated European market is currently producing tangible results: 1. Reduction of liquidity: European exchanges, required to remove trading pairs with USDT, see the liquidity offered to their users considerably minimized. 2. Boost in transactional expenses: market fragmentation causes wider spreads and higher costs for European operators. 3. Migration towards unregulated platforms: more experienced users are moving towards non-European exchanges or DeFi services to continue accessing worldwide stablecoins. 4. Competitive drawback: European startups in the fintech and crypto sector face regulatory barriers that their American rivals do not need to get rid of.
The D.Lgs. 129/2024: a completely Italian complexity
In Italy, the D.Lgs. 129/2024, which entered force on September 14, 2024, carried out the MiCAR by creating a dual supervisory system including Banca d’Italia and Consob.
Monetary Sovereignty vs Development and Market Openness: A False Dilemma?
The contrast in between the European approach and the American one highlights exceptionally different regulative viewpoints: Europe declares that it prioritizes the protection of its financial sovereignty and financial stability; the United States balances consumer security with the promo of financial development. Is this opposition truly necessary? Would European financial sovereignty genuinely be threatened by a more versatile approach to stablecoin? Or rather, does regulatory rigidity danger marginalizing Europe in a vital sector of financial development?
What future for European stablecoins? While the United States seems to place itself as the preferred jurisdiction for the issuance of global stablecoins, bring in capital and development, Europe threats winding up with a poor, separated, and less competitive crypto community.
The video game is still open The battle of stablecoins between Europe and the United States is emblematic of a more comprehensive challenge: how to effectively regulate digital financial innovation without suppressing it.
The obstacle for European regulators will be to discover a balance that protects consumers and monetary stability without compromising the digital future of the continent.
