David Edwards
In 2024, the Markets in Crypto-Assets Regulation (MiCA) propelled the acceptance of euro-backed stablecoins to previously unheard-of heights. These stablecoins have become essential tools in the European cryptocurrency market as investor trust has increased due to legal certainty; in November, monthly trading volumes reached almost €800 million.
Important Growth Drivers
The dramatic increase can be ascribed to the growing popularity of Banking Circle’s EURI stablecoin, especially after its listing on Binance, according to data from Bitvavo and Kaiko, two cryptocurrency exchanges. By the end of the year, other MiCA-compliant stablecoins, such Circle’s EURC and Société Générale’s EURCV, controlled 91% of the market for euro-backed stablecoins.
MiCA’s regulatory framework, which went into force in June, has significantly decreased market uncertainty. This has strengthened the status of the euro-backed stablecoin market by attracting institutional players and promoting liquidity inflows.
Wider Effect on Crypto Markets in Europe
Adoption of stablecoins has effects that go beyond personal wealth. In 2024, trade volumes denominated in euros hit all-time highs; weekly volumes in November exceeded €12 billion, more than doubling from October. This spike coincided with Bitcoin’s explosive ascent to a record high of over $100,000.
By the end of the year, the euro’s proportion of Bitcoin-fiat transactions increased dramatically, from 3.6% to almost 10%. This accomplishment firmly establishes the euro as the third most traded fiat currency on international cryptocurrency marketplaces, after the US dollar and the Korean won.
Exchange and Institutional Contributions
This expansion has been largely driven by European exchanges like Coinbase, Kraken, and Bitvavo. In order to keep up with the increasing demand, Bitvavo alone listed over 331 additional euro-denominated trading pairs in 2024, accounting for approximately 50% of all euro-denominated trading volumes. The combined 1% market depth doubled by November, indicating a notable improvement in liquidity in the euro markets.
Obstacles Despite Advancements
Notwithstanding the advancements, difficulties still exist. The difficulties of navigating Europe’s changing crypto landscape are highlighted by Tether’s decision to stop supporting its euro-backed stablecoin, EURT, citing regulatory concerns.
The increasing popularity of euro-backed stablecoins emphasizes the interaction between institutional adoption, market innovation, and legal clarity. Europe is positioned as a crucial hub in the global bitcoin ecosystem as a result of this evolution.
