Euro Stablecoins Remain Marginal In Global Market
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BANK
SCR
Europe thought it was laying the foundations for a safer crypto market. It may have actually hindered its own digital currency. Behind MiCA, presented as an exemplary framework, a reality sets in: euro stablecoins remain marginal compared to the dollar’s hegemony. A recent report reveals this imbalance and revives a strategic debate. Between investor protection and global competitiveness, the European Union faces a dilemma that could weigh heavily on its place in digital finance.
In brief
- MiCA imposes itself as an ambitious regulatory framework, but now raises questions about its real effects.
- Despite their strict regulation, euro stablecoins remain a small minority in the global market.
- The imposed rules, notably on reserves and the absence of remuneration, directly affect their attractiveness.
- In contrast, dollar-backed stablecoins benefit from a more dynamic ecosystem, especially in DeFi.
Euro stablecoins, safe but marginalized
The report published by “Blockchain for Europe” draws a blunt conclusion: euro stablecoins compliant with MiCA remain ultra-secure but underperform in the market.
According to cited data, they represent “less than 1% of the global stablecoin volume”, a figure out of sync with the euro’s weight in the global economy. The authors explain that the rules imposed by MiCA, especially for electronic money tokens, have created a strict framework that limits their attractiveness.
They highlight that the prohibition of remunerating holders places these assets “in a particularly disadvantageous position” in a positive interest rate environment, compared to bank deposits or stablecoins in foreign currencies.
In detail, several constraints structure this imbalance :
- The obligation of full backing of stablecoins with reserves ;
- The prohibition of paying interest to holders ;
- A requirement to hold between 30 % and 60 % of reserves in the form of bank deposits ;
- The absence of competitive mechanisms compared to yield strategies observed elsewhere.
The authors thus describe a mechanism close to a “regulatory Laffer curve”, where excessive constraints reduce activity instead of structuring it, contributing to the current weakness of euro stablecoins.
Proposed reforms and tensions around a MiCA 2
Faced with these limits and the on-chain data collected, the report calls for targeted adjustments rather than a full overhaul of the framework. The authors notably propose relaxing reserve management rules by adopting a more flexible approach aligned with European liquidity standards.
They also suggest, under strict conditions, opening access for major issuers to central bank accounts during periods of stress. These avenues fit into a broader debate on MiCA’s evolution, as some European officials are already discussing a “MiCA 2” version to support market maturity.
This movement is not unanimous. The European Banking Authority warns against weakening safeguards, believing that certain changes could increase regulatory arbitrage risks.
On its side, the European Central Bank points out that the growth of stablecoins could concentrate demand on certain short-term sovereign bonds, with potential effects on yields and liquidity during redemption phases. These concerns illustrate the complexity of the debate, where financial innovation and systemic stability intersect.
The evolution of MiCA could thus become a decisive test for Europe’s strategy in digital finance. Between maintaining a protective framework and adapting to global dynamics, upcoming choices will determine the euro’s position in the stablecoin ecosystem, currently largely dominated by the dollar.
