Circle becomes the first MiCA-compliant stablecoin issuer, will Tether's leading position be challenged?

Circle announces that it has become the first MiCA-compliant stablecoin issuer and officially opens its USDC and EURC services to European business customers.

1/ 🚨 As the first global stablecoin issuer to achieve MiCA compliance, we are committed to building a more inclusive, compliant future for internet finance.

— Circle (@circle) July 1, 2024

Circle Announces to Become the First MiCA-Compliant Stablecoin Issuer

Circle announced last March that it would establish its European headquarters in Paris, France, and collaborated with the French banking regulatory authority ACPR to successfully obtain its Electronic Money Institution (EMI) license. With this license, Circle's USD stablecoin USDC and Euro stablecoin EURC can be issued in the EU, complying with MiCA's regulatory obligations for stablecoins or electronic money tokens. Circle currently holds 100% of EURC reserves under the regulated entity Circle France, and similarly, holders of European USDC within the EU hold the necessary reserves through a globally systemically important bank (GSIB).

MiCA Officially in Effect, Stablecoins in the Spotlight

MiCA is the world's first and most comprehensive cryptocurrency regulatory framework, covering a market of nearly 4.5 billion customers. MiCA regulations stipulate that only Electronic Money Institutions (EMIs) and credit institutions can issue stablecoins, and this regulation is expected to take effect by the end of June.

Leading exchange Binance has also released related measures to ensure its compliance in the EU market. Starting June 30, 2024, Binance's fiat-to-crypto function will designate unlicensed stablecoins as "sell-only." The function to purchase unlicensed stablecoins will no longer be available.

USDT Losing a Major Market? EU MiCA Stablecoin Regulations Set to Take Effect: How Binance Ensures Compliance

Will USDT Lose Its Leading Position under Regulatory Challenges?

According to CoinGecko data, the current market capitalization of stablecoins is approximately $161.7 billion, with Tether's USDT market cap at $112.8 billion, accounting for nearly 70%, while Circle's USDC market cap has steadily risen to $32.5 billion, accounting for about 20%.

Although Tether is a leading stablecoin issuer, its operational model and compliance have long been questioned. Previous comparisons of multiple reports on Tether found inconsistencies in the indicators used, maintaining its consistent practice of obfuscation.

Breaking down a recent Forbes report: Tether's Profits Decline, Confusing with Different Metrics

Recently, the non-profit organization Consumers’ Research also launched a million-dollar ad campaign criticizing Tether, claiming that the unaudited Tether could be the next FTX.

In addition to MiCA, major economies such as Japan, the United States, the United Kingdom, Singapore, Hong Kong, the United Arab Emirates, Brazil, and many others are also drafting legislation to regulate stablecoin issuance. With MiCA taking the lead, will USDT gradually lose its leading position under regulatory challenges?