The European Banking Authority (EBA) has classified Circle's USDC as a significant e-money token under MiCA. The world's second-largest stablecoin will now sit under joint oversight from Brussels and Paris, and for the EU market it signals that the tokenized dollar is being accepted as part of the system.
What the regulator decided
In a Wednesday notice, the EBA said supervision of USDC will be shared between the authority itself and France's ACPR. According to Cointelegraph, USDC has a market cap of about $73 billion, while Tether's USDT reaches $184 billion. The Block calls the move the first time the EBA has assigned significant e-money token status.
For the issuer it means dealing directly with a supranational supervisor, not just a national one. MiCA sets stricter capital and liquidity management requirements for significant tokens.
Why this is more plus than minus for Circle
Compliance costs will rise, and that is the obvious downside. The status has a flip side, though. EU banks and payment firms that need legal certainty get clear oversight of an asset they want to use in settlement.
That is why the market will probably take the news without panic. No restrictions on the token's circulation have been introduced, only the level of control changes.
The dollar in the eurozone: what issuers say
European issuers have spent months pushing for regulated dollar stablecoins in the region. Stable Mint CEO James Bennett told Cointelegraph that Europe cannot "wish away" dollar stablecoins, but regulators can control the safeguards and rules for issuers.
"For European corporates to make cross-border payments globally, offering only a euro stablecoin isn't enough."
Alexander Hoptner, CEO of AllUnity, comment to Cointelegraph
The risks that remain
Joint supervision does not remove the questions the market is still waiting on. Among them:
- how strict the requirements for USDC reserves held in European banks will turn out
- whether European issuers will go to regulators with complaints about unequal conditions
- how the ECB reacts, as it keeps weighing a digital euro
The ECB has floated the digital euro since 2020 and allows for a launch in 2029 after the legislative process and pilot are complete.
What it comes down to
The EU has effectively admitted that dollar stablecoins will stay in the region, and it is better to manage them than to ban them. For USDC this is a move from "permitted" to "under special attention".
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