Circle has obtained approval from the EU regulatory authorities for its stablecoin under the MiCA cryptocurrency framework. However, the network growth of USDC and USDT has declined.
Despite the growth in the USD/CAD exchange rate for Circle in recent months, it still lags behind Tether in terms of market capitalization. However, the latest developments surrounding the USD/CAD exchange rate may help the stablecoin rise to higher levels.
Circle’s Entry into Europe
On July 1st, Circle became the first stablecoin to receive approval from regulatory authorities under the European Union’s Market in Crypto-assets (MiCA) framework. This is a significant victory for regulatory clarity in the digital asset space.
The announcement by Circle co-founder and CEO Jeremy Allaire has provided relief to investors holding Circle’s stablecoin pegged to the Euro, as they now evidently comply with the new regulations. This eliminates concerns for investors to redeem their holdings or transfer them to other assets to remain compliant.
Circle also announced that it has chosen France as its European headquarters. This decision is influenced by France’s progressive approach to digital asset regulation and Circle’s strong working relationship with the French Prudential Supervision and Resolution Authority (ACPR).
Allaire also emphasized the historical significance of MiCA, which is the EU’s first comprehensive regulatory framework for digital assets. He stated that this marks an important step forward for the legitimacy and stability of stablecoins and demonstrates the maturity of the digital asset industry.
Can USD/CAD Outpace USD/CAD?
As of the time of writing, Circle’s USDC stablecoin holds a market capitalization of $32 billion, accounting for a 20% market share. However, Tether remains the undisputed leader in the stablecoin space, with a 70% market share and a market capitalization of $112 billion.
The regulatory approval in Europe for Circle could be a turning point, driving demand for USDC and potentially helping Circle narrow the gap with Tether. This advantage comes at a critical moment for Circle, as its market share has been steadily eroding to Tether.
As a pioneer in regulatory compliance, Circle can position USDC as a safe and reliable haven for European investors, especially those who may be cautious about unregulated cryptocurrency markets. This could lead to a significant increase in demand for USDC, not only in Europe but globally.
Despite this positive development, analysis of Santiment data by AMBCrypto shows that the network growth of both tokens has declined in the past few days. This indicates a temporary decrease in the number of new addresses for these two stablecoins.
