Stablecoin: Circle now MiCA compliant

Monday, July 1, 2024

The US company has officially obtained its Electronic Money Establishment (EME) licence, a prerequisite for issuing regulated stablecoin in the European Union.

End of suspense for Circle. After weeks of waiting, the American giant made it official this Monday that it had obtained its Electronic Money Establishment (EME) licence, a necessary condition for compliance with MiCA regulation, which came into force on 30 June.

With this licence, Jérémy Allaire's company becomes the first regulated stablecoin issuer in Europe. "This is a very important step for us," explains its CEO in an exclusive interview.

Circle has 2 stablecoins: the first is its dollar stablecoin (USDC) with a market capitalisation of $32 billion. The second is its euro stablecoin (EURC), which has a much smaller market capitalisation of less than €50 million.

As Jeremy Allaire explained to The Big Whale, Circle will be able to benefit from a reserve game that allows it to juggle stablecoin reserves located in US and European banks to manage USDC liquidity. "A criterion that allows us not to split liquidity and to ensure that the USDC remains a global stablecoin," Jeremy Allaire said.

"The United States should take a leaf out of Europe's book"

Other stablecoin issuers, such as Monerium and Salvus, have already obtained their license and are in compliance with MiCA, but none are as large as Circle. Its main competitor Tether, issuer of the market-leading USDT with 105 billion dollars of units in circulation, has even decided to pass on it for the moment, as its CEO Paolo Ardoino recalled in an interview with The Big Whale.

By being the first major stablecoin to be officially regulated in the European Union, Circle gains a significant competitive advantage, its two stablecoins (USDC and EURC) being virtually the only ones that exchange platforms can offer with certainty to their European users.

"To use USDC or EURC, traditional financial institutions now have strong legal guarantees. This is a major turning point for the whole stablecoin industry and more broadly crypto," enthused Jeremy Allaire, who says that his company will now accelerate its development in Europe in the coming months.

"Europe has managed to regulate a stablecoin dollar before the United States. The fact that we are getting this licence in Europe is a cost-free warning for the United States," quipped Jeremy Allaire, who hopes that the US authorities will take inspiration from MiCA to regulate stablecoins.

This analysis is not investment advice. It has been prepared without taking into account your personal situation, particularly your financial situation, risk profile, and investment objectives.

Before investing in any product, investors should fully understand the risks involved and consult their own legal, tax, financial, and accounting advisors.

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