MiCA, the European Union’s Crypto Asset Markets Regulation, came into force on July 1. With the introduction of the regulation, licensed cryptocurrency exchanges began to rapidly remove USDT transactions of the stablecoin Tether from their platforms. In this process, Circle stood out in the vacant space with its regulatory-compliant products.
Circle adapted, Tether retreated
Circle prepared for the changes under MiCA in advance, making its dollar-based USDC and euro-based EURC stablecoins compatible with the new rules. Among the ten stablecoins with the highest market capitalization, Circle was the only issuer that met the MiCA requirements. As a US-based financial technology company, Circle is among the largest players in the stablecoin market, especially with USDC.
Tether, on the other hand, did not apply for the issuance of electronic money required under MiCA. As a result, approximately $185 billion worth of USDT supply became inaccessible on licensed European exchanges. Thus, the liquidity structure on regulated trading platforms in Europe began to be reshaped.
While Tether management argues that MiCA’s request for 60% of the reserves to be kept in European banks poses separate risks, it seems that the company prefers to focus on markets outside Europe for this reason.
Tether Chief Executive Paolo Ardoino publicly defended the company’s stance. Ardoino stated that changing the reserve structure according to new rules may create additional risks. Tether management chose to focus on markets outside the European Union rather than adapting its reserve model to European standards.
Corporate support strengthened Circle’s hand
The timing also worked out in Circle’s favor. One day before the deadline, BNY Mellon announced the launch of USDC support. Thus, corporate customers will be able to hold, transfer, issue and burn USDC through the bank’s service. As one of the world’s largest custodial banks, BNY Mellon has broad influence on the corporate finance side.
Mini dictionary: CASP refers to the “crypto asset service provider” license used under MiCA. This authority is required to provide services such as custody, trading and transfer in a regulated manner throughout the EU.
When BNY Mellon’s move coincided with the change in European stock markets and the same week, Circle gained significant momentum on both the regulatory and corporate side. This situation draws attention not only in terms of stablecoin competition, but also in terms of which issuers the market will be shaped around.
MiCA’s impact is not limited to stablecoins
The consequences of the regulation are not limited to USDT and USDC. Prior to MiCA, only about 210 of the approximately 1,200 nationally registered crypto companies were able to obtain full CASP authorization. This number corresponds to approximately 17% of the total.
| Title | Situation |
|---|---|
| Number of companies registered before MiCA | Approximately 1,200 |
| Number of companies receiving full CASP authorization | About 210 |
| Ratio | 17% |
While regulated platforms can no longer offer liquidity via USDT after MiCA, Circle seems ready to fill this space with its long-established strategy.
The emerging picture shows that it is not just about regulatory compliance. While Circle has been preparing for the long term for several years, Tether has taken a step back in the European market. Although it is still possible for Tether to apply for a European license in the future, there is no clear sign of this at this stage.
