The future is bright for euro-denominated stablecoins, according to Patrick Hansen, European Union strategy and policy director at Circle. The United States dollar may preserve its “first mover” advantage, but euro stablecoin will see increasing real world use cases emerge to lift it above its current meager market share, Hansen said at EthCC in Paris.
Euro-denominated tokens currently represent 0.3% of the stablecoin market and are worth $300 million. At the same time, the euro occupies 20% of the traditional monetary system. It is in second place to the U.S. dollar in both instances and may stay in that position for a while. Hansen explained that the stablecoin market began with the dollar, and:
“Liquidity begets liquidity.”
With lower liquidity on the market, euro stablecoin users face higher risks and usage costs.
However, “we are currently moving from speculation to utility,” Hansen said of crypto capital markets as a whole. Increasing use of stablecoin in remittances, business-to-business transactions and other cases show this, and users will want to use stablecoin in their local currency for these purposes, Hansen said. Integration of euro stablecoins into existing European payment systems will also boost its use.
Decentralized finance will go the same way, with real-world uses, such as car loans, being delivered in local currency. This will lead to more regionalized liquidity pools, he explained.
What does a cup of coffee have to do with the future of the global economic system? As the US Congress prepares for its first vote on Stablecoin laws, US political leaders have a choice to make about the US and Dollar competitiveness. A video for political leaders below. $USDC pic.twitter.com/9sQyZwq4WE
— Jeremy Allaire (@jerallaire) July 13, 2023
Passage of Markets in Crypto-Assets (MiCA) regulations will provide regulatory clarity in the European Union. Hansen added:
“I would even go so far as to say regulatory incentives.”
The euro-denominated stablecoin market is now dominated by five tokens, including Circle’s Euro Coin (EUROC), which it introduced in June 2022. Circle has applied for a license in France to make EUROC a “full compliant e-money token,” Hansen said.