Circle catches compliance dividends, and USDC ushered in top moments in Europe
Author: Asher (@Asher_ 0210)
Original title: MiCA Launches, Tether Exits Europe, Circle Seizes Compliance Dividends
Beginning this month, USDC ushered in a moment of victory in the European crypto market.
As the MiCA transition period comes to an end, unauthorized crypto asset service providers will not be able to continue operating in the EU. For crypto exchanges, if they want to stay in the European market, not only must the platform itself be compliant, but the assets and trading pairs supported by the platform must also be readjusted, with stablecoins bearing the brunt.
In the past, the default answer for US dollar stablecoins was often USDT. However, Tether did not apply for a MiCA license, and Tether CEO Paolo Ardoino explained why USDT did not apply for an EU MiCA license, saying the regulation was “very dangerous for stablecoins.” This means that USDT voluntarily abandoned the European stablecoin market.
But demand for US dollar stablecoins in the European market is not going away. Users need US dollar stablecoins, the platform needs US dollar trading pairs, and institutional funds also need on-chain US dollar assets with a clear compliance path. It's just that part of the demand, which was mainly carried out by USDT in the past, is now beginning to be transferred to compliant stablecoins.
Long before the MiCA transition period ended, Circle obtained the French EMI license and put USDC and EURC into the MiCA framework. For Circle, this is USDC's chance to take the lead in Europe.
USDT trading entrance shrinks, USDC takes on European demand
The actions of crypto exchanges are more straightforward than regulatory documents.
Binance, for example, has previously removed non-MiCA compliant stablecoin trading pairs such as USDT, FDUSD, TUSD, and DAI from European Economic Area users, while retaining USDC, EURI, and Euro trading pairs. Coinbase has also stated that it will restrict stablecoin services that do not meet MiCA requirements and provide European Economic Area users with the option to switch to compliant stablecoins such as USDC and EURC.
These adjustments don't mean that USDT is completely banned in Europe. Users can still hold USDT on the chain and continue to use it in some scenarios, but USDT's trading portal on compliant exchanges is indeed being compressed.
In the past, the advantage of USDT came from a positive cycle of scale effects — the more trading pairs, the more users got used to it; the more users got used to it, the more the exchange became inseparable from it. After MiCA, this cycle was interrupted in Europe. For exchanges, the prerequisite for continuing to serve EU users is to reduce compliance risks as much as possible. Therefore, in choosing stablecoin trading pairs, they will prioritize retaining assets with a clear path to compliance.
Open USD is booming, but USDC's moat is still there
On June 30, Open Standard officially announced the launch of Open USD, a new US dollar stablecoin supported by more than 140 companies including Visa, Stripe, Mastercard, BlackRock, and Coinbase; Open USD is free to mint and redeem, and plans to distribute reserve proceeds to partners after deducting management fees. As soon as this news came out,Circle's stock price plummeted on the same dayAt one point, it fell more than 16% in the intraday period.
The market's concerns are not hard to understand. Open USD's lineup looks luxurious enough, and the model is almost in favor of USDC. On one side, payment giants, trading platforms, and asset management institutions stand together; on the other side, there is a revenue-sharing mechanism. If this model actually works, it may indeed take away some of the stablecoin shares originally belonging to USDC.
But the list of “over 140 partners” was quickly questioned.
Shortly after the official announcement of Open Standard, some Korean companies included in the list clarified one after another that they were not officially involved in the Open USD project. According to related reports, Samsung Electronics said there were no formal negotiations surrounding the OUSD project; Dunamu said it had only reviewed the relevant proposals; Upbit went further and clearly denied participating in the OUSD offering; and K Bank also denied that there was a formal agreement.
For details, see “Is OUSD's “100 People's List” actually a “letter of intent”? Marketing under the name causes a crisis of trust”.
Stablecoins are not a business that can be successfully carried out by putting out a partner's logo. Every aspect of issuance, redemption, market making, exchange depth, on-chain liquidity, and payment scenarios needs to be refined over a long period of time. No matter how luxurious the list is, it doesn't mean that funds will actually migrate, let alone that users will immediately abandon USDC. Circle's stock price plummeted due to news of Open USD competition, just an overreaction from the market to competition concerns.
Furthermore, Circle CEO Jeremy Allaire responded positively to OUSD competition. In the end, stablecoins compete against network effects. USDC's accumulated application integration, global liquidity, regulatory licenses, banking relationships, and payment infrastructure over the past ten years is Circle's true moat. Furthermore, he also questioned consortium stablecoins such as OUSD. Multi-party alliances seem very powerful, but the more participants, the slower decisions are made, and the harder it is to fully agree on incentives. Free minting, free redemption, and revenue sharing sound appealing, but the stablecoin infrastructure itself requires ongoing investment. Without stable profitability support, long-term network construction may be affected. (More related content can be read: Circle CEO Responds to OUSD Challenge: Stablecoins “Winner Takes All”, and the Alliance Model Is Doomed to Fail）
Open USD does put pressure on Circle, but it's still impossible to talk about changing the pattern of the stablecoin market. It's more like a loud competitive teaser. To really challenge USDC, you have to first prove that you can run in terms of liquidity, scenarios, and long-term execution.
In Europe, Circle is in a better position
USDT remains one of the strongest stablecoins in the world, and Open USD will continue to bring new room for imagination to the market. The stablecoin competition will not end when MiCA is launched; on the contrary, it will become more intense.
But the European market has given a clear signal. In the future, stablecoins that can stay in mainstream transactions and institutional scenarios for a long time must not only rely on liquidity and user habits, but also have a sufficiently clear compliance status.
This is Circle's chance. USDC won't necessarily replace USDT right away, but its place in the European compliant trading scene is becoming more important. As exchanges, payment institutions, and institutional funds gradually shift to more compliant on-chain dollar assets, Circle has an opportunity to turn USDC from an “alternative” into one of the core stablecoins in the European market.
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