Euro-denominated stablecoins have a promising future, as highlighted by Patrick Hansen, the European Union strategy and policy director at Circle. While the United States dollar may continue to hold its first-mover advantage, Hansen believes that euro stablecoins will experience a surge in real-world applications, leading to a substantial increase in their current modest market share. Speaking at EthCC in Paris, Hansen pointed out that despite the euro’s prominent position in the traditional monetary system, with a 20% share, euro-denominated tokens currently represent only 0.3% of the stablecoin market, valuing at $300 million. Hansen further emphasized that the stablecoin market originated with the dominance of the U.S. dollar and that: [remainder of his explanation follows].
According to Hansen, the crypto capital markets are shifting from a speculative phase to a more utility-driven phase. This transition is evident in the growing adoption of stablecoins for various purposes, including remittances and business-to-business transactions. Users are increasingly inclined to utilize stablecoins denominated in their local currency to facilitate such transactions. Furthermore, by integrating euro stablecoins into the existing European payment systems, their usage is expected to receive a significant boost.
Hansen also believes that decentralized finance (DeFi) will follow a similar path, with real-world applications gaining prominence. For example, car loans and other financial services will likely be offered in local currencies, promoting the establishment of more regionalized liquidity pools. This shift towards real-world uses is poised to shape the future landscape of crypto capital markets and DeFi in a meaningful way.
With the implementation of the Markets in Crypto-Assets (MiCA) regulations, the European Union will attain regulatory clarity in the crypto space. Patrick Hansen further elaborated that within the euro-denominated stablecoin market, five major tokens currently hold dominance. Among them is Circle’s Euro Coin (EUROC), launched in June 2022. In a move towards full compliance, Circle has sought a license in France to establish EUROC as a “fully compliant e-money token,” according to Hansen.