Euro-Backed Stablecoins Set to Benefit from MiCA Rules, According to JPMorgan.

The European Union’s MiCA framework, which came into effect on December 30, is expected to strengthen the position of euro-backed stablecoins, according to a report from JPMorgan (JPM) published Wednesday.

“MiCA mandates that only compliant stablecoins be used as trading pairs on regulated exchanges, leading EU platforms to revamp their offerings,” said Nikolaos Panigirtzoglou and his team of analysts.

The regulations have given compliant stablecoins like Circle’s EURC a competitive edge, while non-compliant counterparts such as Tether’s EURT have encountered regulatory headwinds, the report highlighted.

Stablecoins are cryptocurrencies designed to maintain a stable value, often pegged to fiat currencies like the U.S. dollar, but can also be linked to other assets such as the euro or gold.

The new MiCA rules require stablecoin issuers to maintain significant reserves within EU-based banks and obtain operational licenses. This has prompted Tether to wind down its EURT offering, with the company announcing in November that users would have a 12-month window to redeem their tokens.

Additionally, several EU exchanges have delisted USDT, further pressuring Tether’s presence in the region. However, despite these challenges, Tether continues to dominate the global stablecoin market, particularly in markets with fewer restrictions, such as those in Asia.

Tether’s strategy to stay active in the European market includes investments in MiCA-compliant stablecoin projects. In recent months, the company has backed initiatives like Quantoz Payments and StablR, signaling its readiness to adapt to the new regulatory environment.