Stablecoins are now a massive part of the crypto industry. You can’t ignore them even if you tried. Over the past four years, stablecoin transactions have skyrocketed, going from $17.4 billion to a mind-blowing $4 trillion.
Right now, the entire inter-currency market was valued at $94.8 billion, and stablecoins took the lion’s share, holding 91.7% of the market. USDT alone is hogging 83.3% of that.
But, despite all this action, stablecoins aren’t exactly living up to their name. They’ve got issues, mainly because they lack the backing of major financial institutions.
Now, with governments in places like Hong Kong and Europe getting their regulatory game on, things are about to change.
I think.
Hong Kong’s play
Let’s start with Hong Kong. These guys aren’t messing around. They’re gunning to be the first in the world to let banks issue stablecoins.
The Hong Kong government’s been pushing hard to set up a regulatory framework that’s all about keeping the financial system in check and making sure consumers don’t get screwed over.
They kicked things off in June with a licensing regime for virtual asset service providers. Now, the Hong Kong Monetary Authority (HKMA) is about to drop some rules for stablecoin issuers.
Hong Kong’s got a pretty tight grip on fiat-backed stablecoin issuers. These issuers must have solid reserves that are fully backed by top-notch. They’ve also got to meet some serious redemption requirements and other regulatory hoops.
Now, who’s jumping into the sandbox? The HKMA has a list of companies, including RD InnoTech Limited, JINGDONG Coinlink Technology Hong Kong Limited, and heavyweights like Standard Chartered Bank (Hong Kong) Limited.
Here’s the deal, though: USDT and USDC, the big boys in the stablecoin world, might have a tough time if they want to operate in Hong Kong. First, they need a physical presence in Hong Kong.
Second, they need to back their reserves with cash in banks, something Europe’s MiCA regulations also demand. And that brings us to our next player: Europe.
Europe’s cards
Europe has released some of the most comprehensive stablecoin regulations we’ve seen, under the MiCA, which the European Parliament passed this year. It’s set to fully kick in by early 2025.
The clock’s already ticking because, from July, issuers have had to start holding real reserves in banks—at least a third of all funds to cover large withdrawals. There are also new rules around transaction limits.
This isn’t sitting well with everyone. Tether’s CEO, Paolo Ardoino, isn’t thrilled. He’s got beef with the idea of keeping large reserves in uninsured bank deposits, which he says exposes them to risks like bank collapses.
According to Paolo, stablecoins should keep their reserves in Treasury bills, which are safer and more stable. But despite his gripes, Tether isn’t pulling out just yet—they’re still talking to the powers that be.
Meanwhile, some exchanges in Europe are already cutting ties with stablecoins that don’t play by the rules. OKX, for example, dropped USDT for its EU users back in March.
Circle’s USDC, on the other hand, is playing the long game, sticking to the regulations and gaining favor. Kraken, however, still lists USDT in Europe, knowing how much customers rely on it.
Here’s what could happen. Circle’s USDC might end up being the big winner in Europe. With MiCA backing it, USDC could surpass USDT in market share and become the top stablecoin in Europe.
Earn more PRC tokens by sharing this post. Copy and paste the URL below and share to friends, when they click and visit Parrot Coin website you earn: https://parrotcoin.net0
PRC Comment Policy
Your comments MUST BE constructive with vivid and clear suggestion relating to the post.
Your comments MUST NOT be less than 5 words.
Do NOT in any way copy/duplicate or transmit another members comment and paste to earn. Members who indulge themselves copying and duplicating comments, their earnings would be wiped out totally as a warning and Account deactivated if the user continue the act.
Parrot Coin does not pay for exclamatory comments Such as hahaha, nice one, wow, congrats, lmao, lol, etc are strictly forbidden and disallowed. Kindly adhere to this rule.
Constructive REPLY to comments is allowed