Euro-pegged stablecoin adoption is on the rise in response to new crypto regulations in Europe, as detailed by digital asset analytics company Kaiko.

In their latest report, Kaiko highlights the significant shifts happening in the European crypto market as the regulations outlined in the 2023 Markets in Crypto Assets (MiCA) law come into effect this month. According to Kaiko, these impending regulations are set to disrupt the stablecoin market in Europe.

Kaiko points out that Binance has already announced plans to limit stablecoins that do not comply with the MiCA standards, while reports suggest that Kraken is actively assessing which stablecoins meet the EU standards, potentially leading to the removal of non-compliant stablecoins for EU users.

The analytics firm suggests that the new crypto regulations could benefit Euro-backed stablecoins that adhere to the MiCA guidelines, as their usage is rapidly growing in Europe. While Europe has traditionally been behind the US and APAC in terms of crypto trading, Euro-backed stablecoins have seen a consistent increase in trading volume since the beginning of the year. Their weekly average volume in 2024 reached $270 billion, which is significantly higher than their EU counterparts. Despite this growth, Euro-backed stablecoins only account for 1.1% of all transactions, but this share has significantly risen from almost zero in 2020 to reach an all-time high.

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