USD-Backed Stablecoins Dominate as Euro-Pegged Competitors See Record Growth in Europe

• Kaiko’s smart data reports a surge in crypto trading activity across Europe.
• Europe is preparing to implement new regulations aimed at bolstering its stablecoin market.
• While Euro-backed stablecoins are gaining traction, USD-backed stablecoins still dominate the market.

Explore how Europe’s evolving regulations and market dynamics are shaping the future of crypto trading, focusing on the rise of stablecoins.

Increasing Adoption of Crypto Trading in Europe

Kaiko’s data points to a remarkable uptick in the adoption of crypto trading within European markets. Since the start of the year, the trading volume of Euro-backed stablecoins has surged, highlighting a growing acceptance and usage among European traders. This trend underscores the region’s increasing interest and engagement in the cryptocurrency space.

Regulatory Framework and Implications for the Stablecoin Sector

In response to the growing popularity of cryptocurrency trading, Europe is on the verge of enacting robust new regulations. These forthcoming regulations aim to enhance the stability and credibility of the stablecoin sector, potentially placing Europe in a more competitive position against major markets like the U.S. and Asia-Pacific (APAC). Notably, major exchanges like Binance and Kraken have already begun to adjust their operations to comply with these standards, indicating significant shifts in the regulatory landscape.

Surge in Euro-Pegged Stablecoin Trading Volumes

Since March, the trading volumes for Euro-pegged stablecoins have reached unprecedented levels. Coins such as Tether’s EURT, Stasis EURS, Société Générale’s EURCV, Anchored’s AEUR, and Circle’s EURCV have consistently recorded trading volumes exceeding $40 million. AEUR, in particular, has shown a substantial rebound from its slow start in December, now contributing over half of the total volume.

Dominance of USD-Backed Stablecoins

Despite the impressive growth of Euro-backed stablecoins, USD-backed stablecoins continue to lead the cryptocurrency market. Approximately 90% of all cryptocurrency trades involve USD-pegged stablecoins. Year-to-date, these stablecoins have maintained a robust average weekly volume of $270 million, dwarfing the $3.8 million average seen by their Euro-backed counterparts.

Future Outlook and Market Impact

Looking ahead to 2024, Euro-pegged tokens are projected to constitute 1.1% of total stablecoin transactions. This is a notable leap from their negligible percentages in 2020 and marks a historic high. However, USDT/EUR trading pairs currently surpass Euro-denominated Bitcoin transactions on leading exchanges like Binance and Kraken, underscoring the integral role these platforms play as fiat off-ramps for European traders.

Conclusion

In summary, the European crypto market is witnessing significant advancements driven by increasing adoption and impending regulatory changes. While Euro-backed stablecoins are achieving new milestones, USD-backed stablecoins continue to dominate the trading landscape. As Europe fortifies its regulatory framework, it may bolster its stablecoin sector further, potentially reshaping the global cryptocurrency market dynamics. Traders and stakeholders should stay attuned to these developments as they unfold.