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Three months after the European Union’s Markets in Crypto-Assets Regulation (MiCA) came into effect, the stablecoin landscape in Europe has undergone significant changes, as revealed by a new report from Kaiko Research. 

MiCA, which officially went into effect at the end of June, has sparked a wave of delistings and product adjustments by major cryptocurrency exchanges, which affected the market shares for EUR-backed stablecoins.

Among the most prominent changes is Coinbase’s recent announcement that it will delist Tether’s USDT for European users by the end of 2024, following similar moves from other major centralized exchanges. 

According to Kaiko, MiCA-compliant EUR stablecoins, such as Circle’s EURC and Société Générale’s EURCV, now control 67% of the EUR-backed stablecoin market. This shift, primarily driven by Coinbase overtaking Binance as the top marketplace for EUR-stablecoins, highlights a growing preference for regulated options. 

Interestingly, while market share shifts have been notable, overall trading volumes for EUR-backed stablecoins remain relatively stable, hovering around $30 million weekly—significantly lower than the $100 million volumes seen in March. 

As for USD-backed stablecoins, Circle’s USDC—currently the largest MiCA-compliant option—has seen a modest uptick in market share, growing from 10% to 12%. Kaiko’s data suggests that the upcoming USDT delisting on Coinbase could further bolster USDC's position in the European market, providing a boost to regulated USD-backed stablecoins.

Despite this, USDT’s widespread liquidity, particularly on decentralized exchanges (DEXs), has ensured its continued dominance. DEXs, which are not directly regulated by MiCA, allow traders to continue using USDT, making it a popular choice for those seeking liquidity in decentralized finance (DeFi). 

USDT has gained traction on Uniswap, the largest Ethereum-based DEX, following the collapse of Circle’s banking partner, Silicon Valley Bank, which led to a sharp depeg of USDC. As a result, USDC’s dominance on Uniswap has plummeted from nearly 90% in 2022 to just 55% last week, while USDT continues to expand its foothold.

The ongoing MiCA-driven market shifts highlight the delicate balance between regulation and liquidity, with compliant stablecoins gaining ground while non-compliant options maintain a stronghold in decentralized ecosystems.