The euro-denominated stablecoin market is set to experience significant growth, driven by real-world use cases and regulatory clarity, according to Patrick Hansen, the European Union strategy and policy director at Circle. While the United States dollar currently holds a “first mover” advantage, euro stablecoin usage is expected to expand beyond its current modest market share.
Currently, euro-denominated tokens account for only 0.3% of the stablecoin market, valued at $300 million. However, considering that the euro holds a 20% share in the traditional monetary system, there is substantial room for growth. Hansen explained that the stablecoin market initially began with the U.S. dollar, and as liquidity increases, more users will adopt euro stablecoins due to their lower risks and usage costs.
The transition from speculative investments to utility-focused applications in crypto capital markets is an overarching trend. Stablecoin usage is steadily increasing in remittances, business-to-business transactions, and other scenarios where users prefer using stablecoins denominated in their local currency. Furthermore, integrating euro stablecoins into existing European payment systems will further drive their adoption.
Hansen predicted a similar shift toward real-world applications in decentralized finance (DeFi), leading to the emergence of regionalized liquidity pools. For instance, car loans could be delivered in local currency through DeFi platforms. Such developments indicate a promising future for euro stablecoins, lifting them above their current market position.
The regulatory landscape in the European Union is also expected to play a crucial role in the growth of the euro stablecoin market. The passage of Markets in Crypto-Assets (MiCA) regulations will provide regulatory clarity, offering incentives for market participants. Circle’s Euro Coin (EUROC), among the dominant tokens in the euro-denominated stablecoin market, aims to become a fully compliant e-money token by obtaining a license in France.
In conclusion, the euro stablecoin market is poised for expansion due to its increasing real-world use cases, integration into European payment systems, and regulatory clarity provided by MiCA regulations. As liquidity grows and decentralized finance embraces local currency applications, euro stablecoins are expected to gain a larger share of the stablecoin market, enhancing their role within the global economic system.