Fintech giants Robinhood and Revolut are eyeing the stablecoin market, as new regulations in Europe promise to deliver regulatory clarity and impact crypto-native companies’ market share.
According to a Sept. 26 Bloomberg report citing unnamed sources, both Robinhood and Revolut are considering issuing their own stablecoins as the industry continues to expand.
The stablecoin market has been largely dominated by Tether’s USDt (USDT). The stablecoin issuer has benefited from the broader macroeconomic landscape and crypto market turbulence over the past two years, including banking crises and regulatory crackdowns on firms in the United States.
USDt, which is pegged to the US dollar, gained more than 20% market share during the period and now controls over 75% of the entire stablecoin market.
Tether’s market share growth has translated into more revenue. The stablecoin issuer reported record-breaking profits of $5.2 billion in the first half of 2024, as well as a larger stockpile of US government bonds to back its reserves. According to Bloomberg, this business model is encouraging more players to enter the stablecoin market.
Stablecoins market capitalization. Source: DefiLlama
Despite Bloomberg’s reporting, Robinhood and Revolut have not confirmed whether they plan to enter the stablecoin arena.
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MiCA to shape the stablecoin industry
The European Union’s Markets in Crypto-Assets (MiCA) regulation, introduced in 2023, will significantly impact the stablecoin market. The MiCA implementation on stablecoins was divided into two phases.
The first, which ended on June 30, imposed rules on reserve requirements, transparency and transaction volume caps, leading some exchanges like Binance and Kraken to start reviewing stablecoin offerings ahead of the new rules.
The second phase takes effect on Dec. 30 and applies to crypto-asset service providers, bringing broader regulations for exchanges, wallets and other service companies.
Under the regulation, stablecoins — also referred to as “asset-referenced tokens” or “electronic money tokens” — face strict rules, such as daily transaction volume caps of $200 million for payments.
Tether’s CEO, Paolo Ardoino, has criticized the European regulation, citing a requirement that 60% of stablecoin reserves be held in cash deposits at multiple banks.
“Very few banks accept this type of business in Europe. It’s already very difficult to get just one!” Ardoino noted in an interview.
According to Ardoino, the company does not intend to be regulated under MiCA.
In contrast, Circle — the company behind the USD Coin (USDC) — recently announced its Euro-backed stablecoin, EURC, which is adapting to the new framework.
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