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According to JPMorgan's research report, MICA regulations will increase the number of stablecoins in Euro! Here are the details.
According to JPMorgan's research report, the new Crypto Asset Markets (MiCA) regulations, which came into effect on 30 December by the European Union, are preparing to strengthen stable coins in euros.
JPMorgan says AB's MiCA Regulations Will Boost Euro-Denominated Stablecoins
Analysts led by Nikolaos Panigirtzoglou noted that under MiCA, only compliant stablecoins can be used as trading pairs on regulated markets, which will lead to a change in offerings from exchanges within the EU.
The Impact of MiCA on Stablecoins
Regulations require stablecoin issuers to hold significant reserves in European banks and obtain trading licenses.
This situation has led to a differentiation between compatible stablecoins like Circle's EURC facing operational challenges and incompatible ones like Tether's EURT.
Tether announced that it will gradually phase out the EURT stablecoin in November and allow users to use the tokens for up to 12 months. This decision has led to the removal of Tether's USDT from several EU-based exchanges.
JPMorgan said that despite these obstacles, Tether continues to dominate the global stablecoin market, especially in Asian markets where regulatory restrictions are less strict.
The report highlights how MiCA offers opportunities for the popularization of compliant euro-backed stablecoins. Circle's EURC emerged as a strong competitor, taking advantage of the regulatory clarity offered by MiCA.
Stablecoin is a type of cryptocurrency designed to minimize price volatility, pegged to a stable asset such as the US dollar, euro, and even commodities like gold. MiCA aims to increase trust in these assets through transparency and reserve backing requirements.
Tether is adapting to the new regulatory environment, as evidenced by its investments in MiCA-compliant stablecoin issuers.
In December, the company announced its support for European stablecoin issuer StablR and signaled its commitment to maintaining its presence in the EU market by previously partnering with Quantoz Payments.