The Impact of MiCAR Regulation on the Euro Stablecoin Market

Maximilian Santner and Alfred Taudes

Working Paper Series/Institute for Cryptoeconomics/Interdisciplinary Research from WU Vienna University of Economics and Business

Abstract: Stablecoins have evolved from a safe-haven asset to a critical financial instrument, reaching a market capitalization of $200 billion in December 2024. The Terra-Luna collapse (2022) and the Silicon Valley Bank crisis (2023) significantly impacted market dynamics, consolidating the dominance of Tether (USDT) and Circle (USDC), which now control 90% of the global stablecoin market. The implementation of the Markets in Crypto-Assets Regulation (MiCAR) in the EU in 2024 presents a new disruption, shifting the focus from liquidity crises to regulatory intervention. The findings suggest that MiCAR, as a regulatory force, could drive lasting structural changes in the stablecoin market beyond short-term shock events. Our analysis highlights that while Circle has secured a strong regulatory position under MiCAR, in creasing competition from bank-led issuers and financial service providers may challenge its dominance in the EUR-denominated stablecoin market. Meanwhile, Tether, unwilling to comply with MiCAR’s strict reserve requirements, has largely withdrawn from the European market but retains indirect influence through investments in compliant issuers. Additionally, regulatory barriers appear to favor established institutions over startups, potentially stifling innovation and limiting new entrants in the European stablecoin ecosystem.

Date: 2025
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