Euro stablecoin market set to take off, thanks to real-world uses, regulatory clarity

Circle’s Patrick Hansen provided an overview of the euro-denominated stablecoin market at EthCC: It all looks rosy, he said.

The future is bright for euro-denominated stablecoins, according to Patrick Hansen, European Union strategy and policy director at Circle. The United States dollar may preserve its first-mover advantage, but euro stablecoins will see increasing real-world use cases emerge to lift them above their current meager market share, Hansen said at EthCC in Paris.

Euro-denominated tokens currently represent 0.3% of the stablecoin market and are worth $300 million. At the same time, the euro occupies 20% of the traditional monetary system. It is in second place to the U.S. dollar in both instances and may stay in that position for a while. Hansen explained that the stablecoin market began with the dollar, and that:

“Liquidity begets liquidity.”

With lower liquidity in the market, euro stablecoin users face higher risks and usage costs.

However, “we are currently moving from speculation to utility,” Hansen said of crypto capital markets as a whole. He said that the increasing use of stablecoins in remittances, business-to-business transactions and other cases shows this, and users will want to use stablecoins in their local currency for these purposes. Integrating euro stablecoins into existing European payment systems will also boost their use.

Decentralized finance will go the same way, with real-world uses, such as car loans, being delivered in local currency, Hansen argued. This will lead to more regionalized liquidity pools, he explained.

What does a cup of coffee have to do with the future of the global economic system? As the US Congress prepares for its first vote on Stablecoin laws, US political leaders have a choice to make about the US and Dollar competitiveness. A video for political leaders below. $USDC pic.twitter.com/9sQyZwq4WE

— Jeremy Allaire (@jerallaire) July 13, 2023

The passage of the Markets in Crypto-Assets regulations will provide regulatory clarity in the European Union. Hansen added:

“I would even go so far as to say regulatory incentives.”

The euro-denominated stablecoin market is now dominated by five tokens, including Circle’s Euro Coin (EUROC), which it introduced in June 2022. Circle has applied for a license in France to make EUROC a “fully compliant e-money token,” Hansen said.

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