The regolamentazione UE is pushing the giants of stablecoins towards the USA, leaving European users in a kind of digital limbo.
The cryptocurrency ecosystem is going through a crucial phase in the regulatory process that could determine its future for the coming decades. At the center of this process are stablecoins, cryptocurrencies pegged to stable values like the dollar or the euro: an infrastructure now essential to the entire crypto market, with over 160 billion dollars in capitalization.
The regulatory approaches of the EU and the USA are in contrast: rigid the European one of MiCAR, more flexible the American GENIUS Act. A game that Europe seems to have already started to lose.
The European regulatory wall: MiCAR and its rigidities
With the entry into force of the MiCAR regulation, the impact on stablecoins in the European Union was immediate and disruptive: several exchanges announced the delisting of Tether (USDT), the largest stablecoin in the world, from their listings for European customers.
“While users might still hold USDT, exchanging it directly for euros or using it on EU-compliant platforms is becoming difficult or impossible,”
Brave New Coin reported, highlighting the practical effect of a regulation that, although created with protective intentions, is creating significant barriers for European investors.
The MiCAR has divided stablecoins into two categories: E-Money Token (EMT), anchored to a single official currency, and Asset-Referenced Token (ART), linked to baskets of assets. The point is that for both, it has imposed such stringent requirements that many operators have fled the European market.
“The EU is saying that if you want to use stablecoin to buy crypto and do DeFi things, go ahead. But if you want to use stablecoin to pay for goods and services like coffee or rent, then you must use stablecoin in Euro”,
Ledger Insights summarized, explaining the logic of monetary sovereignty underlying the European restrictions.
The chains that suffocate innovation and development
The MiCAR imposes a series of limitations that make operations prohibitive for global stablecoin issuers:
1. Quantitative limits on usage: the issuance must cease when usage as a medium of exchange exceeds 1 million daily transactions and 200 million euros – ridiculous figures in a market where Tether moves daily between 15 and 67 billion dollars.
2. Reserve localization requirements: for EMT, at least 60% of the reserves must be held in European banks; for ART, at least 30%. This forces issuers to fragment the global management of their reserves.
3. Restrictions on eligible instruments: Reserves can only be invested in extremely conservative instruments, with limitations that exceed those applied to traditional banks.
4. Quasi-banking authorization regime: Issuers must undergo complex authorization processes and a dual level of supervision involving both European authorities (EBA, ESMA) and national authorities (in Italy, Banca d’Italia and Consob).
5. Complex crisis management procedures: In case of problems, issuers must follow procedures borrowed from banking regulation, including the possibility of extraordinary administration and compulsory administrative liquidation.
The Tether Case: The Resilience of the Giant
The response of Tether to the European impositions was emblematic. Paolo Ardoino, CEO of the company, expressed a substantial disinterest in complying with European regulations, preferring to focus on less regulated and more profitable markets such as the Asian and Latin American ones.
On the other hand, it is natural that there is no interest in radically changing a business model for a market that represents a fraction of the global operations of a company, which manages over 100 billion dollars of stablecoin in circulation.
This choice has immediate consequences for European users, who are progressively being cut off from access to the most liquid of stablecoins, with repercussions on their ability to operate effectively in the global crypto market.
The American approach: the GENIUS Act and the path of flexibility
On the other side of the Atlantic, the USA follows a radically different approach. The GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins Act), recently approved by the Senate with broad bipartisan support (66-32), outlines a more balanced and pragmatic regulatory framework.
The differences with the European model are substantial:
1. Broad and inclusive definition: the GENIUS Act defines “payment stablecoin” in a manner sufficiently flexible to include various operational models, without the rigid European categorizations.
2. Diversified authorization system: three different authorization paths are provided (non-bank federal, subsidiary of depository institutions, state), which adapt to the different needs and sizes of the operators.
3. More flexible reserve requirements: the 1:1 coverage obligation remains, but a wider range of assets is allowed in the reserves, including treasury bills and repurchase agreements.
4. Absence of quantitative limits: no arbitrary caps are imposed on the use of stablecoins, thus promoting organic growth of the bull market.
5. Greater protection in case of insolvency: stablecoin holders are granted an absolute priority privilege on claims in the event of the issuer’s bankruptcy, offering superior protection compared to the European model.
In short, this approach, while aiming to create security, manages to do so without stifling innovation and entrepreneurial initiative.
The Consequences for the European market: a fragmented ecosystem
The de facto exclusion of global stablecoins like Tether from the regulated European market is already producing tangible effects:
1. Reduction of liquidity: European exchanges, forced to remove trading pairs with USDT, see the liquidity available to their users significantly reduced.
2. Increase in transactional costs: market fragmentation leads to wider spreads and higher costs for European operators.
3. Migration towards unregulated platforms: more experienced users are moving towards non-European exchanges or DeFi solutions to continue accessing global stablecoins.
4. Competitive disadvantage: European startups in the fintech and crypto sector face regulatory barriers that their American competitors do not have to overcome.
As observed by Brave New Coin, a true “great exodus of non-compliant stablecoins” is occurring from the European market, potentially increasing the adoption of EU-native stablecoins, pegged to the euro. However, these latter ones would still be limited by a more restricted European ecosystem and might never achieve the liquidity and global reach of the dollar alternatives.
The D.Lgs. 129/2024: an entirely Italian complexity
In Italy, the D.Lgs. 129/2024, which came into force on September 14, 2024, implemented the MiCAR by creating a dual supervisory system involving Banca d’Italia and Consob. If the intrinsic complexity of the European regulation were not enough, this regulatory layering adds further complexity for operators, who must interface with two different authorities and see their legal compliance costs skyrocket.
Now the decree establishes that “the Bank of Italy is assigned prudential supervision and crisis management responsibilities for ART and EMT issuers, while Consob is responsible for transparency, fairness of conduct, and orderly conduct of trading”.
This introduces a breakdown of competencies with unclear boundaries, which risks creating interpretative uncertainties and increasing the already significant compliance costs.
It is necessary to keep in mind that the extent of these charges, particularly burdensome for startups and small operators, usually dynamic and creative, contributes to limiting their access to the market and increases the risk that Italy and Europe remain on the margins of innovation in the stablecoin sector and, more generally, in digital finance.
Monetary Sovereignty vs Innovation and Market Openness: A False Dilemma?
The comparison between the European approach and the American one highlights profoundly different regulatory philosophies: Europe declares that it prioritizes the protection of its monetary sovereignty and financial stability; the United States balances consumer protection with the promotion of financial innovation.
Is this opposition really necessary? Would European monetary sovereignty truly be threatened by a more flexible approach to stablecoin? Or rather, does regulatory rigidity risk marginalizing Europe in a crucial sector of financial innovation?
The choice of Tether to de facto abandon the regulated European market suggests that the current restrictions might be counterproductive. The not-so-implicit message is that the European market is not sufficiently important to justify a radical restructuring of the operational model of a global industry leader.
What future for European stablecoins?
While the United States seems to position itself as the preferred jurisdiction for the issuance of global stablecoins, attracting capital and innovation, Europe risks ending up with a poor, isolated, and less competitive crypto ecosystem.
To avoid this marginalization, there is no other solution than a revision of certain aspects of the MiCAR. Among these, in particular:
1. Reconsider the quantitative limits on the use of stablecoins, which appear arbitrary and disconnected from the reality of the market.
2. Review the localization requirements of reserves, which fragment the global management of the same.
3. Expand the range of eligible instruments for reserves, allowing for more efficient management while maintaining adequate safety standards.
4. Simplify authorization and supervision procedures, reducing overlaps in responsibilities and introducing simplified paths for smaller operators, thus reducing the related compliance costs.
A more pragmatic balance between regulation and innovation could allow Europe to remain competitive in a sector that represents an increasingly strategic component of the global financial infrastructure.
The game is still open
The battle of stablecoins between Europe and the United States is emblematic of a broader challenge: how to effectively regulate digital financial innovation without stifling it. MiCAR must be credited with being the first comprehensive attempt to regulate crypto-assets, but its critical issues are already evident in the first months of application.
The American GENIUS Act, although not yet definitively approved, outlines an alternative model that could better reconcile the needs of protection with those of innovation. Europe now faces a choice: persist on the path of regulatory rigidity, risking irrelevance in the future of digital finance, or rethink its approach to not permanently miss the train of financial innovation.
As demonstrated by the Tether case, global leaders in the sector will not hesitate to turn their backs on markets perceived as overly restrictive, and it is wishful thinking to hope for the birth and affirmation of local unicorns with the existing regulatory barriers.
The challenge for European regulators will be to find a balance that protects consumers and financial stability without sacrificing the digital future of the continent.
