- Although MiCA is set to start taking effect at year-end, it has yet to lead to an increase in crypto-euro transactions, the European Securities and Markets Authority said.
- The level of euro-denominated crypto transactions has held steady at about 10% since the regulation became law last year.
The European Union’s crypto asset legislation, enacted in 2023 and set to be enforced by the end of the year, hasn’t led to a rise in crypto transactions using the Euro yet, according to the EU’s securities regulatory body.
The European Securities and Markets Authority stated in a recent report that the announcement of the MiCA regulation has not led to an increase in euro trading volumes at present. However, once the regulation is implemented in 2024, it could serve as a significant catalyst for growth due to its focus on strengthening investor protection.
The 27-member trading alliance was an early adopter of a detailed legal framework for cryptocurrencies and digital tokens, known as the Markets in Crypto-Assets regulation. This legislation applies to crypto assets and stablecoins, with the stablecoin guidelines taking effect six months following the implementation of other rules.
Globally, the trading volume for converting fiat currency to cryptocurrencies decreased by 10 percentage points from 30% in 2021 to 20% in 2023. This decline was attributed to the crypto winter, as mentioned in the report. However, the market has since bounced back. The increase in usage and acceptance of stablecoins, which represent digital assets with values linked to real-world currencies or assets, could be a contributing factor. Investors can adjust their investment exposure within the crypto market without having to exit it by utilizing stablecoins.
Approximately 80% of the cryptocurrency transactions at entry and exit points, or on-ramps and off-ramps, involve either the US dollar or the South Korean won. The euro’s influence, accounting for around 10%, has remained constant since the MiCA announcement was made.
Approximately 60% of all cryptocurrency transactions involve stablecoins, according to ESMA’s findings. Around 90% of these transactions are processed through ten major exchanges, with Binance handling nearly half of the total volume.
Read more: MiCA, EU’s Comprehensive New Crypto Regulation, Explained
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2024-04-10 18:46