This is Why MiCA is Making Coinbase Restrict Stablecoins

According to Algorand, Coinbase began notifying its European clients that it will begin restricting stablecoins that don’t meet Markets in Crypto Assets (MiCA) requirements tomorrow.

The firm identified two stablecoins that are still available: EURD from Quantoz and USDC from Circle. Tether’s European exit heavily impacts both assets.

Coinbase Prepares for MiCA

This news comes from the Algorand Foundation, a proof-of-stake blockchain and cryptocurrency. Algorand directly posted their notice from Coinbase through a social media post and listed the MiCA-compliant stablecoins that its users could switch to. Both of these options, Circle and Quantoz, are entangled in a new struggle for EU stablecoin dominance.

“Dear Client, as a reminder, due to the new MiCA regulation, Coinbase will implement restrictions for stablecoin services that do not meet MiCA requirements. Based on the latest information, we currently expect we will have to restrict services for the following assets: USDT, PAX, PYUSD, GUSD, GYEN, and DAI,” Coinbase claimed in its notice.

MiCA is a comprehensive new regulatory framework for cryptoassets in the EU, and its advent is creating dramatic new market opportunities. Before this year, Tether was the dominant stablecoin in this market, but it quickly became apparent that the stablecoin giant would not meet compliance. Several firms consider this moment a chance to overtake Tether’s market share.

Tether, for its part, is acting strategically. On one hand, it significantly scaled back EU operations in November. The company also heavily invested in Quantoz, which launched one of two MiCA-compliant stablecoins that Algorand identified. The other approved asset, Circle’s USDC, represents an effort to directly muscle in on Tether’s old territory.

Yesterday, Binance announced a partnership with Circle, seemingly to expand in Europe. Coinbase partially owns Circle, and thus, this public gesture took place despite these two massive exchanges’ rivalry. With their combined capital and resources, the pair could make significant strides in the EU market.

For non-stablecoin crypto firms like Algorand, however, this “MiCA market opportunity” might not impact regular operations. The firm has enjoyed an impressive rally in recent months, and its announcement claimed that users could seamlessly use either USDC or EURD from Quantoz.

In other words, this “MiCA market opportunity” is having a diminished impact on firms like Algorand. Its users can enjoy the same experience, and it isn’t the firm’s concern whether or not Tether can regain its market dominance.