Circle’s USDC Stablecoin Now Compliant with EU Crypto Law
Launched in 2018 by crypto firm Circle, USDC is now the second-biggest stablecoin globally, with more than $30 billion worth of tokens in circulation.
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Cryptocurrency firm Circle announced on Monday that it has been registered as an electronic money institution (EMI) in France. This pivotal license grants the company authorization to operate as a compliant stablecoin issuer under the European Union’s stringent crypto regulations.
Circle, well-known for its USD Coin, or USDC, stablecoin, shared in a statement that it received the e-money license from the ACPR (Autorité de Contrôle Prudentiel et de Résolution), France’s banking industry regulator.
This certification establishes Circle as the first global stablecoin issuer to achieve full compliance with the EU’s comprehensive Markets in Crypto-Assets (MiCA) regulatory framework. Circle emphasized that this approval ensures that both its USDC and Euro Coin (EURC) tokens are now issued in the EU, fully adhering to MiCA’s stringent regulations for stablecoins. Furthermore, the company announced the opening of its Circle Mint in France, enabling businesses within the country to mint and redeem Circle stablecoins.
“Since our founding, Circle has sought to build durable, compliant, and well-regulated infrastructure for stablecoins,” Jeremy Allaire, Circle’s co-founder and CEO, stated in a statement released on Monday. “Our adherence to MiCA, which represents one of the most comprehensive crypto regulatory regimes in the world, is a huge milestone in bringing digital currency into mainstream scale and acceptance,” Allaire added.
Stablecoins are a unique type of cryptocurrency designed to be pegged to traditional assets, typically government-issued currencies like the U.S. dollar. Investors favor stablecoins to mitigate the volatility inherent in other cryptocurrencies, such as Bitcoin.
Stablecoins play a crucial role in facilitating swift trading in and out of cryptocurrencies, providing users with a reliable alternative to relying on fiat currencies held in bank accounts.
EU ushers in stablecoin rules
EU regulators took a significant step last year by passing the world’s first comprehensive legislation governing the operations of cryptocurrency companies. This legislation establishes clear guidelines for companies to implement investor protections and ensure their platforms are robust against manipulation.
Known as MiCA (Markets in Crypto-Assets), the law officially entered into force in May 2023. However, provisions specifically governing stablecoins were approved just last week. These measures were considered particularly strict due to the limitations they impose on the trading volume allowed for certain stablecoins, specifically U.S.-denominated ones.
Under these rules, companies are required to cease issuing non-euro-denominated stablecoins used as a “means of exchange” if they exceed a threshold of 1 million transactions or reach a value exceeding 200 million euros ($215.2 million) per day, as outlined in Article 23 of MiCA.
Circle, as a France-registered EMI, now has the authority to offer its services, including the minting and redemption of USDC via Circle Mint, not only in France but throughout the European Union. MiCA allows crypto businesses operating in one EU country to “passport” their services to other markets within the bloc.
The remaining provisions outlined in MiCA, specifically targeting crypto asset service providers, will become fully applicable by December 30, 2024. Crypto companies will then have until July 2026 to fully comply with all aspects of MiCA.
Launched in September 2018 as a joint venture between Circle and cryptocurrency exchange Coinbase, USDC has solidified its position as the second-largest stablecoin globally, with a current circulation of $32.4 billion worth of tokens (according to CoinGecko data). It trails only Tether’s USDT, the world’s leading stablecoin, which boasts a market capitalization of $112.7 billion, according to CoinGecko.
Key Takeaways:
- Circle, the company behind the popular USDC stablecoin, is now a fully compliant stablecoin issuer in the EU thanks to its new license as an EMI in France. This is a significant achievement as it demonstrates Circle’s commitment to building a compliant and regulated system for stablecoins, particularly in light of the EU’s MiCA legislation.
- The EU’s MiCA legislation is the first comprehensive framework for regulating crypto companies globally. This law lays out specific rules for investor protection, platform security, and stablecoin issuance.
- This move puts Circle ahead of the curve within the global stablecoin market, paving the way for wider adoption of USDC within the EU. With this new license, Circle can now offer its entire suite of services, including USDC minting and redemption, across the entire EU market.
- The EU’s stringent MiCA rules are a crucial step toward fostering confidence and security within the cryptocurrency market. By requiring compliance, the EU aims to ensure a level playing field for investors and protect against market manipulation.
This news represents a significant step forward for the stablecoin industry and the broader crypto market globally. It indicates a shift toward greater regulatory clarity and acceptance of cryptocurrencies in mainstream financial systems.
