Cryptocurrency firm Circle has achieved a significant milestone by securing registration as an electronic money institution (EMI) in France. This move grants Circle a crucial license to operate as a compliant stablecoin issuer under the European Union’s rigorous crypto laws. 

Circle Breakthrough

According to a CNBC report, the approved license positions Circle as the first global stablecoin issuer to achieve compliance with the European Union’s regulatory framework known as Markets in Crypto-Assets (MiCA). 

This framework, considered a cornerstone in the EU’s approach to governing cryptocurrencies, sets out comprehensive rules and obligations for crypto companies to ensure investor protection and safeguard against market manipulation.

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Circle’s acceptance into the MiCA regulatory framework means that both its USDC and Euro Coin (EURC) tokens can now be issued within the European Union while meeting the stablecoin regulatory obligations outlined by MiCA. 

Additionally, Circle is opening up its Circle Mint service, enabling businesses to mint and redeem Circle stablecoins, to customers in France.

Expressing his satisfaction with the achievement, Jeremy Allaire, co-founder and CEO of Circle, emphasized the company’s longstanding commitment to building compliant and well-regulated infrastructure for stablecoins. He stated:

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.

European Stablecoin Adoption

The EU’s MiCA law, which officially came into effect in May 2023, introduced the world’s first comprehensive regulatory framework for cryptocurrency operations. 

Last week, provisions specifically governing stablecoins were approved, imposing stringent measures on trading volume limitations for certain stablecoins, particularly those denominated in US dollars.

As a registered EMI in France, Circle can now extend its services, including the minting and redemption of USDC through Circle Mint, not only to customers in France but also to individuals and businesses across the European Union. 

This is made possible by the concept of “passporting” outlined in MiCA, which allows crypto businesses to offer services in one EU country and expand into other markets within the bloc.

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While Circle’s achievement is commendable, it should be noted that additional obligations under MiCA about crypto asset service providers will become applicable by December 30, 2024. Crypto companies will then have until July 2026 to ensure full compliance with MiCA’s requirements.

Since its launch in September 2018 by Circle and crypto exchange Coinbase, USDC has gained significant traction and now holds the position of the second-largest stablecoin globally. 

According to CoinGecko data, USDC’s circulation amounts to $32.4 billion, trailing only Tether’s USDT, which holds the title of the world’s largest stablecoin with a circulation of $112.7 billion.

Featured image from Shutterstock, chart from TradingView.com 

The global Bitcoin ATM market has seen significant growth. There are now over 38,000 Bitcoin ATMs worldwide, up from just over 10,000 in October 2020 and down by 2,000 from its all-time high (ATH) of nearly 40,000 in December 2022.

According to data available on Coin ATM Radar, the global tally of installed Bitcoin ATMs stands at 38,279 as of the latest count.

This expansion is driven by factors such as accessibility and ease of use, profitability for operators who earn transaction fees above the Bitcoin spot price, and favorable regulatory environments in many countries that support setup and expansion. 

Additionally, Bitcoin ATMs provide enhanced privacy and security, allowing users to transact without divulging personal information and enabling direct deposits into digital wallets.

Despite their advantages, the industry faces challenges. Many operators lack the necessary experience, financial backing, or business acumen required for success, compounded by regulatory uncertainties in certain regions.

To address these issues, industry leaders emphasize the importance of public education on the benefits of cryptocurrencies and the need for reliable customer support. Building greater understanding and trust among users could encourage broader adoption of Bitcoin ATMs and digital assets.

As demand grows for convenient and secure cryptocurrency transactions, the Bitcoin ATM market is poised for further expansion. Strategic approaches and supportive regulatory frameworks could propel this industry into a pivotal role in the global adoption of digital assets.

Bitcoin holds steady at $60k

Bitcoin’s (BTC) price trajectory in 2024 has been marked by significant volatility and a bullish momentum. March saw Bitcoin achieving a new all-time high, surpassing $69,000 and briefly touching $73,000 before undergoing a correction. 

This surge was driven by pivotal events this year: regulators approved the first spot Bitcoin ETFs in January, and April’s halving event reduced the block reward from 6.25 BTC to 3.125 BTC.

Experts anticipate a new growth cycle in the crypto market, potentially peaking between 2024 and 2025, in line with the four-year market cycle theory.

However, external factors such as global developments and regulatory changes could also influence Bitcoin’s price trajectory. Despite ongoing scrutiny of Bitcoin’s long-term prospects, its historical resilience suggests the possibility of a rebound.

Analysts maintain optimism regarding Bitcoin’s future price movements, with some forecasting it could surpass $80,000 in the coming years.

Over the past 60 days, the Bitcoin price has risen by 7.3%, climbing from approximately $57,000 to its current level of $61,532.

The Markets in Crypto-Assets Regulation (MiCA) marks a significant milestone in the European Union’s journey toward regulating the rapidly evolving crypto market. Its timeline and provisions hold immense importance for both crypto businesses and investors. As we approach crucial dates, starting with the application of stablecoin provisions from June 30, 2024, and the complete application of MiCA on December 30, 2024, the crypto landscape is undergoing a transformative phase. 

Over the next two years

MiCA’s staggered timelines and transitional periods, extending up to June 30, 2026, imply a period of fragmented implementation across the EU and European Economic Area (EEA). Jurisdictions such as Ireland (12 VASPs), Spain (96 VASPs), and Germany (12 VASPs) will grant a 12-month transitional period. In contrast, other jurisdictions will offer more extended periods, such as France (107 VASPs) with 18 months, while Lithuania (588 VASPs) will likely only grant five months. This transitional phase will prompt market consolidation as not all existing service providers will secure MiCA licenses. Many will look to capitalize on this interim period before winding down operations.

The race among EU/EEA jurisdictions to become the primary hub for crypto activities intensifies, with jurisdictions like France, Malta, and Ireland competing to take the top spot. However, regulator readiness and compliance for crypto-asset businesses pose significant challenges. Regulators are facing an adjustment period to upskill their staff to process MiCA applications, particularly in jurisdictions with high applicant volumes. The complexity of various business models, encompassing numerous products unfamiliar to regulators, exacerbates this challenge. The general lack of expertise to authorize and supervise this sector requires substantial training efforts.

Challenges for crypto businesses

MiCA, coupled with the vast array of related Level-2 measures (many of which still need to be finalized) and other applicable EU instruments such as the anti-money laundering laws, the Digital Operational Resilience Act (DORA), and the Electronic Money Directive (EMD), create a complex regulatory framework. Understanding what provisions apply to each entity type and what documentation needs to be implemented will be challenging for some.

The delisting of crypto-assets, particularly stablecoins, from EU exchanges due to their issuers’ failure to obtain their licenses on time will pose considerable hurdles and limit the availability of certain assets for consumers.

Adapting to MiCA will strain many entities and require substantial investments in technological infrastructure. The Travel Rule, a requirement in which information must be shared between VASPs with each crypto transaction, also comes into effect at the same time as MiCA. The Travel Rule mandates that CASPs transfer a substantial amount of information about the originator. This includes their address, personal identification number, and customer identification number. In rare cases, it may even require the disclosure of the originator’s date and place of birth. This adds another layer of complexity, further highlighting the need for harmonization within the EU and solutions to comply with the Travel Rule that are interoperable and enable secure data sharing while preserving user privacy.

Key crypto market outcomes

Despite the challenges, MiCA instils confidence in EU entities due to heightened regulatory oversight, the promotion of investor protection and attracting mainstream institutional participation. Enhanced consumer protection measures mitigate risks such as fraud and hacking, fostering trust among retail clients.

MiCA’s reporting requirements will result in regulators across the EU possessing more data, empowering them to monitor market activities effectively. The ability to freely passport activities across the EU will facilitate cross-border operations and reduce regulatory fragmentation while expanding market reach.

MiCA’s prescriptive nature and all-encompassing regime set a precedent for global regulatory frameworks. Other jurisdictions are already observing and may replicate some of MiCA’s provisions and its approach, contributing to regulatory harmonization on a worldwide scale. However, concerns remain as to whether it will stifle growth and innovation and whether businesses will look to relocate to more permissive and less restrictive jurisdictions.

Steps after MiCA

MiCA’s gaps in regulating emerging areas like true defi (the provision of financial services or issuance of financial assets without identifiable intermediaries and with no single point of failure), lending, and NFTs necessitate ongoing policy discussions and further regulatory measures. Reports on these aspects will inform future regulatory developments, potentially leading to a second iteration of  MiCA in at least the next four to five years or supplementary measures.

MiCA signals a new era of regulation in the crypto market, aiming to balance innovation with investor protection and market integrity. While challenges persist, MiCA lays the groundwork for a more transparent, secure, and inclusive crypto framework in the EU and beyond. As the crypto landscape continues to evolve, regulatory regimes must adapt to emerging trends and technologies, ensuring sustainable growth and fostering investor confidence.

Ernest Lima

Ernest Lima is one of the founding Partners at XReg Consulting and a qualified lawyer with over 17 years of experience working in financial services regulation. As XReg’s legal and regulatory policy lead, he is highly experienced in the design, development, and implementation of crypto legislative frameworks that meet both global and local policy objectives. At XReg, Ernest leverages in-house expertise on Europe’s Markets in Crypto-Assets (MiCA) Regulation to advise European clients or those looking to enter the European market. He also leads engagement with European public sector officials and National Competent Authorities in their transition to MiCA compliance. Ernest has also spoken at industry conferences and trained international regulatory authorities on Europe’s MiCA regulation and how it will shape the future of crypto’s international regulatory landscape. He also sits on the Financial Markets Law Committee to address issues arising from using cryptoassets and DLT.