USDT exits the market, EURC fills the gap, Euro stablecoin surges over 170% against the trend

Author: Jae, PANews

As the global stablecoin landscape exceeds $300 billion, with USD assets dominating 99% of the market share, a non-mainstream category is quietly making a comeback.

Dune data shows that the total market capitalization of euro stablecoins recently surpassed $400 million for the first time in history, with a growth rate of over 170% since the beginning of this year.

Compared to the massive scale of USD stablecoins, which account for only 0.14% of the global market, this force should not be underestimated. Against the backdrop of increasingly stringent regulations under the EU’s Markets in Crypto-Assets (MiCA) law, the countertrend surge in this data indicates that the eurozone’s crypto ecosystem is experiencing a profound liquidity reshaping.

A smoke-free on-chain euro war may have already begun, perhaps marking a turning point for euro stablecoins moving from the fringes to mainstream markets.

Providing compliant entry tickets, regulatory certainty as a growth driver

The most puzzling aspect of the countertrend growth of euro stablecoins is the regulatory pressure behind it. From a traditional financial perspective, strict regulation usually means limited market vitality. However, market logic often contradicts intuition: harsh rules can actually eliminate uncertainty for capital entry.

After the collapses of FTX and Terra, global capital fears of unlicensed assets far surpass resistance to strict regulation. While MiCA sets thresholds, it also provides compliant entry tickets for large financial institutions and stablecoin issuers.

Before full implementation of MiCA, the euro stablecoin market was fragmented with inconsistent rules across member states. In June 2024, the MiCA provisions on stablecoins will officially take effect, requiring issuers to obtain licenses from electronic money institutions or credit institutions within EU member states.

In essence, this extremely high threshold acts as a gatekeeper. Under the MiCA framework, stablecoins that fail to meet 100% reserve backing, monthly third-party audits, and full redemption at any time must withdraw from the European market.

Suddenly, the market was alarmed, and stablecoin giants like Tether had to withdraw from Europe. The large-scale purge on the supply side created a vacuum for compliant issuers like Circle. Dune data shows that within 18 months of MiCA’s implementation, the monthly trading volume of major euro stablecoins soared from $19.7 million to $310 million, an increase of approximately 15.74 times.

More importantly, MiCA introduced a “passport” mechanism, allowing any issuer licensed in one member state to operate across the entire EU. For leading European centralized exchanges (CEXs) like Bitstamp and Bitpanda, delisting non-compliant USDT trading pairs and shifting to MiCA-compliant euro stablecoins (such as EURC) is not only a regulatory compliance requirement but also a necessary measure to avoid potential sanctions. Clearly, regulation has shifted from an optional action to a survival necessity, directly fueling the tangible growth of euro stablecoins.

From risk hedging to arbitrage allocation, another catalyst for scale growth

Exchange rate appreciation is another hidden pillar behind the growth of euro stablecoins. Between late 2024 and 2025, the repeated US inflation expectations and the resilience shown by macroeconomic data in the eurozone form the underlying logic for euro appreciation against the US dollar.

For crypto investors, holding euro stablecoins not only meets on-chain hedging needs but also serves as a means of forex arbitrage and diversification.

When the euro appreciates against the dollar, prudent capital typically moves funds into euro-denominated assets to hedge against dollar depreciation. Investors holding euro stablecoins, with unchanged asset face value, will gain additional fiat purchasing power. For domestic European investors, especially those needing cross-currency risk hedging, converting idle USD stablecoins into euro stablecoins not only hedges single-currency risks but also captures positive exchange rate fluctuations.

In this year’s specific macro cycle, due to the positive contribution of exchange rate expectations, the holding cost of euro stablecoins is actually lower than that of USD stablecoins. This forex arbitrage behavior has invisibly boosted the scale of euro stablecoins, forming a strong wave of passive capital inflows.

Moreover, global concerns about over-reliance on the US dollar settlement system have further intensified this year. Particularly with changes in US tariffs and geopolitical turbulence, some international trade entities are seeking alternatives. As the second-largest global reserve currency, the digital form of the euro—namely euro stablecoins—has become the preferred option for non-US entities conducting cross-border on-chain settlements.

Chainalysis data shows that after April this year, following the implementation of US tariff policies, there has been a notable shift from USD-denominated to EUR-denominated transactions. During this period, EURC’s trading volume growth far outpaced USDC’s, reflecting an urgent market demand for diversified foreign exchange reserves.

Multi-chain deployment and application strategies jointly drive, with EURC occupying 70% of the market share

Within the $400 million euro stablecoin market, Circle once again demonstrates its dominance as a compliant giant.

Dune data indicates that Circle’s EURC supply has approached $300 million, accounting for about 70% of the market share, serving as the main engine behind the overall growth of euro stablecoins.

Circle’s leading position is due to precise early deployment. Before MiCA took effect, Circle proactively obtained an electronic money institution license in France, under the supervision of the French Prudential Supervision and Resolution Authority. This made it the first mainstream player to be “licensed and compliant” when MiCA was implemented.

The transparency of EURC’s reserves is the cornerstone of gaining user trust. According to its public audit reports, EURC’s reserve management aligns with the highest standards under the MiCA framework.

However, compliance is just the entry ticket; capturing market share requires an ecosystem. EURC is not limited to the Ethereum mainnet but has adopted a multi-chain expansion strategy.

• Ethereum: The primary battlefield for large institutional settlements, carrying about 60% of circulation.
• Base: Leveraging Coinbase’s large retail user base, EURC’s application on Base has rapidly expanded into small payments and daily social transactions.
• Solana: With extremely high TPS and low fees, it has become the top choice for high-frequency forex trading and arbitrage.
• Stellar: Deep integration with payment giants like Visa and Wirex enables EURC to achieve 24/7 real-time settlement, optimizing cross-border remittance costs.

Real breakthroughs may occur in application scenarios. On December 12, EURC announced integration into World App, which has 37 million users, potentially injecting a huge retail dynamic, allowing users to send EURC directly within chat applications.

As the market leader, EURC’s expansion has directly driven a qualitative change in the overall scale of euro stablecoins. When liquidity reaches a certain threshold, EURC is transitioning from a store of value tool to a medium of payment. Today, Visa has begun settling in EURC on the Stellar network, possibly marking euro stablecoins’ official entry into the mainstream financial infrastructure layer.

Entry of traditional banking giants, CBDC also eyeing

Circle is not resting on its laurels. As the market grows, traditional financial giants are beginning to compete. One typical example is EURCV issued by SG-FORGE, a subsidiary of Societe Generale.

Unlike EURC with Web3 genes, EURCV flows with pure banking blood. Its initial purpose was to provide a compliant on-chain cash tool for tokenized securities and retail payment services. Payments giant DECTA’s report indicates that EURCV’s transaction volume grew by 343.26% in 2025, mainly due to its adoption in European institutional repo agreements and bond tokenization settlements.

Compared to EURC, EURCV’s credit backing is directly provided by top-tier commercial banks, which is an unmatched advantage in traditional financial scenarios that are highly sensitive to counterparty risk.

In addition to Societe Generale, several European banks including Banco Santander in Spain have also launched stablecoin experiments this year. These “legacy stablecoins,” backed by banks’ already enormous deposit bases, may potentially trigger a strong on-chain migration at some future event.

And above all market participants, the pressure from the public sector has always loomed. The European Central Bank’s push for digital euro (CBDC) is the biggest uncertainty facing private euro stablecoins.

ECB Executive Board member Piero Cipollone emphasized: To maintain European monetary sovereignty, it is necessary to issue a public digital cash. Yesterday (December 18), ECB President Christine Lagarde also stated that the ECB has completed preparations for the digital euro, awaiting political action.

Compared to euro stablecoins, CBDC has inherent advantages in legal status, holding limits, and infrastructure access. If CBDC can provide higher user convenience and zero-cost structures in the future, it could directly impact existing euro stablecoins.

The ECB’s deeper concern is financial stability, and it remains skeptical about deposit runs potentially triggered by stablecoins. According to ECB analyses, if a large number of retail deposits convert into euro stablecoins, it may weaken the traditional banking sector’s lending capacity. Meanwhile, since stablecoin reserves are concentrated in banks, a wave of on-chain redemptions could cause instantaneous liquidity pressures on banks.

To prevent such risks, MiCA will impose stricter regulations on euro stablecoins, requiring their reserves to be increased to 60%. These ongoing compliance costs may limit the future expansion momentum of euro stablecoins.

This also presents a fundamental contradictory narrative: euro stablecoins flourish under compliant frameworks, while their regulators are planning a possible replacement—CBDC. The interplay between “official” and “private” will be the biggest uncertainty for euro stablecoins in the coming years.

The rapid growth of euro stablecoins may indicate a long-term trend: as regulatory dust settles, global investors are no longer satisfied solely with USD stablecoins; the ecosystem of euro stablecoins is being rapidly filled.

Meanwhile, with further tokenization of RWA (Real-World Assets) and cross-border settlement demands, euro stablecoins may be on the brink of large-scale adoption. And this game led by Europe has only just begun.