According to a Bloomberg reportCrypto trading platform Robinhood and fintech company Revolut are exploring launching their own stablecoins. The potential move by Robinhood and Revolut comes amid growing pressure from regulators in Europe, which could loosen the grip of Tether, the market’s largest stablecoin issuer.
Tether and Circle prepare for regulatory changes
Several startups have attempted to challenge Tether’s strategy. USDTwhich has maintained a stronghold in the stablecoin market, with a circulation close to $120 billion, more than two-thirds of the total market.
In contrast, its closest competitor, USDC, issued by Circle Internet, has a circulation of approximately $36 billion. Despite numerous attempts to capture market share, most rivals have struggled to make significant inroads.
Despite this, the report notes that the landscape is changing, as the European Union prepares to implement comprehensive regulations known as Markets for Crypto Assets (MiCA). structure by the end of the year, which could be one of the potential catalysts for Robinhood and Revolut to enter the stablecoin space.
These regulations could force crypto exchanges in the EU to delist stablecoins from issuers like Tether that lack the necessary permissions, creating an uncertain environment for Tether and its operations.
Circle has already obtained the required EU license, positioning itself advantageously as regulations tighten. The company has even confidentially applied for a US authorization application. initial public offering (IPO), indicating its confidence in the regulatory landscape.
However, Tether CEO, Paolo Ardoinohas expressed concerns about the risks that EU regulations could pose, especially in scenarios involving massive refunds. Tether is now exploring a “technology-based solution” to adapt to the EU market, although it does not currently hold an e-money license in the region.
Robinhood and Revolut look for stablecoin opportunities
While Robinhood has stated that it has “no imminent plans” to launch a stablecoin, on the other hand, Revolut has expressed intentions to expand its crypto product offerings. The potential for profitable businesses is significant; Tether reported earning $5.2 billion from its reserves in the first half of 2024, illustrating the lucrative nature of this business model.
However, as competition increases in the stablecoin space, experts warn of possible “hyperfragmentation” of the market. Nuri Chang, head of product at BitGo, noted that various financial applications can develop their own stablecoinsresulting in seamless transactions that users may not even notice.
The MiCA regulations, which are already partially in place, require stablecoin issuers to have an electronic money license and ensure that a significant portion of their assets are held in independent banks. The second phase of these regulationswhich will cover all crypto platforms, is expected to provide a clearer compliance framework.
Exchanges like OKX, Uphold, and Bitstamp have already begun delisting Tether stablecoins in anticipation of these regulations, creating competitive disadvantages for those who still support Tether. It remains to be seen whether Robinhood and Revolut will take advantage of this opportunity to finally enter this sector of the market.
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