Robinhood and Revolut are considering launching their own stablecoins, betting that tighter regulation in Europe could weaken Tether’s dominance in the $170 billion digital asset market.
According to Bloomberg, both fintech companies are considering the move but have not yet committed to it.
With stablecoins, Tether’s USDT circulation grew to around $120 billion, accounting for more than two-thirds of the market. Despite numerous attempts by competitors, Tether has held its own, with the next largest stablecoin, USDC, having $36 billion in circulation.
However, with the European Union’s Market for Cryptoassets (MiCA) regulation set to be fully implemented by the end of the year, Tether could face new challenges. MiCA requires stablecoin issuers to hold certain licenses, which could force exchanges within the EU to delist non-compliant tokens like USDT.
USDC issuer Circle has already obtained the necessary EU license and is preparing for an initial public offering in the United States. Meanwhile, Tether CEO Paolo Ardoino expressed concern about the risks posed by EU rules, noting that the company is working on “technology-based solutions” for the region.
New entrants to the stablecoin market
Robinhood and Revolut are among the fintech companies eyeing the market, but neither company has disclosed specific plans. A Robinhood spokesperson said there are “no imminent plans” to issue a stablecoin, but suggested Revolut is focused on expanding its offering of crypto products.
The financial incentives for stablecoin issuers are substantial. According to the company, Tether made $5.2 billion in profits in the first half of 2024, primarily from reserves backing USDT.
The use of stablecoins in payments is also growing, especially in emerging markets, as stablecoins gain traction beyond simply moving funds to and from crypto exchanges. Countries such as Brazil, Indonesia, and Nigeria are increasingly using stablecoins to save in USD, pay for goods, and even settle salaries.
MiCA’s stablecoin regulations came into effect in June, requiring issuers to hold an e-money license and meet strict backing requirements. The 18-month enforcement period for other crypto platforms will begin at the end of 2024, during which exchanges will have to comply with the new rules.
Exchanges such as OKX, Uphold, and Bitstamp have already partially delisted Tether’s stablecoin in anticipation of the new regulatory environment. Meanwhile, some companies, such as Société Générale subsidiary SG Forge, see an opportunity. SG-Forge has obtained an e-money license and sees MiCA as a turning point in the industry, expanding its stablecoin offering to the retail market.
