EU’s Complex Regulations Hinder Stablecoin Progress While U.S. Companies Advance

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EU’s Complex Regulations Hinder Stablecoin Progress While U.S. Companies Advance

Bitget-RWA2025/11/01 07:22

By:Bitget-RWA

- EU stablecoin firms face dual licensing under MiCA and PSD2, doubling €250,000 capital requirements and stifling innovation. - USDC (Circle) and Tether dominate with $74B and $135B in Treasury holdings, leveraging compliance and institutional partnerships. - Circle's Arc blockchain and Tether's infrastructure strategies highlight industry shift toward proprietary solutions for compliance and speed. - Geopolitical competition intensifies as South Korea launches KRW1 stablecoin on Circle's Arc, targeting i

The competition among stablecoins in 2025 is increasingly focused on meeting regulatory standards, as top companies maneuver through a maze of international regulations. In the European Union, inconsistent policies risk hindering progress, while American issuers such as

Circle

and

Tether

are strengthening their positions by investing in infrastructure and U.S. Treasury assets.

EU’s Complex Regulations Hinder Stablecoin Progress While U.S. Companies Advance image 0

Stablecoin providers in the EU are facing significant challenges as overlapping obligations from the Markets in Crypto-Assets (MiCA) regulation and the Payment Services Directive (PSD2) require companies to obtain two separate licenses for identical custody and transfer services. The European Banking Authority (EBA) clarified in June 2025 that euro-backed stablecoin custody falls under PSD2, obligating firms to acquire both MiCA and PSD2 licenses by March 2026. This overlap effectively doubles the capital requirement—€125,000 for each license—resulting in a €250,000 minimum, as highlighted in a

BeInCrypto report

. Patrick Hansen, who leads Circle’s EU policy, cautioned that this “regulatory misstep” could damage the EU’s ability to compete and slow down the adoption of euro-denominated stablecoins, according to

Crypto Economy

While European authorities continue to debate compliance issues, U.S. stablecoins are gaining momentum.

JPMorgan

analysts noted that Circle’s

USDC

has increased its market cap by 72% so far this year, reaching $74 billion, outpacing Tether’s 32% growth, according to a

JPMorgan report

. Adherence to MiCA has played a major role, with USDC’s transparent reserve audits and collaborations with Visa and Mastercard boosting confidence among institutions, as reported by

Bitget

. USDC’s expansion to blockchains such as

Solana

and Base, supported by Circle’s Cross-Chain Transfer Protocol (CCTP), has further established its importance in decentralized finance (DeFi).

At the same time, Tether has carved out a significant role in traditional finance. Its holdings in U.S. Treasuries now top $135 billion, placing it above South Korea and the UAE and ranking 17th worldwide, according to

FinanceFeeds

. This development aligns with regulatory expectations that stablecoin reserves consist of low-risk assets, especially under the U.S. GENIUS Act. Experts suggest Tether’s growing presence could influence Treasury yields and reinforce the dollar’s global status, though some warn of potential liquidity concerns, as noted by

Yahoo Finance

Geopolitical rivalry is also heating up. South Korea’s BDACS has introduced its won-pegged stablecoin, KRW1, on Circle’s Arc blockchain, joining a group of institutional partners like BlackRock and Visa, as detailed by

Coinpedia

. This initiative highlights the push to bring regulated stablecoins into international payment networks, with Arc’s efficient and cost-effective infrastructure attracting institutional interest, according to

CryptoTimes

Launched in August 2025, Circle’s Arc blockchain marks a strategic move for stablecoin issuers aiming to control their own settlement networks. By developing a dedicated Layer-1 blockchain, Circle seeks to enhance transaction efficiency, lower expenses, and integrate compliance mechanisms directly into the system, as reported by

Yahoo Finance

. Rivals such as Tether and Stripe are also pursuing proprietary blockchain solutions, reflecting a wider industry shift toward custom infrastructure.

As the stablecoin sector continues to change, the combination of regulatory certainty and technological advancements will shape which companies lead the market in 2025.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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