The European Union’s Crypto-Assets Markets Regulation (MiCA) framework is gradually coming into force according to the planned implementation schedule. The first regulations, which came into force on July 1, focused on stablecoins and their issuers.

These clear guidelines cleared the market of players who failed to meet regulatory requirements and created a conducive environment for stablecoins based on local currencies.

A new collaboration between France-based fintech company Next Generation and Ireland-based electronic money institution (EMI) DECTA Ltd provides an example of this. The two companies announced plans to reintroduce EURT, a euro-backed stablecoin, on the Stellar blockchain.

According to the parties, this initiative, launched on August 5, is fully MiCA compliant. Next Generation has strong ties with the famous fintech player Tempo France. In 2017, the company collaborated with the Stellar Foundation to launch EURT, pioneering one of the first euro-backed stablecoins.

However, the lack of a regulatory framework at the time resulted in a stall for the project. Now, under MiCA, stablecoins are classified as electronic money tokens (EMT), making them compatible with traditional e-money, requiring issuers to hold an EMI license or become a credit institution.

This regulatory clarity has transformed the euro-backed stablecoin market and made it more predictable and attractive for investors.

At the time of MiCA coming into force, an industry analyst told Cointelegraph that they expected a potential shift towards euro-backed stablecoins as demand grows in European markets. DECTA was authorized by the Central Bank of Ireland to obtain an EMI license which it would use to issue EURT.

Next Generation’s president, Suren Hayriyan, stated that the current demand for euro-backed stablecoins is around $30 billion and the supply is under $300 million. The collaboration aims to close this gap and a significant growth projection is envisaged for EURT.

Currently, the euro-backed stablecoin market includes major players such as Circle (EURC) and Tether (EURT), and Hayriyan describes these players as “our main competitors.”

“However, our strong regulatory compliance and technological infrastructure keep us in a strong position in this emerging market,” he said. Next Generation and DECTA target EURT to be launched by October 2024.

Circle became the first global stablecoin issuer to comply with MiCA, choosing France as its European headquarters, citing the country’s “forward-thinking” stance on digital asset regulation.

MiCA is expected to become active and provide significant growth in the euro-backed stablecoin sector. Market forecasts call for a minimum market capitalization of 15 billion euros by 2025, reaching 70 billion euros in 2026 and exceeding 2 trillion euros in 2028.

As of July 31, the market capitalization of stablecoins increased and reached $164 billion, an increase of 2.1% in July. These were the highest levels since April 2022, and stablecoins such as USD Coin saw a 48% increase in trading volume.