MiCA Targets Tether As Revolut And Robinhood Aim To Capitalize

Robinhood and Revolut are reportedly exploring the possibility of entering the stablecoin market, aiming to challenge significant dominance held by Tether. Thus far, neither company has made any formal announcements, and no representatives have commented publicly.

The timing seems advantageous, as Robinhood and Revolut are not the only notable firms investigating stablecoins. On Thursday, Ethena Labs introduced a new stablecoin backed by the BlackRock USD Institutional Digital Liquidity Fund (BUIDL). This stablecoin aims to mirror the stability of traditional options by linking its value to BUIDL, which consists of US dollars, short-term US Treasury bills, and repurchase agreements.

Competition Heating Up

The interest in stablecoins is largely driven by the upcoming MiCA regulations in the EU, which will impose strict rules on this market. While Circle has the necessary licensing to operate in the EU, it has not posed a serious challenge to Tether in over two years. Should Tether fail to comply, the EU market would present a prime opportunity for new entrants, particularly for major players like Robinhood and Revolut.

Thomas Eichenberger, Chief Product Officer at Sygnum, remarked on the appeal of the business models seen with companies like Circle and Tether, suggesting many may seek to replicate their success. Bloomberg highlighted that Tether employed about 100 people while generating $5.2 billion in profit this year, making it a significant player in terms of assets under management.

Global Expansion

The stablecoin market is expanding globally, especially in emerging economies, where an increasing number of users are utilizing them for savings or everyday transactions. Their role in helping users navigate US sanctions has also drawn considerable interest.

Even before the specific opportunities presented by MiCA, investors have been keen to disrupt the duopoly held by Tether and Circle. PayPal introduced its own stablecoin last year with this aim and is nearing a valuation of $1 billion, though the total assets of Tether stand at nearly $120 billion. If the EU market becomes available for competition, numerous challengers are expected to emerge.