According to Bloomberg reportCrypto trading platform Robinhood and financial technology company Revolut are exploring the launch of their stablecoins. The potential move from Robinhood and Revolut comes amid growing pressure from regulators in Europe, which could loosen the dominance of Tether, the largest stablecoin issuer in the market.
Modem and Circle Configure Control Changes
Various startups have tried to challenge Tether USDThas maintained a strong foothold in the stablecoin market, with 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 about $36 billion. Despite many attempts to gain market share, most challengers have struggled to make significant changes.
Despite this, the report notes that the landscape is changing, as the European Union prepares to implement comprehensive regulations known as Markets in Crypto-Assets (MiCA). frame at the end of the year, which could be one of the possible motivations for Robinhood and Revolut to enter the stablecoin space.
These rules would force crypto exchanges in the EU to issue stablecoins to issuers like Tether that do not have the necessary permits, creating an uncertain environment for Tether and its functionality.
The circle has already received the necessary EU licence, setting itself up for good as the rules tighten. The company has even filed for privacy in the US first public offering (IPO), which shows its confidence in the regulatory environment.
However, the CEO of Tether, Paolo Ardoinoexpressed concern about the risks EU rules could cause, especially in cases involving mass redemptions. Tether is now testing a “technology-based solution” to adapt to the EU market, although it currently does not have an e-money license in the region.
Robinhood and Revolut Eye Stablecoin Opportunities
While Robinhood has stated that there are “no imminent plans” to launch a stablecoin, on the other hand, Revolut has expressed intentions to expand crypto product donations. The potential for profitable business is important; Tether reported that it received 5.2 billion dollars in its reserves in the first half of 2024, which shows the profitable nature of this business model.
Still, as competition in the stablecoin space heats up, experts warn of potential “hyper-fragmentation” in the market. Nuri Chang, head of product at BitGo, noted that various financial applications may develop their own stablecoinsresulting in seamless transactions that users may not even notice.
The MiCA rules, which are already in place, require stablecoin issuers to have an e-money license and ensure that the majority of their assets are held in private banks. The second category of these regulationswhich will cover all crypto platforms, is expected to provide a clear compliance framework.
Exchanges such as OKX, Uphold and Bitstamp have already started issuing Tether stablecoins in anticipation of these regulations, creating a lack of competition for those who still support Tether. It remains to be seen whether Robinhood and Revolut will seize this opportunity to enter this market sector.
Featured image from DALL-E, chart from TradingView.com