Dollar-based stablecoins have tightened their grip on the stablecoin market, leaving euro-based stablecoins struggling to gain traction.

Data compiled by crypto research firm Kaiko show monthly spot trading volume for euro stablecoins has halved to about $100 million this year from about $200 million in early 2024. In a report, Kaiko said, "Euro-based stablecoins have failed to generate meaningful trading activity despite the MiCA regulatory framework aimed at creating a favorable environment for compliant issuers in Europe."

MiCA is a European Union crypto regulation enacted in 2023 that sets out clear rules for issuers of cryptocurrencies, including stablecoins. Despite the sweeping legislation, use of euro stablecoins has not increased. Kaiko said traders are using dollar-denominated tokens instead of euro tokens, and that euro-based tokens "offer no real advantage, only currency conversion friction versus the dollar."

Tether, issuer of the largest stablecoin USDT, stopped issuing its euro-denominated stablecoin EURT in 2024. EURT had only minimal trading volume compared with USDT even before it was shut down. EURA, once the largest euro stablecoin, is also ending its service, citing falling demand.

Kaiko said total monthly trading volume for euro stablecoins is about $1.5 billion to $2.0 billion, but that is about 200 times smaller than more than $1 trillion a month for dollar stablecoins. It said this shows regulatory approval alone cannot drive market adoption in the absence of underlying demand.