With Aave’s launch of the EURC stablecoin on Base, which complies with MiCA, users can now use it to secure loans and borrowing.
The decentralized lending and borrowing platform Aave introduced Circle’s EURC stablecoin on the Base layer 2 blockchain. Users can now borrow EURC or use it as collateral to obtain other loans on the platform thanks to its availability on Aave’s Base market. Thanks to this addition, Aave users now have more options for borrowing and leveraging their assets than just the USD-pegged stablecoins available on the platform, such as USD Coin (USDC), Dai, and Tether.
Aave’s EURC Stablecoin On Base
This development contributes to the expanding trend of DeFi platforms offering more than just dollar-pegged stablecoins for lending and borrowing. Additionally, a market for EURC on Base was activated last year by the DeFi protocols Fluid and Moonwell.
It also fits into the expanding trend of crypto service providers trying to delist non-compliant stablecoins and integrate more MiCA-compliant ones since the MiCA regulation took effect. For instance, Binance recently declared that it would delist nine stablecoins, including USDT and DAI, for users in the European Economic Area to guarantee compliance with MiCA regulations. Likewise, Coinbase urged users to switch to compliant stablecoins like USDC and EURC and delisted non-compliant ones like Tether.
MiCA Regulations And Stablecoin Issuance
Stablecoins and other cryptocurrency assets are guaranteed to comply with stringent EU regulations thanks to MiCA compliance. In particular, it mandates that issuers have EU-based licenses and registrations, disclose their reserves regularly, and submit to audits to guard against fraud and poor management.
Issuers must keep fully backed reserves in safe, low-risk assets, and consumers have the legal right to exchange stablecoins 1:1 for fiat money. With the authority to prohibit non-compliant stablecoins and step in when there is financial instability, the European Banking Authority and national regulators keep an eye on compliance. With effect from July 1, Circle, the issuer of EURC and USDC, was the first stablecoin issuer to receive a license from MiCA.
