Aave has introduced the MiCA-compliant EURC stablecoin on the Base platform, allowing users to utilize it for lending and borrowing purposes.
This decentralized lending and borrowing protocol has integrated Circle’s EURC (EURC) stablecoin on the Base layer 2 blockchain. With EURC now available in Aave’s Base market, users have the option to borrow EURC or use it as collateral for other loans within the platform. This development enhances the choices available for Aave users, expanding beyond the USD-pegged stablecoins currently offered, such as USD Coin (USDC), Dai (DAI), and Tether (USDT).
This advancement aligns with a broader trend among lending and borrowing platforms in the DeFi space, which are diversifying their portfolios to include stablecoins that are not tied to the dollar. In the previous year, DeFi protocols like Fluid and Moonwell also established markets for EURC on the Base platform.
This initiative is part of a larger movement among crypto service providers to incorporate more MiCA-compliant stablecoins while phasing out those that do not meet these standards following the implementation of the MiCA regulation. For instance, Binance recently announced plans to delist nine stablecoins, including USDT and DAI, for users in the European Economic Area to ensure compliance. Coinbase has similarly removed non-compliant stablecoins, including Tether, and encouraged its users to shift to compliant alternatives such as USDC and EURC.
The MiCA compliance framework mandates that stablecoins and other crypto assets conform to rigorous regulations set forth by the European Union. It requires issuers to obtain licenses and register within the EU, provide regular disclosures regarding their reserves, and undergo audits to mitigate fraud and mismanagement risks. Consumers have the legal entitlement to exchange stablecoins on a 1:1 basis for fiat currency, with issuers required to maintain fully backed reserves comprised of secure, low-risk assets. Compliance is overseen by the European Banking Authority and national regulators, who have the authority to prohibit non-compliant stablecoins and intervene during instances of financial instability. Circle, the issuer of EURC and USDC, became the first stablecoin issuer to achieve MiCA licensing, which took effect on July 1.