Two years after the MiCA framework began applying to stablecoins, the qualitative gap between regulated and crypto-native designs has widened. We map the implications.
MiCA — the EU's Markets in Crypto-Assets regulation — went into application for stablecoins in mid-2024. The transition was uneven, contentious, and resulted in the withdrawal of several non-compliant tokens from EU-facing markets. Two years on, the regulatory dust has settled enough to assess what has actually changed for client portfolios.
Circle Internet Financial operates USDC under a Belgian electronic money institution licence. Reserves are held in segregated accounts at regulated banks, marked daily, audited monthly, and subject to redemption at par to verified holders. The token's qualitative profile in 2026 is closer to a tokenised bank deposit than to a crypto asset. We treat USDC, for the purposes of our client mandates, as a substitute for short-term EUR or USD cash equivalents.
MakerDAO operates DAI through an over-collateralised, on-chain mechanism. Collateral is now predominantly USDC and US Treasuries via tokenisation partners. The protocol is governed by a token-weighted decentralised process. The MiCA framework does not classify DAI as an electronic money token; it occupies a separate, less-defined category.
In practice, DAI's risk profile depends on the composition of its backing. As of last reporting, approximately 64% of DAI is backed by USDC or directly by tokenised US Treasuries. The remaining 36% is collateralised by crypto-native assets. The token's redemption mechanism is operational and tested, but it depends on continued governance functionality.
We maintain modest USDC allocations across all client mandates as a baseline. We continue to allocate to DAI where governance exposure is consistent with the client's broader profile — typically clients who hold protocol tokens elsewhere — and where the additional yield (typically 30–60 basis points over USDC in 2026) is meaningful at scale.
We do not recommend tether (USDT) in any client mandate, and we have not since 2022. The reserve disclosure regime, while improved, does not meet our threshold.
We expect a third generation of regulated stablecoins — bank-issued, jurisdiction-specific, redeemable at named institutions — to emerge in 2026 and 2027. SocGen-Forge, Standard Chartered's Zodia, and several Asian counterparts have announced products. We will assess them when they reach the depth required for client mandates.