Europe will soon test the application of new crypto rules, and some of the industry's biggest players are bracing for impact.

Why it matters: Dominant U.S.-dollar-pegged stablecoin issuers and a couple of the largest crypto exchanges say they're still working toward compliance with the new scheme going into effect June 30.

Catch up quick: The EU's Markets in Crypto-Assets Regulation, known as MiCA, asks certain crypto companies to comply with new disclosure requirements, as well as existing rules that say fiat-backed digital currency can only be legally issued by banks and e-money institutions.

• That broad regulatory framework for digital assets homes in on how stablecoin issuers should operate.

It's not yet clear, however, whether the most-used stables in the world will attain regulated status under MiCA.

• Though algorithmic-based coins or those not backed by a liquid reserve on a 1:1 basis are an obvious no-go.
• A spokesperson for ESMA, the EU's financial markets regulator, said via email, "For the moment there is no list (and no issuer officially authorised and no unauthorised stablecoin technically before 30 June 2024)."

The big picture: Tether and Circle's stablecoins, USDT and USDC respectively, dominate trading with nearly 90% of the combined market.

• Binance, the world's largest crypto exchange by volume, said last week that it was taking steps to try to comply with the upcoming MiCA rollout, in part, by restricting access to certain stablecoins, though it also hasn't said which coins would be affected.
• A spokesperson for Binance's European unit in response to Axios's query said there was no list and echoed a blog post about what users should know about upcoming changes.
• He added: "Currently, there are few regulated stablecoins with limited liquidity that may not be sufficient to support sudden demand from across the industry."

Nearly 90% of all crypto transactions are done using USD-backed stablecoins relative to fiat, with average weekly volume in 2024 roughly $270 billion, according to Kaiko.

• Euro-backed stablecoins are used for 1.1% of all transactions.

Zoom out: Binance and fellow exchange Kraken appear to be "important fiat off-ramps" for EU traders, as USDT/euro trading pairs are among the highest volume trading tools on both platforms — exceeding even euro-denominated bitcoin volume by a large volume, a Kaiko report said today.

• Kraken said last month that it was "actively reviewing" Tether's status under those rules, but stopped short of saying it would delist USDT.

The intrigue: Tether chief Paolo Ardoino said in an email statement today that the company "remains concerned that MiCA contains several problematic requirements."

• Circle is "committed to full compliance with EU's MiCA regulations," a spokesperson said in an email last week, adding that it was working on getting an EMI license before the end of this month.

There's a growing set of issuers putting U.S. treasuries on the blockchain, including asset managers like BlackRock and WisdomTree.

• Fidelity International, meanwhile, reportedly used JPMorgan's private blockchain to tokenize money-market funds.
• Plus, there's Robert Leshner's Superstate and Lucas Vogelsang's Centrifuge on the crypto-native side.

Zoom in: BlackRock and Securitize's tokenized treasuries product BlackRock USD Institutional Digital Liquidity Fund (BUIDL), recently handed its holders $1.7 million in monthly dividends on Ethereum.

• BUIDL accounts for about a third of the overall $1.5 billion market, making it the largest, according to research platform rwa.xyz.

Context: This is still a very small segment in the overall crypto space, one that took off as interest rates did, when the idea of putting a yield-bearing asset on-chain became a business-savvy one.

• See: Paxos's yield-generating stablecoin launch last week.

The big picture: It's all part of a larger movement to make banking hours 24/7, as those tokenized treasuries can be used as collateral for lending and firms supporting a market for them.

What we're watching: Tokenization won't truly take off until more people are using them, according to rwa.xyz's Mac Naggar.

• And for tokenized treasuries to truly thrive, trading needs to rival existing stablecoin pairs, says Naggar. That hasn't happened yet.

ProShares, the firm behind the largest futures-based bitcoin ETF, launched a pair of ether funds that aim to double daily returns on ether, whether the price goes up, or down.

Why it matters: These so-called leveraged ETFs beat the eight spot ether ETFs to market.

Zoom in: The ProShares Ultra Ether ETF (ETHT) and the ProShares UltraShort Ether ETF (ETHD), unlike the spot ether ETFs, do not directly invest in ether. They use derivatives.

• ETHT is for the number-go-up folk. ETHD, for the number go down believers.

Between the lines: These things can juice returns, but can also cut them to ribbons, because of the cost of the strategy — what's called "decay" — that eats into those returns. (They can go very wrong in other ways.)

• That's outlined in the risk disclosures of the ETF prospectuses.
• There are lots of risks using leveraged ETFs, but there are even more for leveraged ether ETFs.

Think regulatory risk. If ether itself were deemed security, or, if the U.S. or any other country, "exerts regulatory authority over the Ethereum Network, ether trading or ownership in ether, the ether futures may be adversely affected," the leveraged ETF filings read.

💭 Our thought bubble: Pretty wild that these power tools are landing in investors' hands before any normal spot ETF does.

📣 Former President Trump said he's a "crypto president" at a San Francisco fundraiser. (Reuters)

🤳 Celebrity Iggy Azalea said MOTHER tokens could soon be used to buy phones. (CoinDesk)

👛 Wallet developer Squads Labs raised $10 million in Series A funding led by Electric Capital. (CoinDesk)

🥸 Nexus Laboratories raised $25 million from Pantera and Lightspeed to expand on zero-knowledge privacy tools. (Fortune)

🏷️ A NYSE-launched digital asset marketplace called Bakkt is weighing a potential sale. (Bloomberg)

It's tough out there for NFTs, even the storied collections that sold at auction houses like Christie's.

• The sound of a price floor breaking below 30 ETH for a blue-chip NFT caused a stir.

Zoom in: Here's CryptoPunk #8249 selling for 28.56 ETH.

The bottom line: [Whistles]

• @punksOTC observed: "First punk sale in the 20s in nearly 3 years."