The European Securities and Markets Authority has ordered that crypto-asset services providers (CASPs), who do not comply to the Markets for Crypto-Assets Regulation, delist Stablecoins.
ESMA, in urging this delisting of non-compliant stablecoins and issuers, did not specify the specifics.
The document is a follow-up to the European Commission’s guidance, July 2024, which clarifies how MiCA applies for crypto-assets services that involve non-compliant stabilcoins.
ESMA Clarifies Crypto-Asset Services
MiCA, which became effective on June 30, 2020, established a regulatory framework to regulate the issuance and trade of asset-referenced (ART) tokens or stablecoins and electronic money (EMT) tokens.
Before this directive was issued, the European Banking Authority had already encouraged stakeholders HTML0 to assess the MiCA Compliance of the tokens that they offered and to cease providing services relating to non-compliant asset.
In its recent Q&A, the European Commission explains that certain crypto-assets services, such as executing trades or exchanging cryptocurrencies could be viewed as offering noncompliant stablecoins, and potentially violating MiCA regulations.
The new ESMA guidelines state that individuals or entities who are not the original issuers of an ART token or EMT may offer them to the public, or list them on trading platforms.
This is only possible under certain conditions. The issuer of an ART or EMT is required to be authorized by the EU. The entity or individual offering the ART or EMT must also obtain the written consent of the original issuer.
Stablecoins that are not compliant with the “Sell-Only Period” will be subject to this period.
ESMA recognizes that a smooth transition is necessary, even though it emphasizes the importance to restrict services that allow the purchase of stablecoins which are not compliant.
Investors will have the opportunity to liquidate existing assets by allowing a “sell-only period” until the end first quarter 2025.
ESMA also mandates CASPs to inform investors clearly about the impact MiCA will have on their non-compliant holdings of stablecoins, and implement measures that assist them in liquidating or converting these holdings into compliant alternatives.
This includes a clear and concise explanation of the MiCA restrictions and the possible consequences for those investors who hold non-compliant Stablecoins.
Tether’s USDT Faces EU Delisting Due to MiCA Regulatory Deadline
Tether’s USDT is the largest stablecoin in terms of market capitalization and will likely face restrictions. It is also on the verge being delisted from a number of cryptocurrency exchanges within the EU.
Coinbase will delist USDT and other non-compliant currencies from its European platforms in December 2024 to comply with MiCA.
Coinbase’s move is indicative of a wider trend as other exchanges could be preparing for USDT to be delisted in the next few months.
, as a response to Tether, is working in developing MiCA compliant alternatives. However, the timeline for these offerings remains uncertain. This creates a large gap in the market that could benefit competitors such as Circle’s USDC ( USDC ) which is already MiCA-compliant.
There are speculations about other stablecoins, such as Ripple’s RLUSD, stepping up to fill the USDT void.
In a report by Bloomberg, Pascal St-Jean said that “a large proportion of crypto assets are traded in pairs with Tether’s US Dollars”. He also added that switching from stablecoins to fiat or other pairs of currencies could cause inefficiencies for investors.
Stringent regulations may also push investors and innovators to regions with less restrictive environments.
, the head of Europe at Gemini, has recently highlighted the lack of clarity regarding stablecoin regulations in the new framework.
