MiCA Regulation Forces Coinbase to Restrict USDT and Other Stablecoins
MiCA Regulations– Cryptocurrency exchanges in Europe are gearing up for the upcoming enforcement of the European crypto regulations, with Coinbase announcing it will delist non-compliant stablecoins as part of its adherence to the Markets in Crypto-Assets Regulation (MiCA).
Coinbase’s Delisting of Stablecoins: A Response to European Regulations
Coinbase Europe, Coinbase Germany, and Coinbase Custody International have confirmed they will delist several stablecoins, including Tether’s USDt (USDT), on December 13, 2024. The delisting is in response to the requirements under MiCA, Europe’s new regulatory framework for digital assets.
A Coinbase spokesperson told Cointelegraph, “Based on the latest information, we currently expect we will have to restrict services for the following assets: USDT, PAX, PYUSD, GUSD, GYEN, and DAI.” These stablecoins are considered non-compliant under the MiCA regulation, which is designed to ensure transparency and safety in the cryptocurrency sector.
Which Stablecoins Will Be Affected by MiCA?
The affected stablecoins include Tether’s USDt (USDT), Paxos (PAX), PayPal’s PYUSD, Gemini Dollar (GUSD), GYEN, and DAI. Coinbase will continue to support other stablecoins like USD Coin (USDC) and the euro-pegged EURC stablecoin. USDC is jointly operated by Coinbase and Circle, a US-based crypto company.
MiCA’s Phase One Stablecoin Rules and Full Regulatory Framework
The first phase of MiCA’s stablecoin regulation has been in effect since June 30, 2024. However, the full regulatory framework for crypto asset service providers (CASPs) is set to come into force on December 30, 2024. This deadline is expected to bring stricter enforcement of MiCA’s rules across the European Union.
Coinbase had previously announced in October that it would begin delisting MiCA-restricted stablecoins, urging users to convert their holdings into compliant assets like USDC before the regulation deadline. The exchange, which ranks as the third-largest global platform by trading volume, has a significant portion of its trading activity involving USDT.
Impact of USDT on Coinbase and Trading Volume
According to CoinGecko data, Tether’s USDT is the second-largest asset traded on Coinbase, following Bitcoin (BTC). USDT accounts for more than 12% of all trades on the platform, with over $1 billion in daily transactions. Despite its widespread use, the stablecoin is facing increased scrutiny in Europe due to MiCA’s regulatory framework.
A Coinbase spokesperson explained, We regularly review the assets we make available to customers on our platform to ensure we are meeting regulatory requirements. We will assess re-enabling services for stablecoins that achieve MiCA compliance at a later date.
The Compliance Status of USDT: A Mixed Picture
While Coinbase refers to USDT as a “MiCA-restricted stablecoin,” European regulators have not officially declared it non-compliant with MiCA. The European Securities and Markets Authority (ESMA), a key supervisor of MiCA compliance, has yet to provide a clear stance on USDT’s legal status, with discussions still ongoing.
Tether’s CEO, Paolo Ardoino, has openly criticized certain aspects of MiCA and disclosed that Tether has been working on developing a technology-based solution specifically tailored for the European market.
Tether’s Commitment to the European Market
Tether has reiterated its commitment to the European market, despite the challenges posed by MiCA. The company remains focused on supporting new projects that offer MiCA-compliant stablecoins, such as EURq and USDq stablecoins, developed by the Dutch fintech company Quantoz Payments.
A Tether spokesperson stated, In light of recent changes to MiCA, Tether is finalizing its long-term plans for the region, where it remains committed.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
Leave a comment