The European Union’s Markets in Crypto-Assets Regulation (MiCA) will come into effect on 30 June, which is only three days away. As such, many crypto exchanges offering services in the bloc are already taking measures, mostly by dropping stablecoin offerings.
“This will be a first step entering the new regulatory framework, and it will have a significant impact on the stablecoin market in the European Economic Area (EEA),” Binance, the largest crypto exchange in terms of trading volume, stated.
Crypto Exchanges Dropped Stablecoins
At least four cryptocurrency exchanges have confirmed that they are restricting some stablecoin access to users within the EEA. Bitstamp was the latest to confirm on Wednesday that it would delist the euro-denominated stablecoin, EURT, before the 30 June deadline.
EURT is a EUR-pegged stablecoin issued by Tether, the company behind the largest circulated stablecoin, USDT, with a market capitalisation of more than $112.7 billion. Interestingly, Bitstamp became one of the first crypto exchanges to list EURT in November 2021.
“Electronic Money Tokens (EMTs) which are not Euro-denominated and are already available on the exchange but not within MiCA regulation, will not be delisted, although their availability to European customers will be limited on certain products,” Bitstamp wrote in its announcement.
“Bitstamp will not list any new EMTs that don’t meet MiCA requirements, nor will it engage in any marketing of them.”
Another major name to take action ahead of MiCA is Binance. As Finance Magnates reported earlier, the crypto exchange already blocked access to some services, including copy trading. It will also bring further restrictions, including restricting the purchase of unauthorised stablecoins and limiting new borrowings and transfers of unauthorised stablecoins in margin trading.
Uphold, another crypto exchange with ties to Ripple, also confirmed the delisting of six stablecoins, including the popular USDT, for European users. However, it will continue to support USDC, EURC, and PYUSD.
Comply with MiCA from 30 June
Similar to MiFID, MiCA will bring cryptocurrency services to the EU under one regulatory umbrella. The regulation will impact the distribution of the cryptocurrencies in the bloc, meaning both retail and institutional players will be affected in some way or another.
With the EU parliament’s approval in 2023, MiCA is set to be implemented in two phases: the rules around stablecoins to come into effect on 30 June 2024 and then the wider compliance on exchanges and wallets to be effective from 30 December 2024.
Under MiCA, fiat-backed stablecoins in the bloc would be categorised as ‘e-money tokens’, whereas other asset-backed tokens would be ‘asset-referenced tokens’. In both cases, the stablecoin issuers must maintain a 1:1 reserve. It will also bring algorithmic stablecoins under the purview, mandating them to maintain value.
The regulations would also restrict the daily transaction limit with non-euro pegged stablecoins to merely $1 million.
“As the world’s longest-running cryptocurrency exchange, we have consistently advocated for a proportionate response to regulation which protects consumers while allowing for the ongoing maturation of cryptocurrencies as an asset class,” said James Sullivan, UK Managing Director at Bitstamp. “We are communicating directly with the small proportion of our customers whose asset mixes are affected.”
Exchanges Are Preparing for Months
A few crypto exchanges were already taking steps to comply with MiCA earlier this year. In March, OKX confirmed its delisting of USDT pairs in the EEA, without mentioning MiCA. “Please note that not all tokens are available in all markets due to regulatory requirements,” an email sent by the exchange to its European customers noted.
Interestingly, Kraken also reviewed the USDT pairs it offered in the EU and considered removing them to comply with MiCA, according to a Bloomberg report in March. However, following the report, Kraken’s Global Head of Asset Growth and Management, Mark Greenberg, clarified that the exchange “continues to list USDT in Europe and we have no plans to delist at this time.”
“We know our European clients value access to USDT and we continue to look at all options to offer USDT under the upcoming regime,” he added. “We will of course follow all legal requirements, even those we disagree with. But the rules are not finalised yet and we continue to do everything we can to continue to offer all relevant stablecoins to our European customers.”
Until now, Kraken did not announce anything officially on delisting any stablecoin pairs to comply with MiCA.
Interestingly, a recent report revealed that only 9 percent of the cryptocurrency firms, out of 68 surveyed, are fully compliant with MiCA requirements, whereas another 25 percent are yet to commence preparations.
