By December 30, 2024, all stablecoins that do not comply with the new EU standards will be removed from the list of Coinbase, one of the top crypto exchanges.
The measure is a response to the EU’s recently introduced Markets in Crypto Assets (MiCA) regulatory framework for cryptocurrencies.
The purpose of these 2023 laws is to establish clear guidelines for the virtual currency sector operating within the European Economic Area (EEA).
Coinbase plans to delist all unauthorized stablecoins from European Economic Area crypto exchanges by the end of the year https://t.co/d361uOgj9S
— Bloomberg Crypto (@crypto) October 4, 2024
MiCA Guidelines on Virtual Currency Regulation
The MiCA Regulation aims to improve the security and transparency of the cryptocurrency market. Companies that generate tokens tied to stable assets such as the US dollar or euro are known as stablecoin issuers and are therefore subject to strict requirements.
This includes adhering to regulations for consumer protection and maintaining sufficient liquidity to facilitate stablecoins. In addition, stablecoin issuers must secure an e-money license from at least one EU member state.
On June 30, 2024, stablecoins came under the formal supervision of MiCA. However, by the end of the year, more comprehensive regulations for crypto exchanges and businesses like Coinbase are expected to be introduced.
According to these new regulations, companies must have full licensing capabilities within the 27 EU member states.
Coinbase decides to delist stablecoins not approved in the EU
In a statement released on October 4, 2024, Coinbase declared that stablecoins that do not comply with MiCA requirements will be delisted by the end of the year.
The exchange emphasized its commitment to compliance and declared that after the deadline, users within the EEA will not be allowed to trade non-compliant stablecoins.
Coinbase is expected to allow users to convert to compliant stablecoins once more information becomes available in November.
The company introduced Circle’s USD and EUR stablecoins as examples of tokens that comply with EU regulations. The first company to receive an e-money license in the EU, Circle is a fintech company that is the second largest stablecoin issuer.
Impact of Coinbase delisting on Tether
One stablecoin that has not yet received the required e-money license in the EU is Tether (USDT), the most popular stablecoin by market capitalization.
While Tether acknowledges the EU’s attempts to dominate the market, it also expresses concerns about the additional complexity aspects of MiCA.
According to Tether representatives, MiCA could pose a threat not only to the stablecoin itself but also to the region’s financial infrastructure.
#USDT Tether develops technology solutions adapted to the European market.
This new technology aims to address MiCA’s regulatory challenges. https://t.co/6idWmI1H0G
— CryptoLens.News (@cryptolens_news) October 5, 2024
Tether is developing technology-based solutions specifically for the European market to overcome these issues. It remains to be determined whether companies will be able to comply with MiCA and avoid delisting from Coinbase.
broader results
Stablecoins are becoming more popular due to their lower volatility compared to other cryptocurrencies such as Bitcoin.
They are widely used for payments, trade, and other financial transactions. Companies such as PayPal are starting to incorporate stablecoins into their services, indicating that stablecoins are becoming more widely accepted in traditional banking.
The MiCA regulation is scheduled to be fully implemented by December 2024, and crypto companies are scrambling to meet it.
If a company does not meet the requirements set by the EU, it could be banned from major exchanges like Coinbase, potentially limiting its access to one of the world’s largest markets.
Coinbase’s decision to delist non-compliant stablecoins is proof of how important regulation has become in the cryptocurrency space.
While some companies like Circle are starting to comply, others like Tether will have a hard time meeting the new regulations. As the deadline approaches, the crypto market will be keenly watching how these regulatory changes will impact the market.
