Cryptocurrency exchange Coinbase has announced that it will remove all stablecoins that do not meet EU MiCA regulations from its European platform. This decision was taken in accordance with the EU’s new regulatory approach.
The exchange has very strict rules for stablecoin issuers and crypto exchanges in the European Economic Area (EEA).
A Coinbase representative said:
“We are primarily a compliant company and plan to cease providing services to EEA customers for stablecoins that do not meet MiCA requirements by December 30, 2024.”
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The decision comes as Coinbase prepares to comply with increased EU oversight. Some have already led to similar actions by other exchanges.
Drive compliance with MiCA requirements
The MiCA regulations are expected to be fully implemented by the end of the year. All issuers of stablecoins must have an e-money license in at least one EU country. This regulation took effect on June 30th for stablecoin issuers.
It is expected that market stability and transparency will improve. Platforms such as Coinbase, OKX, Bitstamp, and Uphold are increasingly integrating with Markets in Crypto-Assets (MiCA).
Tether Holdings Ltd., the world’s largest issuer of stablecoin USDT, could be delisted from Coinbase if it fails to obtain the proper licenses. As The Coin Republic previously reported, speculation has been swirling within the crypto community that Coinbase will delist Tether (USDT).
New opportunities for compliant stablecoins
To support affected users, Coinbase has decided to allow EEA users to exchange their stablecoins into MiCA-compliant assets such as USDC. Coinbase said it will provide more information on this matter next month.
USDC issuer Circle is one of the first stablecoin issuers to meet all MiCA criteria. This gives us a strategic advantage to capture a larger portion of the European market.
MiCA provides a regulatory framework for a more transparent protection environment for consumers. MiCA-compliant stablecoins like USDC are likely to see increased demand as they become a preferred option for EU users.
Intensifying competition in the stablecoin market
With the advent of MiCA, many companies are starting to explore business opportunities in the stablecoin space. Fintech companies such as Revolut and Robinhood are also planning to issue their own stablecoins. Fintech company PayPal recently entered the stablecoin market.
*Robinhood says Revolt is considering launching its own stablecoin: BBG
— Tree News (@News_Of_Alpha) September 26, 2024
However, MiCA regulations require stablecoin issuers to maintain stable reserves, which can be very demanding for new market participants. These rules apply to companies planning to issue their own stablecoins to achieve this objective.
At least 60% of reserves must be held in cash, with appropriate disclosure standards in place. Such guidance could lead to more companies entering the space, and would also increase consumer confidence in stablecoin-backed assets.
Impact of MiCA on crypto companies in the EEA
MiCA aims to harmonize cryptocurrency regulations across the EU, and some experts believe this could lead to consolidation of cryptocurrency companies within the region. Small businesses may find it difficult to meet new compliance standards and be forced out of the market or into regions with more favorable regulations, such as the Middle East.
Despite this potential challenge for SMEs, major financial institutions such as Société Générale are actively preparing to offer digital assets in conjunction with MiCA.
Societe Generale has partnered with Bitpanda to launch EUR CoinVertible (EURCV), a euro-pegged stablecoin designed to meet MiCA standards. This partnership aims to make stablecoins a core part of the European financial ecosystem and reflects the interest of traditional financial institutions in adopting compliant digital assets.