ESMA Pushes for Delisting of Non-MiCA Compliant Stablecoins, Sets Q1 2025 Deadline

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Veronika Rinecker

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Veronika Rinecker

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Veronika Rinecker is based in Germany and studied international journalism and media management. She specializes in reporting on topics such as politics and regulation, energy, blockchain, and…

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ESMA Pushes for Delisting of Non-MiCA Compliant Stablecoins, Sets Q1 2025 Deadline

The European Securities and Markets Authority (ESMA) has ordered crypto-asset service providers (CASPs) to delist stablecoins that do not comply with the Markets in Crypto-Assets Regulation (MiCA).

However, while pushing for this delisting, ESMA did not specify which non-compliant issuers or stablecoins should be restricted.

The document follows the European Commission’s July 2024 guidance clarifying how MiCA applies to crypto-asset services involving non-compliant stablecoins.

ESMA Provides Clarity on Crypto-Asset Services

MiCA, which came into effect on June 30, 2024, establishes a regulatory framework for the issuance and trading of asset-referenced tokens (ARTs), or stablecoins, and electronic money tokens (EMTs).

Prior to this directive, the European Banking Authority (EBA) had already urged stakeholders to assess the MiCA compliance of the tokens they offer and cease providing services related to non-compliant assets.

The European Commission’s recent Q&A also explains how certain crypto-asset services, like executing trades and exchanging cryptocurrencies, could be seen as offering non-compliant stablecoins to the public, potentially breaking MiCA regulations.

According to the new ESMA guidance, individuals or entities other than the original issuer of an ART or EMT can offer these tokens to the public or seek to have them listed on trading platforms.

However, this is only permissible under specific conditions. One condition is that the issuer of the ART or EMT must be authorized to operate within the EU. Additionally, the entity or individual making the offer must obtain written consent from the original issuer.

“Sell-Only” Period for Non-Compliant Stablecoins

While ESMA emphasizes the importance of restricting services that enable the purchase of non-compliant stablecoins, it recognizes the need for a smooth transition.

Therefore, a limited “sell-only” period will be permitted until the end of the first quarter of 2025, allowing investors to liquidate their existing holdings of these assets.

Additionally, ESMA mandates that CASPs clearly inform investors about how MiCA will affect their non-compliant stablecoin holdings and implement measures to assist them in liquidating these holdings or converting them into compliant alternatives.

This includes providing clear and concise information about the restrictions imposed by MiCA and the potential consequences for investors holding non-compliant stablecoins.

Tether’s USDT Faces EU Delisting Amid MiCA Regulatory Deadline

Tether’s USDT, the largest stablecoin by market capitalization, is likely to face restrictions and is on the verge of being delisted from several cryptocurrency exchanges in the EU.

In December 2024, Coinbase delisted USDT from its European platforms along with other non-compliant stablecoins in order to comply with MiCA.

Coinbase’s action is indicative of a broader trend, as other exchanges may be preparing to delist USDT in the coming months.

Tether, in response, is reportedly working on developing MiCA-compliant alternatives, although the timeline for these new offerings remains unclear. This leaves a significant gap in the market, potentially benefiting competitors like Circle’s USD Coin (USDC), which is already compliant.

Moreover, there are speculations around other stablecoins like Ripple’s RLUSD stepping in to fill the void left by USDT.

In a Bloomberg report, Pascal St-Jean, CEO of crypto asset manager 3iQ Corp., said that “a vast proportion of crypto assets trade in pairs against Tether’s USDT.” He added that switching to other stablecoins or fiat pairs could create inefficiencies for investors.

The new regulation also raises concerns about Europe’s position in the global crypto market, as stringent regulations might push investors and innovation towards regions with less restrictive environments.

Some industry executives, such as Gemini’s head of Europe, have recently highlighted the lack of clarity surrounding stablecoin regulations under the new framework.

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