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European Securities and Markets Authority (ESMA) Calls for Measures Against Non-MiCA-Compliant Stablecoins
Pressure on Stablecoin Issuers and Crypto Service Providers
The European Securities and Markets Authority (ESMA) has urged crypto companies to take action against stablecoins that do not comply with the new Markets in Crypto-Assets Regulation (MiCA) of the European Union. ESMA is pushing for these changes to be implemented no later than January 31, 2025.
In a statement released on January 17, ESMA emphasized that crypto asset service providers (CASPs) and national regulators must ensure that only MiCA-compliant stablecoins remain available. The new regulatory framework mandates that stablecoin issuers must hold a license, and only authorized entities are allowed to issue or trade stablecoins.
Although ESMA did not name specific stablecoins or issuers, it is widely believed that major tokens like Tether’s USDt fall under the category of non-compliant stablecoins. According to Juan Ignacio Ibañez, a member of the MiCA Crypto Alliance’s technical committee, Tether does not meet MiCA requirements as it lacks the necessary licensing.
Compliance Deadline and Restrictions
ESMA has set a firm deadline: by the end of Q1 2025, all crypto firms must fully comply with MiCA regulations. At the same time, companies are expected to impose restrictions on non-compliant stablecoins by January 31, 2025.
To protect investors, these tokens will only be available on a “sell-only” basis until the end of March 2025. This means that European investors will be able to liquidate their holdings in non-compliant stablecoins but will not be allowed to make new purchases.
Potential Impact on USDT
The announcement has sparked speculation about the fate of Tether’s USDt, the largest stablecoin on the market. According to Ibañez, crypto exchanges may be forced to completely remove USDT from their platforms after January 31, 2025, except for “sell-only” transactions allowed until the end of March. After that, no service provider in the European Union will be permitted to support this token.
ESMA has stressed that these measures are designed to protect the market and give investors time to adjust their positions in an orderly manner. However, the announcement has also caused confusion within the industry. Some industry leaders, such as Gemini’s Head of Europe, have pointed out that there are still uncertainties regarding the practical implementation of MiCA regulations.
Stricter Regulation for Stablecoins under MiCA
The EU’s focus on stricter regulations under MiCA aims to bring greater control and transparency to the crypto market. By subjecting stablecoins to strict conditions, the EU seeks to limit risks for investors and safeguard the stability of the financial system.
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