Key Takeaways
- ESMA issued a statement highlighting the need for CASPs to delist or restrict non-compliant stablecoins by January 31, 2025.
- The regulation mandates that stablecoin issuers be authorized by the EU’s relevant regulatory authorities,
The European Securities and Markets Authority (ESMA) is urging crypto asset service providers (CASPs) to take immediate action against stablecoins that do not comply with the European Union’s new Markets in Crypto-Assets Regulation (MiCA). On January 17, 2025, ESMA issued a statement highlighting the need for CASPs to delist or restrict non-compliant stablecoins by January 31, 2025.
MiCA, which came into effect recently, sets out a regulatory framework for stablecoins within the EU, specifically targeting asset-referenced tokens (ARTs) and electronic money tokens (EMTs). The regulation mandates that stablecoin issuers be authorized by the EU’s relevant regulatory authorities, ensuring that only compliant entities are allowed to offer stablecoins in the market.
Under MiCA’s provisions, stablecoin issuers are required to maintain reserves to back the value of their tokens. These reserves must be liquid and easily convertible, such as cash or equivalent assets.
Issuers must also ensure transparency by providing detailed disclosures regarding the tokens’ backing assets, risks, and redemption processes. Notably, stablecoins like Tether’s USDT do not currently meet these MiCA requirements and could be subject to the restrictions outlined by ESMA.
ESMA’s latest guidance pushes for urgent compliance. The regulator emphasized that by the end of January 2025, CASPs must restrict or delist non-compliant stablecoins. If these stablecoins are not compliant, CASPs will only be allowed to offer them on a “sell-only” basis, giving users the ability to liquidate their positions until they find alternative solutions. The deadline for full compliance and removal of non-compliant tokens from the market is set for the end of Q1 2025.
ESMA also highlighted the important role of EU national regulators, known as National Competent Authorities (NCAs), in overseeing compliance. These authorities will ensure that CASPs align with MiCA’s guidelines and apply the necessary restrictions on non-compliant stablecoins.
Notably, the European Commission’s guidance clarifies that only authorized issuers of stablecoins can legally offer their tokens in the EU. This will affect major stablecoins, including USDT, which is not currently licensed under MiCA.
While ESMA did not name specific stablecoins in its statement, the largest stablecoin by market capitalization, Tether’s USDT, has been widely discussed in the context of these new regulations.
As per Juan Ignacio Ibañez, a member of the MiCA Crypto Alliance, USDT has not yet obtained the necessary MiCA authorization. This raises the possibility that Tether could face delisting or be forced to limit its operations to a sell-only model by March 31, 2025, unless it complies with MiCA’s requirements.
