- Stablecoin providers have been racing to comply with new EU regulations effective June 30
- New rules require stablecoin issuers to obtain authorization and face transaction limits in the EU
- Some EU-based exchanges have already removed certain stablecoins in anticipation of these regulations
Tether, Circle, and other major stablecoin issuers are racing to get their ducks in a row within the EU before new regulations kick in on June 30. Starting Monday, new rules will require stablecoin issuers to obtain proper authorization to operate within the 27-nation trading bloc as well as facing stringent limits on transaction numbers and values. The rules follow the implementation of the Markets in Crypto Assets (MiCA) legislation which is gradually finding its way into the crypto space after a slow rollout. Circle and Tether have already signaled their intentions to meet the requirements, but this hasn’t stopped some EU-based exchanges from pulling certain stablecoins from their list of supported coins ahead of the new rules.
MiCA Aims to Protect Euro
MiCA, the EU’s comprehensive crypto industry regulatory framework, was enacted last year, allowing firms licensed in one member nation to operate throughout the bloc. According to Article 23 of the law, companies must halt the issuance of an asset-referenced stablecoin used for more than 1 million transactions or valued over 200 million euros ($215 million) daily.
These rules are intended to safeguard the monetary system and prevent stablecoins from undermining the euro, according to a spokesperson from the European Banking Authority (EBA).
Efforts to counter these measures have been made by Blockchain for Europe and the Digital Euro Association, which argued in a 2022 letter that the rules effectively ban large stablecoin issuers. The EBA, however, maintains that the regulations do not prohibit the issuance of stablecoins denominated in non-euro assets unless used as a means of exchange for goods or services.
The new regulations pose significant challenges for issuers of the two biggest stablecoins, Tether (USDT) and Circle (USDC), with Robert Kopitsch, secretary-general of Blockchain for Europe, highlighting the potential operational hurdles to Coindesk:
Non-EU, euro-denominated stablecoins – if they are over a certain threshold – then you need to stop issuing and using them, and that creates a problem because 99% of the stablecoins market is in USD.
Jón Egilsson, co-founder at Monerium, explained that issuers could still service Europeans without limitations for transactions not classified as a means of exchange, such as peer-to-peer transactions or exchanges for e-money tokens. The EBA is expected to clarify how it will measure these transaction values by the end of the month.
Circle and Tether Racing to be Ready
MiCA rules state that stablecoin Issuers must also secure an e-money institution license or banking license to operate legally in the EU, a process described as costly and lengthy by Kopitsch. With just days left to comply, Circle is aiming to meet the deadline, having conditionally registered as a Digital Asset Service Provider with the French Financial Markets Authority in April.
Meanwhile, Tether’s CEO Paolo Ardoino has not outright stated how his company plans to comply with MiCA, although he told Coindesk that Tether has “engaged extensively with its exchange counterparties in Europe regarding the requirements, including those pertaining to the ongoing listing of USDT and other Tether tokens, and the interpretation of key regulatory provision.”
Ardoino warned, however, that “it remains crucial that stablecoin regulatory policies enacted are balanced, protect consumers, and nurture growth in our emerging industry.”
Some EU exchanges have taken preemptive action and delisted stablecoins they feel may not pass muster from Monday. These include Uphold, which last week announced the delisting of multiple stablecoins, including USDT and DAI.
