Coinbase to Delist Unapproved Stablecoins in the EU by December
By December 30, 2024, all stablecoins that don’t adhere to the new EU standards will be removed from the Coinbase list, one of the top cryptocurrency exchanges.
This action is a reaction to the EU’s recently implemented Markets in Crypto Assets (MiCA) regulatory framework for cryptocurrencies.
The objective of these 2023 laws is to establish unambiguous guidelines for the cryptocurrency sector operating inside the European Economic Area (EEA).
Coinbase will delist all unauthorized stablecoins from its crypto exchange in the European Economic Area by year-end https://t.co/d361uOgj9S
— Bloomberg Crypto (@crypto) October 4, 2024
MiCA Guidelines on Crypto Regulations
MiCA regulations aim to improve the security and transparency of the cryptocurrency market. Companies that generate tokens tethered to stable assets, such as the US dollar or the euro, are known as stablecoin issuers, and as such, they are subject to stringent requirements.
They include adhering to regulations for consumer protection and maintaining sufficient liquidity to promote the stablecoins. In addition, issuers of stablecoins need to secure an electronic money license from a minimum of one EU member state.
On June 30, 2024, stablecoins came under formal MiCA supervision. But by the end of the year, more comprehensive regulations on cryptocurrency exchanges and businesses like Coinbase will be in place.
According to these new regulations, businesses must have complete authorization functions within the 27 EU member states.
Coinbase declared that by year’s end, it would delist any stablecoins that do not adhere to MiCA’s requirements in a statement released on October 4, 2024.
The exchange underlined its dedication to compliance and declared that beyond the deadline, users in the EEA would not be permitted to trade non-compliant stablecoins.
When further information becomes available in November, Coinbase is anticipated to enable users the ability to convert to compliant stablecoins.
The company showcased the USD and EUR stablecoins from Circle as instances of compliant tokens with EU regulations. Being the first company in the EU to receive an e-money license, Circle is a fintech company that is the second-biggest stablecoin issuer.
Impact of Coinbase’s Delisting on Tether
One stablecoin that does not yet have the required e-money license in the EU is Tether (USDT), which is the most popular stablecoin by market capitalization.
Tether has acknowledged the EU’s attempts to control the market, but it has also voiced reservations about aspects of the MiCA’s added complexity.
MiCA may pose threats to regional financial infrastructure as well as stablecoins itself, according to a Tether representative.
#USDT Tether is developing a technology solution adapted for the European market.
The new technology aims to address MiCA regulatory challenges. https://t.co/6idWmI1H0G
— CryptoLens.News (@cryptolens_news) October 5, 2024
Tether is developing a technology-based solution especially for the European market in order to overcome these issues. If the business can adhere to MiCA in time to prevent being delisted from Coinbase, that is yet to be determined.
Broader Consequences
Due to their low volatility in comparison to other cryptocurrencies such as Bitcoin, stablecoins have grown in popularity.
They are extensively utilized in payments, trade, and other financial dealings. Businesses like PayPal have started incorporating stablecoins into their offerings, indicating that they are becoming more widely accepted in traditional banking.
The MiCA regulations are scheduled to go into full force by December 2024, and cryptocurrency companies are scrambling to get in line.
If a company doesn’t fulfil the requirements set by the EU, it may be removed from key exchanges like Coinbase, which might restrict its access to one of the biggest markets in the world.
Coinbase’s decision to delist non-compliant stablecoins serves as evidence of how important regulation is becoming in the cryptocurrency space.
While some businesses, like Circle, have begun to comply, others, like Tether, will have a difficult time fulfilling the new regulations. The cryptocurrency market will be intently observing how these regulatory changes affect the market as the deadline draws near.
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