ESMA Urges Restriction On Non-Compliant Stablecoins In EU

According to Cointelegraph, the European Securities and Markets Authority (ESMA) is advocating for restrictions on stablecoins that do not adhere to the European Union's Markets in Crypto-Assets Regulation (MiCA). As the EU's financial markets regulator and a key supervisor of MiCA compliance, ESMA issued a statement on January 17 concerning asset-referenced tokens (ARTs), commonly known as stablecoins. The authority called on crypto asset service providers (CASPs) to take immediate action regarding stablecoins that do not comply with MiCA regulations. However, ESMA did not specify which issuers or stablecoins should be restricted. The statement emphasized the role of EU state authorities, known as national competent authorities (NCAs), in guiding CASPs to align their services with the European Commission's recent guidance. This guidance clarifies that MiCA prohibits the offering of stablecoins by issuers who are not authorized under MiCA. It also states that other entities may offer or seek admission to trade ARTs or electronic money tokens (EMTs) under certain conditions, such as obtaining written consent from the issuer and ensuring the issuer is authorized in the EU. ESMA has urged NCAs to ensure CASP compliance with these regulations as soon as possible, with a final deadline set for the end of the first quarter of 2025. While the deadline for compliance is set for Q1 2025, ESMA has encouraged more immediate actions. The regulator expects restrictions on existing services to be completed by the end of January 2025. To facilitate EU investors in liquidating or converting their positions in non-compliant ARTs and EMTs, CASPs may continue to offer services for these products on a "sell-only" basis until the end of Q1 2025. The communication from ESMA suggests that Tether's USDt (USDT), the largest stablecoin by market capitalization, may face restrictions in the EU. Juan Ignacio Ibañez, a member of the Technical Committee of the MiCA Crypto Alliance, stated that USDT is considered a non-compliant asset under ESMA's definition, as Tether does not possess a MiCA license. Ibañez indicated that CASPs might need to delist USDT by January 31, except for "sell-only" operations, and that no trace of USDT should remain by March 31. Industry executives, including Gemini's head of Europe, have noted ongoing confusion regarding stablecoin regulations under MiCA. Cointelegraph reached out to ESMA and Tether for comments on potential delistings but did not receive a response at the time of publication.