The European cryptocurrency landscape is undergoing significant regulatory shifts as key players adapt to the EU’s Markets in Crypto-Assets (MiCA) framework. The European Securities and Markets Authority (ESMA) is urging swift action from crypto firms to restrict non-compliant stablecoins, signaling a firm stance on regulatory alignment. Meanwhile, Gemini, the crypto exchange founded by the Winklevoss twins, is establishing a compliance hub in Malta to strengthen its foothold in Europe and meet MiCA’s stringent requirements.
ESMA Pushes for Urgent Restrictions on Non-MiCA-Compliant Stablecoins
The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator, has issued a call to action for firms handling stablecoins that do not meet the requirements of the European Union’s Markets in Crypto-Assets Regulation (MiCA). This significant regulatory move, announced on Jan. 17, highlights the EU’s firm stance on ensuring compliance with its groundbreaking crypto legislation.
In a statement addressing asset-referenced tokens (ARTs) and electronic money tokens (EMTs), commonly referred to as stablecoins, the ESMA urged crypto asset service providers (CASPs) to act swiftly to align with MiCA guidelines. The regulator emphasized the critical role of national competent authorities (NCAs) in steering CASPs through compliance processes, signaling that adherence to MiCA’s requirements is a high priority.
The MiCA framework, designed to create a harmonized regulatory environment for cryptocurrencies across the EU, explicitly prohibits the offering or trading of stablecoins that are not issued by authorized entities. It also requires written consent from issuers for any offerings or listings, reinforcing stringent oversight.
The ESMA set a definitive timeline for compliance, mandating that CASPs restrict services for non-compliant stablecoins ”as soon as possible” but no later than the end of the first quarter of 2025. However, CASPs will be allowed to offer limited ”sell-only” services for such stablecoins until March 31, 2025, providing EU investors an opportunity to liquidate or convert their holdings.
The regulator’s push for an earlier deadline—January 31, 2025—for the complete restriction of existing services indicates the urgency of aligning with MiCA standards. ESMA’s statement also highlights the critical role of NCAs in enforcing these regulations, showing the importance of a coordinated effort across EU member states.
Tether’s USDT, the largest stablecoin by market capitalization, has emerged as a key focal point of the ESMA’s directive. According to Juan Ignacio Ibañez, a member of the MiCA Crypto Alliance’s Technical Committee, USDT is classified as a non-compliant asset under MiCA. As Tether lacks the required MiCA license, exchanges and CASPs operating within the EU may be compelled to delist USDT by the end of January 2025.
Ibañez further noted that no trace of USDT should remain, not even in a “sell-only” capacity, by March 31, 2025. This development raises significant questions about the future availability of USDT within the EU market.
In response, a Tether spokesperson acknowledged the evolving regulatory landscape under MiCA and its potential implications for the stablecoin market. The representative added that many exchanges are engaging with local NCAs to address regulatory concerns, while Tether users are unlikely to experience immediate disruptions as discussions progress.
Industry Uncertainty and Concerns
Despite the ESMA’s efforts to clarify regulatory requirements, confusion persists among industry stakeholders regarding the practical implementation of MiCA’s stablecoin provisions. Some executives, such as Gemini’s head of Europe, have pointed out ambiguities in the legislation, adding to the challenges faced by CASPs and stablecoin issuers alike.
The ESMA’s directive also raises broader questions about the impact of MiCA on the stablecoin market, particularly as issuers and service providers navigate the complexities of regulatory compliance. Industry players are now racing against the clock to align their operations with MiCA, while national regulators work to ensure consistent enforcement across the EU.
The ESMA’s push for compliance marks a pivotal moment for the cryptocurrency industry in Europe. By enforcing strict guidelines for stablecoins, the EU aims to bolster investor protection, reduce risks, and foster a more transparent and accountable crypto ecosystem. However, the impending restrictions on major stablecoins like USDT could also lead to significant market shifts, with potential disruptions for CASPs and users alike.
As the March 2025 deadline approaches, the industry will be closely watching the responses of key players and the regulatory measures taken by NCAs. Whether MiCA’s implementation will achieve its intended goals of harmonization and market stability remains to be seen, but one thing is clear: the era of unregulated stablecoins in the EU is coming to an end.
Gemini Establishes MiCA Compliance Hub in Malta to Expand European Operations
In related news, Gemini, the cryptocurrency exchange founded by the Winklevoss twins, is making significant strides in aligning with Europe’s evolving crypto regulations by setting up a dedicated compliance hub in Malta. This move is part of Gemini’s commitment to adhering to the European Union’s Markets in Crypto-Assets (MiCA) framework, a groundbreaking regulatory initiative set to reshape the continent’s crypto landscape.
Gemini’s decision to establish its European compliance hub in Malta was announced on Jan. 20, following the company’s receipt of its sixth Virtual Asset Service Provider (VASP) registration from the Malta Financial Services Authority (MFSA) in December 2024. The exchange now holds VASP licenses in six European countries: Malta, France, Ireland, Spain, Italy, and Greece. These licenses enable Gemini to provide regulated crypto services across the EU.
Mark Jennings, Gemini’s head of Europe, said that Malta’s proactive approach to supporting fintech innovation was a key factor behind the decision.
While establishing its presence in Malta is a critical step forward, Gemini has yet to secure a MiCA license. Jennings explained that obtaining the license involves either filing a new application in a chosen jurisdiction or transitioning existing VASP licenses into MiCA compliance during the regulatory framework’s transition period.
Gemini Intergalactic EU, the exchange’s European arm, secured its VASP license in Malta on Dec. 16, 2024. This milestone is expected to serve as a foundation for the eventual attainment of full MiCA compliance. Jennings emphasized the importance of building a scalable and compliant infrastructure to meet MiCA’s rigorous requirements.
One of the most significant challenges in aligning with MiCA regulations has been creating a unified and compliant infrastructure across Europe. Before MiCA, regulatory requirements varied widely between countries like France, Spain, and Italy, complicating customer onboarding and operational processes.
MiCA’s Impact on the European Crypto Landscape
MiCA, expected to be fully implemented by 2025, is designed to harmonize cryptocurrency regulations across the EU, providing greater transparency and stability to the market. For Gemini, this clarity is a significant step forward in addressing customer concerns and driving the adoption of crypto services.
“From our perspective, MiCA brings much-needed regulatory certainty, which is crucial for customers who have been waiting for clear guidelines,” Jennings remarked. However, he acknowledged that some uncertainties remain, particularly regarding the treatment of certain stablecoins under MiCA.
Stablecoins, a cornerstone of the crypto ecosystem, have faced mixed reactions under MiCA regulations. While issuers like Circle have secured approval for their USDC stablecoin, others, such as Tether, have resisted MiCA’s requirements. This has led to speculation about the potential delisting of Tether’s USDT in the EU as a non-compliant asset. Jennings noted that stablecoin regulation under MiCA remains a complex issue.
This article was originally Posted on Coinpaper.com
