Coinbase to Delist Non-Compliant Stablecoins, Including Tether’s USDT, in Europe

Cryptocurrency exchanges are taking important actions to ensure compliance with the Markets in Crypto-Assets Regulation (MiCA), which is about to be fully implemented in Europe. The new rules will have a big effect on the market starting on December 30, 2023, especially for stablecoins. Major exchanges have started eliminating stablecoins that don’t adhere to MiCA’s compliance requirements in advance, including Coinbase Europe, Coinbase Germany, and Coinbase Custody International. Tether’s USDt and five additional assets—PAX, PYUSD, GUSD, GYEN, and DAI—are among the delisted assets.

Impact of MiCA’s Stablecoin Regulations

MiCA’s phase one regulations, which took effect on June 30, 2023, focus on enhancing transparency and ensuring that stablecoins meet specific operational and reserve requirements. This regulatory shift is driving exchanges to carefully review their supported assets. Coinbase, for instance, informed its users in October of the upcoming delistings, urging them to convert their holdings to compliant alternatives such as USDC and EURC. USDC, a stablecoin co-operated by Coinbase and Circle, remains unaffected by MiCA’s new rules and will continue to be supported.

The delisting of Tether’s USDT is particularly significant. As the second most-traded asset on Coinbase, USDT accounts for over 12% of global trades, with more than $1 billion in daily trading volume. Its removal could create disruptions, particularly for users who rely on USDT for liquidity and transactions.

While Coinbase has removed non-compliant stablecoins, it has left open the possibility of relisting them if they meet MiCA standards in the future. However, the European Securities and Markets Authority (ESMA) has yet to issue a definitive decision on USDT’s compliance status, leaving its future in the region uncertain.

The company that issues USDT, Tether, has been outspoken in its criticism of MiCA’s rules. The business has advocated for a more technologically oriented regulatory strategy that better fits the developing cryptocurrency market in Europe. Due to limited demand, Tether halted EURt, the stablecoin backed by the euro, in November. Paolo Ardoino, the CEO, alluded to continuous attempts to create fresh solutions that meet MiCA’s needs.

Exchanges and stablecoin issuers must negotiate a challenging compliance environment as MiCA regulations continue to take shape in order to keep their position in the European market.