In its latest announcement, the European Securities and Markets Authority (ESMA) issued a critical directive for crypto firms, specifically stablecoin issuers, operating within the European Union (EU).
On 17 January 2025, ESMA mandated compliance with the new Markets in Crypto-Assets Regulation (MiCA). ESMA has set a 31 January 2025 deadline for crypto asset service providers (CASPs) to address non-compliant stablecoins.
ESMA’s directive will now compel CASPs to either restrict or delist non-compliant stablecoins by the end of January.
Explore: MiCA-Compliant Stablecoins Dominate European Market. BTC-EUR Trading Pair Flourishes!
Major Players Like Tether’s USDT Can Suffer
While ESMA did not name specific stablecoins in its statement, industry insiders suggest that major players like Tether’s USDT could be affected due to their lack of MiCA authorization.
Tether’s USDT, the largest stablecoin by market capitalization, has become a focal point in the MiCA compliance debate.
Reports indicate that USDT does not currently hold the necessary MiCA license.
For tokens already in circulation, firms are allowed to transition to a “sell-only” model. However, this provision comes with a hard deadline of 31 March 2025, after which further restrictions could be imposed.
Hence, CASPs listing USDT must act swiftly to delist or transition it to “sell-only” conditions by 31 March 2025.
Tether reported experiencing a sharp decline in its market value, dropping by 1.2% to $137 billion, earlier this month. This marks its steepest weekly loss since November 2022, during the FTX collapse.
Just 20 more days until Tether becomes effectively illegal across the entire EU.
Tether has refused to comply with MiCA requirements because it would mean they’d be forced to adhere to basic consumer protection and transparency standards pic.twitter.com/Fxwsdqw4g2
— Rho Rider (@RhoRider) June 11, 2024
Explore:Tether Sees A Market Cap Drop Amid EU’s MiCA Regulations: Competitors Like Circle Gain An Edge
CASPs Must Act Quickly: ESMA
The MiCA regulation requires that all stablecoins offered within the EU be issued by authorized entities. CASPs must ensure that their listed tokens meet MiCA’s stringent standards or face regulatory consequences.
With less than two weeks until the 31 January deadline, CASPs must act quickly to assess their portfolios and ensure compliance with MiCA’s standards.
ESMA’s enforcement strategy heavily relies on National Competent Authorities (NCAs), which serve as the primary regulators within individual EU member states.
These NCAs are tasked with ensuring that CASPs align with MiCA’s requirements.
According to guidance from the European Commission, any CASP offering non-compliant stablecoins risks violating MiCA regulations. This could lead to severe penalties, including fines and potential bans from operating within the EU.
Recently, Crypto.com announced an in-principle approval for their MiCA license, making them the first major global crypto service provider to do so.
Explore: Crypto.Com Expands Services To EU With A MiCA License
The post ESMA Sets January Deadline To Align With MiCA Stablecoin Rules, Tether’s USDT Can Be Affected appeared first on 99Bitcoins.
