Markets
Restrictive EU Stablecoin Rules Take Effect June 30, Issuers Running Out of Time
Tether, Circle and other big ones stable part Transmitters will soon be kept on a tight leash in the European Union.
With the new rules coming into force on June 30, not only will they need proper authorization to operate in the 27-country trading bloc, but they will also face strict limits on the number and values of transactions set on the Crypto Asset Markets (MiCA). legislation.
The regulation means that some of the largest issuers of stablecoins, including Tether, whose dollar-pegged USDT is the world’s largest by market capitalization, and Circle, responsible for the second-ranked USDC, may not be able to operate in the EU, said Robert Kopitsch, the secretary general of Blockchain for Europe.
“Non-EU stablecoins denominated in euros – if they exceed a certain threshold – then you have to stop issuing them and using them, and that creates a problem because 99% of the stablecoin market is in USD,” Kopitsch said on the sidelines. from CoinDesk’s Consensus 2024 conference in Austin, Texas last month.
MiCA is the comprehensive package of EU rules for the crypto sector. was voted last year and allows companies licensed by a member state to operate across the bloc.
According to the law Article 23Companies must stop issuing a stablecoin that is listed as an asset and used as a medium of exchange for more than one million transactions or a value of more than €200 million ($215 million) per day. The stablecoin rules will come into force at the end of the month, with the remaining provisions expected to come into force in December.
Blockchain for Europe and the Digital Euro Association – a think tank – have attempted to fight against measures in a 2022 letter claiming that they were effectively banning large issuers of stablecoins.
An EBA spokesperson told CoinDesk that the provisions do not prevent companies from issuing stablecoins denominated in non-euro assets. The key is whether they are used as a medium of exchange, to pay for goods or services. If this is the case, specific limits apply.
Issuers can serve Europeans without limits when tokens are not a medium of exchange, Jón Egilsson, co-founder of Monerium said in a statement. This includes transactions between currency zones, peer-to-peer transactions and the exchange of a cryptocurrency for an electronic money token, it said.
Although the EBA has not yet clearly defined how it will measure these values, a The consultation document suggests that transactions with parties based outside the EU could be excluded, but any transaction with at least one party in the EU can be counted.
According to the consultation, a transaction includes both on-chain and off-chain transfers. Movements between addresses or accounts of the same person are not considered a transaction.
A final report on how the EBA will measure transactions will likely be released by the end of the month, a spokesperson told CoinDesk.
Companies that have been forced to suspend emissions will have to submit a plan demonstrating they can meet the limits before being reinstated. That could be difficult: USDT’s global daily trading volume is about $27 billion according to data from CoinGecko. USDC is 5 billion dollars.
Another hurdle is obtaining the necessary certification.
“When you are a stablecoin issuer at the European level, you need to have an electronic money institution license or a banking license, which is a very expensive and time-consuming process,” Kopitsch said.
Tether, Circle and other issuers therefore have only three days to obtain an e-money license to operate legally.
Circle that is conditionally saved as a Digital Asset Service Provider with the Financial Markets Authority in April, aims to obtain an electronic money license by the deadline, a company spokesperson said.
“Circle is committed to full compliance with EU MiCA regulations. We plan to export EURC to the EU and issue it from Circle France in accordance with MiCA regulations,” the spokesperson said. “In addition, we intend to issue USDC for our EU-based clients from the same entity, in accordance with MiCA regulations and subject to regulatory approval.”
EURC is the company’s Euro-backed stablecoin. The equivalent of Tether is EURT. Crypto exchange earlier this week Bitstamp Delists Tether Tokenquoting MiCA. OKX Delisted USDT in March, saying it wanted to focus on euro-denominated liquidity in the region.
“Tether has engaged extensively with its exchange counterparties in Europe regarding requirements, including those related to the ongoing listing of USDT and other Tether tokens, and the interpretation of key regulatory provisions,” Tether CEO Paolo Ardoino said in a statement. “While Tether is optimistic about the implementation of MiCA, it remains crucial that the stablecoin regulatory policies adopted are balanced, protect consumers, and foster the growth of our emerging industry.”
“The question is what happens next, because we increasingly understand that there is a need to find a solution,” Kopitsch said of the restrictive nature of stablecoin rules.