As a researcher with experience in the crypto industry, I’m closely following the developments around MiCA regulation and its impact on European digital asset exchanges. The new law aims to bring transparency, investor protection, and financial crime prevention in the rapidly evolving crypto market.
The impending implementation of MiCA (Markets in Crypto-Assets) regulation has digital asset exchanges gearing up for compliance.
In response to recent regulatory developments, crypto exchanges are reassessing their offerings for European traders to ensure compliance with new investor protection rules, financial crime prevention measures, and transparency requirements.
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What is known about MiCA
Starting from 30th of June, the European regulations governing stablecoins will take effect. In the meantime, the European Banking Authority (EBA) and the European Securities Market Authority (ESMA) are actively seeking public feedback as they work towards enforcing these new rules.
Stablecoin issuers subject to MiCA regulation must be based in the EU. Yet, it’s undecided how this rule applies to decentralized and foreign entities. EBA officials clarified that there will be no leniency for stablecoins currently in operation.
How MiCA classifies stablecoins
Few European institutional funds can invest in cryptocurrencies currently because of regulatory ambiguity. But with the introduction of MiCA (Markets in Crypto-Assets) regulation, major EU banks are expected to provide services like custody, trading, and token issuance, reducing concerns over regulatory uncertainty.
As a financial analyst, I would interpret the MiCA regulations in this manner: I, as a stablecoin issuer, am obligated to hold sufficient reserves according to MiCA guidelines. The European Banking Authority (EBA), led by Chairman José Manuel Campa, will closely scrutinize the composition of these funds. To ensure transparency and mitigate potential conflicts of interest, I must: eliminate any conflicting interests between my storage facilities and trading platforms; and clearly disclose the relationship between these two entities.
Which crypto exchanges are abandoning stablecoins in Europe
Uphold
Effective July 1, Uphold will no longer allow users in the European Economic Area (EEA) to use USDT, DAI, FRAX, GUSD, USDP, and TUSD as stablecoins due to compliance with MiCA regulations.
The regulatory landscape for #Mica stablecoins doesn’t apply uniformly to all US Dollar stablecoins, making it intriguing to find out which ones meet the requirements.
— Antony Welfare (@AntonyWelfare) June 17, 2024
If you’re the owner of a stablecoin, you need to exchange it for other assets before June 28. Failing to do so means your cryptocurrency will be swapped with USD Coin (USDC) by default. However, USDC, EURC from Circle, and PYUSD from PayPal will remain supported on the platform.
Binance
Starting on June 30, Binance will limit the use of unapproved stablecoins for users residing in the European Economic Area (EEA). This decision stems from the requirements of the Markets in Crypto-Assets (MiCA) regulations pertaining to these types of assets.
Starting next month, some stablecoins that don’t comply with the MiCA regulations will be subject to limitations. Binance will not remove these non-compliant stablecoins from its main trading market, but it will restrict their usage for European Economic Area (EEA) users on specific platforms like Launchpool and Earn. Additionally, Binance intends to propose a plan for handling these unauthorized stablecoins.
— Binance (@binance) June 3, 2024
The unused assets in this category will end up being classified as unauthorized. Binance acknowledged that certain stablecoins currently in existence could be included in this designation.
Starting on June 30, the exchange is implementing a gradual shift towards compliant digital assets for European Economic Area (EEA) users. This change includes prohibiting access to unapproved stablecoins in all of their offerings.
As an analyst, I would advise that starting from June 29, certain limitations will be imposed on our copy trading service. It is strongly recommended for our users to close any open positions and process fund withdrawals prior to this date to avoid disruption. Additionally, traders residing in the European Economic Area (EEA) will no longer be permitted to access the FDUSD pool.
Kraken
According to a report by Bloomberg, Kraken announced that it will cease support for USDT in Europe starting from May. Some analysts speculate that this move could be connected to Europe’s efforts to implement new regulations governing the cryptocurrency sector.
As a researcher studying the developments in the cryptocurrency market, I’ve come across the recent announcements from Kraken regarding their platform. In response to these plans, Tether, the issuer of USDT, has expressed their preference for exchanges to hold a stablecoin reserve for facilitating deposits and withdrawals.
The company reminded us that its CEO, Paolo Ardoino, had previously voiced concerns over some elements of MiCA’s regulations. Rest assured, Tether remains committed to collaborating with EU regulatory bodies.
As a researcher, I came across a report from Bloomberg stating that Patrick Sutton, the Head of Communications at Kraken, had made certain remarks. However, upon further investigation, I discovered that Mr. Sutton subsequently refuted Bloomberg’s statement in a comment to crypto.news.
I, as an analyst, can confirm that there is no intention to remove Tether from our listings or modify its trading pairs at present. As a prominent crypto exchange, it is our responsibility to consistently assess our international strategy and operations to ensure regulatory compliance both now and in the future. We remain dedicated to adhering to regulations while driving the growth of this emerging asset class.
Patrick Sutton, Head of Communications at Kraken
As a crypto investor, I can tell you that Mark Greenberg, the head of growth and asset management at Kraken, announced that we’ll keep supporting payments and trading pairs with Tether (USDT) stablecoin in Europe.
Let’s make things clear: @krakenfx remains committed to providing USDT for use in Europe, with no present intention to remove it from our listings. Our European clients hold USDT in high regard, and we are actively exploring ways to support its availability under the forthcoming regulatory framework. We will adhere strictly to all legal requirements as they unfold.
— Mark Greenberg (@marklg) May 18, 2024
Greenberg confirmed that Kraken intends to comply with all applicable laws. However, as the regulations have not been finalized yet, the firm is making efforts to provide widely-used stablecoins to European users in the meantime.
OKX
As a Euro zone crypto investor using OKX exchange, I’ve been affected since March 14th as the platform no longer offers trading pairs involving the stablecoin USDT for my region.
It’s plausible that OKX made this move because MiCA, the European Union’s Markets in Crypto-Assets Regulation, requires stablecoin operators to obtain a license. Since OKX does not hold such authorization, they chose to act preemptively to steer clear of regulatory scrutiny.
Instead of Tether’s initial and widely-used stablecoin, the OKX team proposed USDC as an option for European users, making it a continuous rival to USDT.
What is going to change in Europe with MiCA
As a researcher studying the cryptocurrency market, I’m excited about the regulatory developments brought forth by MiCA (Markets in Crypto-Assets). The insights gained from this regulatory framework have the power to significantly influence the future direction of digital asset regulation.
As a analyst, I would rephrase it as follows: I believe that MiCA (Markets in Crypto-Assets) regulation is designed to bring transparency and understanding to the vast crypto asset market, making the European Union an alluring destination for web3 firms to experiment and recruit top talent. Clear regulations foster innovation and market dominance, instilling trust and assurance among investors and businesses alike.
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2024-06-21 16:53