European Securities Regulator Demands Immediate Action on Non-Compliant Stablecoins

The European Securities and Markets Authority (ESMA) has called on crypto-asset service providers (CASPs) to take immediate steps regarding stablecoins that fail to comply with the Markets in Crypto-Assets Regulation (MiCA). In a statement issued on January 17, ESMA gave companies until the end of January to restrict or halt the trading of non-compliant stablecoins.

MiCA, set to take full effect on June 30, 2025, mandates that issuers of asset-referenced tokens (ARTs) and e-money tokens (EMTs) must be licensed within the European Union. This means trading stablecoins issued by unlicensed entities will be illegal under the regulation.

Although ESMA did not name specific stablecoins, the decision implicitly targets major tokens like USDT, issued by Tether, which currently lacks the required licensing under MiCA. According to European Commission guidelines, issuers of unlicensed stablecoins will be barred from offering their products in the EU market. As a result, trading platforms must delist these tokens or restrict them to “sell-only” status by the end of Q1 2025.

USDT, the largest stablecoin by market capitalization, faces increasing regulatory scrutiny under MiCA. Juan Ignacio Ibáñez, a member of the MiCA Crypto Alliance, confirmed that USDT does not meet MiCA’s licensing requirements. Consequently, trading platforms are required to delist or restrict USDT trading by the end of January 2025.

Despite these developments, Tether has stated that it is engaging with national regulatory authorities across EU member states and remains committed to compliance with local regulations. The company also assured users that its services would not be immediately affected.

The MiCA compliance deadline poses a significant challenge for digital asset service providers. While ESMA has temporarily allowed trading of non-compliant stablecoins in “sell-only” mode until the end of March 2025, the pressure to accelerate compliance is mounting.

ESMA emphasized the crucial role of national competent authorities (NCAs) in ensuring effective enforcement of MiCA. NCAs are responsible for supervising the compliance of crypto companies with MiCA’s requirements. Companies failing to meet these standards by the deadline could face severe legal consequences.

While MiCA aims to provide clear rules for the crypto market, it has raised questions about practical implementation, particularly for stablecoins. Industry stakeholders have expressed concerns over certain aspects of the regulation, especially compliance standards for stablecoins. As the MiCA implementation deadline approaches, there is an urgent need for more detailed and clear regulatory guidance to help companies adapt to these new requirements.