Coinbase would delist all noncompliant stablecoins on its platform in just a few hours. According to Coinbase’s update, its Europe arm will delist all locally noncompliant stablecoins. This move will help it stay ahead of the European crypto regulation enforcement cutoff date.
MiCA’s Impact on Stablecoins
This delisting results from the European Union’s Markets in Crypto Assets regulation (MiCA).
The first phase of MiCA’s stablecoin has been in effect since June 30. The full regulatory framework will kick off by December 30.
Hence, as a precaution, Coinbase Europe’s retail customers and Coinbase Germany GmbH will have their accounts restricted from 11:59 CET.
According to the update, the MiCA-restricted assets include USDT, PAX, PYUSD, GUSD, GYEN, and DAI. Only USDC and EURC are MiCA-compliant and will continue to enjoy service support from Coinbase.
In October, Coinbase informed its users of the planned delisting of MiCA-restricted stablecoins. In the announcement, the exchange urged users with noncompliant coins to swap their holdings for other stablecoins like USDC.
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Interestingly, the MiCA regulations primarily address centralized stablecoins. According to Raphaël Bloch, Co-founder and Editor-in-Chief at The Big Whale, MiCA’s current regulation does not affect decentralized stablecoins.
These categories, often governed by protocols or DAOs without a central issuer, are outside the regulatory scope.
Bloch speculates that additional oversight might emerge with the EU updating its interpretation of MiCA to include decentralized stablecoins.
Bloch also believes Coinbase’s list of assets to delist was an overreach and might be an internal policy.
He considers it a proactive step to prepare for possible future regulations that could include decentralized stablecoins.
Potential Implications on the Cryptocurrency Market
Industry experts have been assessing the potential impact on EU users’ liquidity in the crypto sector.
Notably, these assets are a ready avenue for new entrants to enter cryptocurrency trading. Investors can easily convert fiat currency to stablecoin, which they can use to purchase other assets like Bitcoin and Ethereum.
The delisting could limit the ease with which potential investors can access funds for trading.
Tether (USDT), the largest stablecoin in trading volume, might significantly drop its market share. Tether currently occupies the third position in market capitalization, surpassed only by Bitcoin and Ethereum.
Surprisingly, Coinbase classified USDT as one of the MiCA-restricted stablecoins. However, European regulators have not categorized USDT as such.
Drawing on this, Paolo Ardoino, Tether’s CEO, has criticized certain aspects of the MiCA regulation.
Last month, Tether announced it was suspending its euro-backed stablecoin, EURt. However, it maintains it will continue to support new MiCA-compliant projects.
Such projects include USDq and EUR facilitated by Quantoz Payments, a Dutch fintech.
Global Stablecoin Regulation
Analysts claim that the quest to regulate stablecoins is largely driven by the desire to keep the markets safe.
Stablecoins are pegged 1:1 to fiat currency, usually the U.S. dollars. This nature of stablecoin raises a risk: an entity other than a central bank is issuing assets outside a regulated space.
Hence, regulators worldwide are doubling down on the supervision of the stablecoin space.
The EU has blazed the trail with the Markets in Crypto Assets Regulation, set to become fully operational later this month.
