Coinbase Global has shocked the cryptocurrency world with its recent announcement. The popular exchange plans to delist all unauthorized stablecoins in the European Economic Area (EEA) by the end of the year. This decision could deal a significant blow to major tokens like Tether Holdings Ltd’s USDT, which is the largest stablecoin in the world.
New Rules Are Coming: MiCA
Big changes are coming to the crypto world, as the European Union is set to enforce new regulations for the crypto industry, known as the Markets in Crypto-Assets (MiCA) framework, which will fully begin on December 31, 2024. Under these regulations, stablecoin issuers must have e-money authorization in at least one EU member state.
However, the initial phase of these regulations began on June 30, focusing on stablecoin issuers, but the guidelines will extend to crypto exchanges and other businesses operating in the region later this year.
According to a Coinbase spokesperson, “Given our commitment to compliance, we intend to restrict services to EEA users for stablecoins that do not meet MiCA requirements by December 30, 2024.” This requirement is part of a broader effort to bring more security and transparency to the crypto market.
Impact on the Crypto Market
The potential delisting of unauthorized stablecoins could create a ripple effect throughout the crypto market. Tether’s USDT, with a market cap of around $120 billion, is particularly at risk since it has not yet gained permission to operate in Europe.
Other exchanges like OKX, Bitstamp, and Uphold are already restricting access to Tether’s tokens, making it clear that the regulatory landscape is changing fast.
In response to these challenges, companies such as Robinhood Markets Inc. and Revolut Ltd. are exploring the idea of launching their stablecoins to compete with Tether. This could ignite fierce competition in the stablecoin market as businesses strive to comply with new regulations while attracting users.
What’s Next for Users?
Coinbase plans to update its users next month, explaining how they can convert their unauthorized stablecoins into compliant versions like Circle Internet Financial Ltd’s USDC. This option could help users transition smoothly as the new rules take effect.
