Coinbase will remove stablecoins that do not meet MiCA rules
Coinbase Global Inc., an international subsidiary of the American exchange Coinbase. announced its plan to remove several stablecoins from its platform. According to the company, the objective is to remove tokens that do not comply with European legislation on cryptocurrencies, MiCA.
This removal will affect Coinbase platforms in the European Union (EU) and will take place until the end of December 2024. The implementation follows the MiCA implementation timeline, which will take place until the end of the year.
The new rules follow the regulatory terms of the legislation, in force since June 30th. Designed to create a standardized regulatory framework for cryptoassets across the EU, the MiCA rules are expected to come into full force on December 31, 2024.
Coinbase Announces Compliance Deadline
Coinbase's announcement specifies that the delisting will target stablecoins that do not meet the new MiCA requirements. The regulation, which came into force on June 30, obliges stablecoin issuers to obtain registration authorization to operate electronic currency within the EU.
This regulatory measure will increase oversight of cryptoassets within the European Economic Area (EEA), ensuring consumer protection. Circle, issuer of the USDC stablecoin, was the first company to obtain authorization to operate in the EU under MiCA rules.
Additionally, Coinbase plans to provide a transition update in November, stating which stablecoins will be leaving the platform. With this, the company will give users options to convert their holdings into MiCA-compatible stablecoins, including the aforementioned USDC.
Impact on the EEA stablecoin market and users
Coinbase's impending regulations and compliance strategy could significantly reshape the stablecoin landscape in Europe. USDT, issued by Tether Holdings Ltd., may face challenges as it has not yet secured the necessary permissions to operate under the new EU framework.
This regulatory scenario sets a precedent that could lead other cryptocurrency exchanges to follow suit by aligning their operations with MiCA guidelines. In fact, there are risks that EU citizens will not be able to trade with USDT, which currently has the highest liquidity among stablecoins.
Additionally, other major platforms such as OKX, Bitstamp, and Uphold have already taken steps to limit the availability of non-MiCA compatible stablecoins to their European users.
Despite increasing stringent regulatory measures in the cryptocurrency landscape, adoption of stablecoins like USDC continues to thrive. In the last 12 months, USDC's market value went from US$24 billion to US$35 billion, reinforcing this adoption.
Meanwhile, Paul Grewal, the Chief Legal Officer at Coinbase, highlighted inconsistencies in how the US Securities and Exchange Commission (SEC) handles legal arguments in different cryptocurrency cases. Grewal criticized the SEC for varying its stance on whether digital asset transactions constitute securities transactions.