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A spokesperson for the European Securities and Markets Authority (ESMA) has confirmed to Vixio that unauthorised stablecoins cannot be offered to the public under the Market in Crypto-Assets regulation (MiCA).
Over the New Year, the EU’s MiCA regulation arrived at another key implementation deadline.
On December 30, MiCA came into effect for crypto-asset service providers (CASPs) — a group that includes custodians, wallet providers and trading platforms.
As the deadline approached, there was much speculation as to what would become of Tether on the other side of it.
Tether’s USDT stablecoin is the largest in the world, with more than $140bn in circulation, and it is also the most-traded stablecoin on European exchanges.
But throughout 2024, Tether had made clear that it cannot comply with MiCA in its current form, and will not attempt to comply.
Tether’s critics therefore warned of a sudden death of USDT in Europe after December 30, as major exchanges rushed to delist the stablecoin from their platforms.
In the end — and as noted in a previous article by Vixio — this did not happen. In fact, only one major exchange, Coinbase, delisted Tether in Europe ahead of the December 30 deadline.
Others, including Binance, began to promote Circle’s MiCA-compliant USDC more explicitly to their users, but Tether remained available nonetheless.
Tether celebrates too soon
After surviving the December 30 deadline, Tether CEO Paolo Ardoino took to X to accuse his critics of being “paid shills” intent on spreading fear, uncertainty and doubt (“FUD”) around USDT.
Ardoino and other Tether allies, who the CEO amplified during this period, made much of the claim that Tether will become “illegal” in the EU after December 30.
The illegality charge was an easy one for Tether to dispute, given that USDT can still be used to transact between private individuals under MiCA, or via decentralised finance (DeFi) platforms.
However, as confirmed to Vixio by ESMA, if a stablecoin issuer is not authorised under MiCA, then its stablecoin cannot be offered to the public on any MiCA-compliant trading platform.
Alongside the European Banking Authority (EBA), ESMA is one of two key regulators that will be responsible for the enforcement of MiCA.
Speaking with Vixio, an ESMA spokesperson stressed that they could not comment on individual products or providers, but they could clarify the effect of MiCA on stablecoin issuers in general.
“As per MiCA, electronic money tokens (EMTs) and asset-referenced tokens (ARTs) offered to the public or admitted to trading in the EU must have an authorised issuer,” the spokesperson said.
“If this condition is not met, those tokens must be delisted or brought into compliance.
“This means that platforms listing such tokens could face supervisory action unless the tokens meet MiCA’s requirements.”
'Grandfathering' saves the day, for now
As such, it is only thanks to the MiCA “grandfathering” arrangements opted into by individual states that Tether has remained available on European exchanges after December 30.
On December 17, ESMA published a statement on MiCA transitional measures.
The statement noted that CASPs that offered their services in compliance with local laws prior to December 30 may continue to do so until July 1, 2026, or until they are granted or refused an authorisation under MiCA — whichever is sooner.
As part of this transitional arrangement, individual jurisdictions were given the choice of when to enforce MiCA on local CASPs, and almost all opted for a “grandfathering” period of between six and 18 months.
Confusion expected
ESMA also noted that a mix of regimes will co-exist across member states during the transitional phase, which may result in disparate levels of supervision and customer protection.
“The different transitional periods should be taken into account by CASPs providing services in more than one member state when they transition to MiCA,” the regulator said.
“For example, a CASP seeking a MiCA authorisation in Member State A, with a 12-month transitional period, while also serving clients in Member State B, with a 6-month transitional period, should take action to ensure compliance with the applicable law of Member State B.”
ESMA has also called for market participants to apply for a MiCA authorisation as soon as possible, reminding them that without a MiCA authorisation, they will not benefit from passporting rights within the EU during the transitional period.
Alessio Ippolito, chief editor of Italian crypto news site Criptovaluta, said that the various grace periods in each jurisdiction will bring “total chaos” to Europe’s crypto sector.
“The situation is illegible, even for the compliance departments of exchanges that are as big as those of a medium-sized Italian bank,” he said in a post that was shared by Ardoino.
“MiCA wanted to bring transparency to Europe’s crypto sector. So far it has brought only confusion.”
