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Coinbase reveals new MiCA compliance plans, Crypto.com sues the SEC after receiving a Wells notice, and Dubai fines seven unlicensed crypto firms as a “public warning” to the industry.
As the EU’s Markets in Crypto-Assets (MiCA) regulation approaches its final implementation deadline, Coinbase has released new details of how it plans to comply with MiCA’s stablecoin provisions.
This week, Coinbase announced that it plans to delist all non-MiCA-compliant stablecoins for users in the European Economic Area (EEA) by December 30, 2024.
The company said it will share further details of its plans in November and will provide options for affected EEA customers to switch to “appropriately authorised” stablecoins.
Under MiCA, the only stablecoins that may be offered to the public are those issued by credit institutions or by holders of an electronic money institution (EMI) licence issued within the EU.
In a statement shared with Vixio, Coinbase highlighted Circle’s USDC and EURC as two MiCA-compliant stablecoins that it intends to promote to its customers.
“Coinbase believes that regulated stablecoins offer a faster, more affordable and more accessible version of fiat money,” it said.
“As the industry leader in trusted, compliant crypto products and services, we always aim to achieve regulatory compliance, and will continue the same with respect to MiCA.”
Coinbase said that stablecoins will bring more efficient payments and more accessible financial services to European consumers, and will stimulate competition with traditional payments firms.
“There is huge scope for stablecoins to deliver on broader EU digitalisation as well as payments innovation priorities,” it said.
As covered by Vixio — and though Coinbase did not mention it by name — all eyes are on Tether to see how much longer the world’s largest stablecoin can survive in Europe.
With a market cap of $120bn, Tether’s stablecoin dwarfs all of its competitors, including its closest rival, Circle’s USDC, which has a market cap of $35bn.
MiCA’s stablecoin provisions have been in effect since June 30, 2024, while the remainder of MiCA’s provisions come into effect on December 30, 2024.
In the weeks prior to the stablecoin deadline, Tether CEO Paolo Ardoino had signalled that the company will exit the EU under MiCA.
“At Tether, what particularly bothers us about MiCA are the very strong constraints on how you can manage your reserves,” he said.
“If you are a small stablecoin issuer, 30 percent of your reserves must consist of cash deposits at a bank. In the case of stablecoins of systemic size like ours, this requirement rises to 60 percent.”
Ardoino said that these requirements are “particularly difficult” for stablecoin issuers that need to be fast and flexible when redeeming tokens.
Citing the case of Circle’s trapped deposits at Silicon Valley Bank (SVB) in 2023, the CEO said that MiCA could expose stablecoin issuers to the risk of bank runs.
“The only way to protect yourself is to buy financial securities such as US Treasury bonds,” he said. “In this case, even if the bank goes bankrupt, you are guaranteed to get your assets back.”
This week, however, following Coinbase’s delisting announcement, Tether revealed that it now plans to continue serving European users under MiCA.
“Tether is developing a technology-based solution, which we will unveil in due course and will be tailor-made to serve the necessities of the European market,” Ardoino told the Crypto Briefing.
Ardoino provided no further information about the “solution”, and did not explain which element of MiCA compliance it would solve for.
"Occami Crypto", a legal analyst and compliance commentator, was unconvinced by the Tether CEO’s remarks.
“There is no tech solution to MiCA,” they posted on social media platform X (formally known as Twitter). “They just need to hold reserves in EU banks, but Tether has no EU bank accounts.”
Tether also did not respond when contacted by Vixio for comment.
Crypto.com receives Wells notice, sues the SEC
This week, Crypto.com announced that it is suing the US Securities and Exchange Commission (SEC), alleging that the agency has overstepped its authority in its enforcement activity against the crypto industry.
In August this year, the SEC issued a Wells notice to Crypto.com, indicating that the regulator intends to recommend charging the company with selling and offering unregistered securities.
As noted by John Reed Stark, a former head of internet enforcement at the SEC, a Wells notice allows the recipient to provide a written explanation or argument as to why the SEC should not proceed with the suggested charges.
Like others in the industry that have received similar charges, Crypto.com rejects the SEC’s characterisation that most crypto-asset sales are securities sales, including when sold on a secondary market, such as a crypto exchange.
The company also disagrees with the SEC’s position that transactions in Bitcoin and Ethereum are not securities sales — a distinction that the plaintiffs say is “arbitrary” and “unlawful”.
“We seek to stop the SEC’s illegal actions in excess of their authority and in violation of federal law in their tracks,” said Crypto.com.
“While this is an unprecedented move for our company to file suit against a federal agency, actions by that agency towards our industry have left us no other choice.”
Dubai fines seven unlicensed crypto firms
Finally, Dubai’s Virtual Assets Regulatory Authority (VARA) has fined and issued cease-and-desist orders to seven firms operating without a licence.
Though the firms were not named, VARA said the fines range from AED 50,000 ($13,500) to AED 100,000 ($27,000) per entity.
The regulator added that the enforcement action will serve as a "public warning" to the industry to avoid engaging with firms that are not licensed.
“Interacting with such entities exposes individuals and institutions to significant financial and reputational risk, with potential legal consequences for regulatory breach,” it said.
“Only firms licensed by VARA are authorised to provide virtual asset services in/from Dubai, and the authority remains steadfast in its commitment to protect consumers and investors, and to preserve market integrity.”
