Cryptocurrency exchange Uphold has sent a notice to its European users informing them that the platform will end support for six popular stablecoins starting July 1st. Crypto exchanges are delisting these stablecoins to align with the European crypto regulations called Markets in Crypto-Assets (MiCA) new stablecoin framework.
The six stablecoins include Tether (USDT), Dai (DAI), Frax Protocol (FRAX), Gemini dollar (GUSD), Pax dollar (USDP) and TrueUSD (TUSD). Users holding these stablecoins must convert them to a different cryptocurrency before June 28, after which the cryptocurrency exchange will automatically convert them into USD Coin (USDC).
Europe’s all-encompassing cryptocurrency law, MiCA, was passed into law in May 2023 and went into partial effect in June 2023. The extensive EU crypto laws are expected to come into force by the end of 2024,
New Stablecoin framework under MiCA
On June 30, MiCA’s stablecoin regulations will be implemented in the European Economic Area (EEA). Crypto exchanges like Uphold and others are making key changes to their market listing to comply with these regulations.
MiCA places additional and stricter regulatory requirements on fiat-backed stablecoins and eMoney tokens that have crossed a predetermined adoption threshold, as determined by a set of seven quantitative and qualitative indicators. This puts the European Banking Authority (EBA), rather than one of the national authorities of the EU, in charge of these tokens.
In addition to requiring fiat-backed stablecoins to be backed by a 1:1 ratio of liquid reserve and requiring issuers to create and maintain a reserve of assets held in custody by a third party and isolated from other assets, the rule flatly forbids algorithmic stablecoins. These safeguards are intended to increase consumer confidence in digital currencies by ensuring that stablecoins can be used as a store of value and for payments in a dependable manner.
Thus, stablecoin issuers in the EU must hold licenses as credit institutions or Electronic Money Institutions (EMIs) under the MiCA framework. While certain stablecoins remain uncertain, it is anticipated that stablecoins backed by euros will thrive under the new regulations.
Crypto exchanges review stablecoin policy
Apart from Uphold, other major crypto exchanges, including Binance, also tweaked their stablecoin listing policies earlier this month to comply with MiCA regulations.
Binance divided their stablecoins into “regulated” and unauthorized” coins according to their compliance with the new rules. However, unlike Uphold, Binance has yet to decide which crypto stablecoins qualify as regulated and which are unauthorized. In March earlier this year, OKX also delisted Tether in Europe without mentioning MiCA, while Kraken is weighing in on whether to support Tether’s USDT as well.