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Uphold to Delist Major Stablecoins Including USDT, DAI, and FRAX Ahead of MiCA Regulations

Last Updated June 18, 2024 3:08 PM
Teuta Franjkovic
Last Updated June 18, 2024 3:08 PM

Key Takeaways

  • New EU regulations (MiCA) require stricter licensing for stablecoin issuers, causing uncertainty and exchange actions.
  • MiCA’s regulations may favor euro-backed stablecoins, aiming for increased transparency in the European crypto market.
  • Binance restricts unauthorized stablecoins, OKX stops USDT trading pairs in the EU, and Kraken reviews USDT listing.
Uphold, a New York-based crypto exchange and a Ripple On-Demand Liquidity (ODL) partner, has announced its decision to discontinue support for several stablecoins, including Tether (USDT), Dai (DAI), and Frax Protocol (FRAX).
This decision is made in preparation for the upcoming Markets in Crypto Assets (MiCA) regulations, which are soon to be implemented in the European Economic Area (EEA).

Uphold Delisting Stablecoins Ahead of EU Regulations

Antony Welfare, the CBDC Strategic Advisor at Ripple, relayed  Uphold’s announcement regarding the delisting of stablecoins. The decision extends to additional stablecoins such as Gemini Dollar (GUSD), Pax Dollar (USDP), and TrueUSD (TUSD). Starting July 1, 2024, these digital assets will no longer be available on the Uphold platform.

Uphold has advised its users to convert any holdings in the affected stablecoins by June 27th to avoid automatic conversion into USDC on June 28th. This guidance is part of the platform’s preparations for removing these stablecoins from its offerings.

Customers holding any of the specified stablecoins on Uphold are encouraged to convert their assets by June 27, 2024. If not converted by this deadline, these stablecoins will automatically be exchanged for USD Coin (USDC) on June 28, 2024.

This impending regulation represents a major change in the regulatory framework for stablecoins within the European Economic Area (EEA). With the tightening regulations on USD-backed stablecoins in Europe, EUR-backed stablecoins are poised to see increased adoption within the region. However, USD stablecoins are expected to maintain a dominant position globally.

MiCA Shakes Up Stablecoins in Europe

MiCA (Markets in Crypto Assets) regulation will notably impact stablecoins. Under the new guidelines, stablecoin issuers in the European Economic Area (EEA) must obtain licensing as Electronic Money Institutions (EMIs) or credit institutions, introducing a level of uncertainty for many stablecoin operators, while euro-backed options are likely to benefit from the new regulatory environment.

The MiCA regulations are poised to provide significant regulatory clarity for Europe, marking a major advancement in cryptocurrency oversight. While some exchanges like Uphold have chosen to delist certain stablecoins preemptively, others like Kraken are still evaluating the implications for stablecoins such as USDT on their platforms, with decisions pending on whether to continue listing them.

In a recent CCN interview with Tom Kiddle, co-founder of Palisade: a French-regulated digital asset service provider based in London, Kiddle highlighted several critical aspects of MiCA and its implications for the crypto industry. He explained MiCA provides significant benefits for crypto businesses by offering clarity, which is crucial for innovation. However, he highlighted that despite MiCA’s advantages, there are challenges, such as stringent licensing requirements and continuous reporting obligations that can be burdensome for smaller companies. Yet, these measures are necessary to protect consumers.

As MiCA’s implementation unfolds, it is expected to significantly influence the European crypto market, potentially serving as a model for other regions. A key outcome may see USDC emerging as a preferred stablecoin for secure transactions within Europe, reflecting its perceived stability and compliance readiness.

Stablecoin Shakeup: Binance Sells, OKX Skips USDT, Kraken Considers

Binance has adopted a sell-only policy for unauthorized stablecoins and implemented further restrictions across its services to comply with new regulations. Earlier this year, OKX stopped supporting USDT trading pairs within the European Union but continues to offer other stablecoins like USDC and euro-based pairs.

Kraken is currently reviewing Tether’s compliance with the new EU regulations and has not yet decided on the future listing of USDT, as it assesses the implications of MiCA. The MiCA framework requires stablecoin issuers in the EU to be licensed as Electronic Money Institutions (EMIs) or credit institutions, introducing uncertainty for several stablecoins.

However, euro-backed stablecoins are expected to flourish under this regulatory environment, aiming to increase the legal and operational transparency of the cryptocurrency market in the EEA.

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