Cryptocurrency exchange Uphold has sent a notice to its European users informing them
Cryptocurrency exchange Uphold has sent a notice to its European users informing them that the platform will end support for six popular stablecoins effective July 1. Uphold says it will phase out stablecoins to align with European Crypto Asset Markets (MiCA) regulations.
The six stablecoins are Tether (USDT), DAI, FRAX, Gemini Dollar (GUSD), Pax Dollar (USDP), and True USD (TUSD). Users who own these stablecoins must convert them to another cryptocurrency before June 28, after which the cryptocurrency exchange will automatically convert them to USD (USDC).
MiCA was adopted in May 2023 and came into force partially in June 2023. The full EU cryptocurrency laws are expected to come into full force by the end of 2024.
New stable framework under MiCA
On June 30, MiCA regulations for stablecoins will be implemented in the European Economic Area. Cryptocurrency exchanges like Uphold and others are making major changes to their stock listings to comply with these regulations.
MiCA imposes additional and stricter regulatory requirements on stablecoins and fiat-backed e-money tokens that have exceeded a predefined adoption threshold, determined by a set of seven quantitative and qualitative indicators. This makes the European Banking Authority responsible for the tokens rather than the national authorities of EU member states.
In addition to requiring that fiat-backed stablecoins be backed by a 1:1 ratio of liquid reserves and that issuers create a pool of assets and maintain them in third-party custody isolated from other assets , the rule categorically prohibits algorithmic stablecoins. These safeguards aim to increase consumer confidence in digital currencies by ensuring that stablecoins can be used as a store of value and for payments reliably.
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Therefore, stablecoin issuers in the EU must hold licenses as credit institutions or electronic money institutions under the MiCA. While some stablecoins face uncertainty, euro-backed stablecoins could thrive under the new regulations.
Cryptocurrency exchanges review their stablecoin policies
Besides Uphold, other major cryptocurrency exchanges including Binance revised their stablecoin listing policies earlier in June to comply with MiCA regulations.
Binance has divided its stablecoins into “regulated” and unauthorized coins, in accordance with the new rules. However, unlike Uphold, Binance has not yet decided which stablecoins can be regulated and which are not. In March, OKX also delisted Tether in Europe without mentioning MiCA, while Kraken is considering whether to continue supporting USDT in the region.
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