Cryptocurrency exchange Uphold has sent a notice to its European users informing them that the platform will end support for six popular stablecoins from July 1. Uphold says it is delisting the stablecoins to align with the European Union’s Markets in Crypto-Assets Regulation (MiCA).
The six stablecoins are 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).
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 full 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. Crypto exchanges like Uphold and others are making key changes to their market listings to comply with these regulations.
MiCA places additional and stricter regulatory requirements on fiat-backed stablecoins and e-money 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 in charge of the tokens rather than the national authorities of EU member states.
In addition to requiring fiat-backed stablecoins to be backed by a 1:1 ratio of liquid reserve and issuers to create and maintain a reserve of assets held in custody by a third party 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.
Related: EU publishes draft rules for stablecoin issuer complaint procedures
Thus, stablecoin issuers in the EU must hold licenses as credit institutions or Electronic Money Institutions under the MiCA framework. While some stablecoins face uncertainty, stablecoins backed by the euro could 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 in June to comply with MiCA regulations.
Binance divided its stablecoins into “regulated” and unauthorized” coins in line with the new rules. However, unlike Uphold, Binance has yet to decide which crypto stablecoins qualify as regulated and which are unauthorized. In March, OKX also delisted Tether in Europe without mentioning MiCA, while Kraken is considering whether to continue supporting USDT in the region.