Uphold Cryptocurrency Exchange Drops Support for Six Stablecoins in Europe, Citing MiCA Regulations

Uphold, a cryptocurrency exchange, recently announced to its European clientele that it will cease supporting six widely-used stablecoins from July 1

Cryptocurrency exchange Uphold has announced that it will no longer support six widely-used stablecoins for its European customers, effective July 1.

This decision aligns with the European Union’s Markets in Crypto-Assets Regulation (MiCA), which aims to standardize crypto regulations across the bloc.

The stablecoins affected by this decision include Tether (USDT), Dai (DAI), Frax Protocol (FRAX), Gemini Dollar (GUSD), Pax Dollar (USDP), and TrueUSD (TUSD).

Uphold users will have the option to either convert these stablecoins into other cryptocurrencies by June 28 or have the platform automatically exchange them for USD Coin (USDC).

Those who do not take any action will have their stablecoins automatically converted to USDC at a rate of 1:1 on July 1. Stablecoins are cryptocurrencies that are pegged to fiat currencies, such as the U.S. dollar, and are designed to offer price stability.

MiCA, which was adopted into law in May and partially implemented in June, will be fully operational by the end of 2024.

The regulation introduces stringent regulatory standards for fiat-backed stablecoins and electronic money tokens that reach a high level of adoption, based on seven quantitative and qualitative indicators.

A key shift under MiCA is the transfer of regulatory authority from national bodies of EU member states to the European Banking Authority.

The new rules aim to enhance the stability and reliability of the crypto market.

They require that all fiat-backed stablecoins must be fully backed by a 1:1 ratio with liquid reserves, which are to be maintained in a segregated account, managed by a third party, and separate from other financial assets.

Furthermore, MiCA explicitly bans algorithmic stablecoins that do not adhere to these guidelines.

The broader goal of these regulations is to instill consumer confidence in digital currencies, ensuring that stablecoins function reliably both as stores of value and mediums of exchange.

Within the MiCA framework, stablecoin issuers will be licensed either as credit institutions or Electronic Money Institutions.

While this regulatory environment poses challenges for some stablecoins, it may favor those backed by the euro, which could potentially thrive under the new rules.

In response to MiCA, other major cryptocurrency exchanges have also been adjusting their stablecoin policies.

For instance, Binance classified its stablecoin offerings into “regulated” and “unauthorized” categories earlier in June to align with MiCA's stipulations.

However, Binance has not yet specified which stablecoins fall into these categories.

In contrast, OKX opted to delist Tether in Europe in March without explicitly attributing the decision to MiCA.

Meanwhile, Kraken is still considering whether to continue supporting USDT in the European market.

These policy revisions across various platforms highlight the impact of MiCA on the cryptocurrency landscape in Europe.

As exchanges adapt to these stringent new regulations, the stablecoin market is set to undergo significant transformations, ultimately leading to a more stable and reliable digital currency environment.

News source：https://www.kdj.com/cryptocurrencies-news/articles/uphold-cryptocurrency-exchange-drops-support-stablecoins-europe-citing-mica-regulations.html

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