As the EU MiCA regulations are about to take effect, Bitstamp and Binance are the first to remove non-compliant stablecoins.

Written by: Aiying Aiying
Recently, the EU’s upcoming “Crypto-Asset Market” (MiCA) regulations have attracted widespread attention. This regulation has had a profound impact on the cryptocurrency industry, especially the stablecoin market. MiCA requires that stablecoins backed by legal currency must have sufficient liquidity reserves and obtain an "electronic currency license." Additionally, trading volume caps and other asset support requirements for stablecoins are stipulated. June 30 is an important node, requiring exchanges to remove stablecoins that do not comply with regulations.
In the face of MiCA regulations, major cryptocurrency exchanges in the EU have taken measures. This week Bitstamp announced that it will delist stablecoins that do not meet MiCA requirements, such as Tether’s EURT, and will communicate directly with affected customers. Binance also restricts users from using unauthorized stablecoins and copy trading services, and advises users to convert to compliant digital assets or fiat currencies. In contrast, Coinbase has not taken explicit precautions but said it will continue to monitor the situation to ensure compliance with MiCA standards.
The implementation of MiCA regulations brings multiple challenges to the EU cryptocurrency market. Since most stablecoins are pegged to the U.S. dollar, it will be difficult for many stablecoins to comply with MiCA requirements in the short term, resulting in restricted trading and reduced liquidity. Jasper De Maere, head of research at Outlier Ventures, pointed out that the new regulations may limit trading activities and crypto investment opportunities for European citizens and force companies to reduce their activities in the EU, affecting industry innovation and consumer market access.
While the MiCA regulations create compliance challenges and market uncertainty, they also provide legal clarity and investor protection. Going forward, the EU cryptocurrency market is expected to continue to evolve under the new regulatory environment as more exchanges and stablecoin issuers adjust their strategies to comply with MiCA requirements. Industry experts believe MiCA has a positive role in providing legal clarity and protecting investors, and could become a model for international crypto regulation.
Aiying previously compiled an article [European MiCA Bill Ten Thousand Words Research Report: Comprehensive Interpretation of the Far-reaching Impact on the Web3 Industry, DeFi, Stablecoins and ICO Projects] which discussed in detail the possible impact of the introduction of the bill. The following is one of the content fragments :
The impact that the Mica bill may bring
Impact 1: Privacy coins will be removed from the shelves
Crypto-assets with built-in anonymity functions (such as Monero, Zcash and other "privacy coins") can only be identified by CASP or relevant regulatory agencies. Only with the person and their trading history can they be allowed to enter the trading platform. Since this is de facto impossible, EU-regulated cryptocurrency exchanges are expected to remove privacy coins from their products.
Impact 2: CASPs that have obtained relevant European licenses will have an easier time obtaining a Mica license
CASPs that have already obtained a license under the national framework will benefit from a simplified MiCA authorization procedure and have up to 18 months to obtain the final MiCA license certificate. For example, regulated crypto custodians in Germany may benefit from these simplified procedures and transitional measures. However, CASPs licensed only by MiCA will have the opportunity to provide services throughout the EU single market through so-called cross-region licensing. This is why most cryptocurrency businesses are expected to apply for MiCA authorization as soon as possible.
Impact 3: Unify the European market
MiCA regulations will bring unified supervision, enhance competitiveness and promote institutional development. Until now, EU crypto companies had to apply to regulators in each country if they wanted to serve the entire EU market, making it costly and cumbersome. Under MiCA, the same binding EU requirements will apply to all 27 member states. Once a company obtains a MiCA license in one country, it will be able to provide licensing services throughout the EU single market through "cross-regional licensing".
Impact 4: Offshore companies will be restricted, benefiting EU companies
After MiCA takes effect, offshore, unregulated companies will not be able to actively attract EU customers. Even the rules under which foreign businesses can take on customers if contacted by EU users will become stricter. This means that crypto companies regulated by MiCA will grab more EU market share from these unregulated overseas competitors.
Impact 5: MiCA promotes institutional participation and European banks accelerate their layout
MiCA may lead to increased institutional adoption and activity in the EU crypto market. According to Bloomberg data, only 4% of European institutional funds are exposed to crypto assets. Regulatory uncertainty is one of the main concerns preventing institutions from entering this space. It is expected that within the next 48 months, major European banks will launch crypto-asset services, whether it is custody, trading, or the issuance of electronic currency tokens or asset reference tokens.
Impact 6: MiCA’s impact on stablecoin issuers
MiCA’s new regulatory rules will bring significant compliance challenges to stablecoin issuers represented by Tether, especially considering that Tether has not been able to fully disclose its reserve status and composition, and has not been comprehensively audited by an authoritative independent agency. Tether has also been involved in multiple lawsuits and investigations, including an $18.5 million settlement with the New York State Attorney General’s Office, and was reportedly investigated by the U.S. Department of Justice for bank fraud, money laundering, and illegal operations. In the future, stablecoin issuers represented by Tether will face greater compliance reform costs.
In order to deal with these challenges, Tether should actively promote its own compliance process and establish good cooperative relations with EU regulatory agencies and third-party audit institutions to improve its market credibility and competitiveness. In the face of increasingly stringent regulatory requirements, Tether has taken measures to advance the compliance process. For example, Tether recently announced that it will cooperate with the Italian branch of BDO International, the world’s fifth largest accounting firm, which will be responsible for auditing the company’s reserve guarantee and attestation reports, and plans to change the frequency of issuing audit reports from quarterly to quarterly. per month.
Under the framework of MiCA, stablecoin issuance will become more compliant and transparent. Stablecoin issuers such as Tether need to accelerate their compliance processes to adapt to the new regulatory environment and remain competitive in the EU market.
Impact 7: Impact of MiCA on Defi
MiCA applies to businesses – natural and legal persons and “certain other businesses”. "Other businesses" may include entities that are not legally established, but the EU has clarified that decentralized DAOs and protocols are not the new targets. Paragraph 22 of MiCA clarifies that “crypto-asset services shall not fall within the scope of this Regulation if they are provided in a fully decentralized manner without the need for any intermediaries.” This core statement has been made public multiple times by key officials from the European Commission and Parliament Statement of support.
However, details determine success or failure. The bill proposes that MiCA may apply even if some activities or services are performed in a decentralized manner. This means that if there are certain parts or aspects of a DeFi project that are not fully decentralized, they may still need to comply with the relevant provisions of MiCA.
How much decentralization (technical, governance, legal, etc.) is required to not be in scope? It is an unambiguous subjective judgment. I expect some enforcement and litigation cases will arise around this issue. The EU is generally reluctant to enforce their laws in other countries, but if some DeFi projects are nominally decentralized but are actually centralized and are located in Europe or provide services to EU users, the EU will Special attention.
If DeFi projects want to be excluded from the scope, they have two options:
Prove complete decentralization (high threshold) and block EU users. However, when the EU formulated regulations for traditional financial companies, it excluded truly decentralized DeFi projects. , which is worthy of praise. It would be great news if something about MiCA could become a global standard. Impact 8: Challenges and Uncertainties
However, the actual success of MiCA is highly dependent on the implementation standards and enforcement practices developed by EU regulators over the next 12-18 months. Some provisions may impose burdens on industry participants, the full impact of which will only be apparent once technical implementation standards provide practical guidance.
Impact 9: High compliance costs and hindered innovation
Like the recent situation in Hong Kong, compliance costs are too high and companies flee. Mica’s compliance costs will also allow stablecoin issuers to bypass the EU, and exchanges face disclosure requirements and The liability is too onerous and fails to deliver benefits to consumers, making its products less competitive than offshore competitors. EU consumers will either be cut off from innovation or continue to use (and be exposed to) the largest pool of offshore liquidity and utility. Furthermore, regulators may decide that most NFT and DeFi projects are actually within the scope of MiCA and need to comply – a door that the current MiCA preamble remains open to interpretation. This will inevitably lead to the migration of teams and resources outside the EU.

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