Coinbase Europe has decided to remove multiple stablecoins including Tether’s USDT (the market leader), to conform to the European Union rules.
In a Wednesday announcement set to its users, Coinbase wrote that "due to the new European Markets in Crypto-Assets (MiCA) regulation, Coinbase will implement restrictions for stablecoin services that do not meet MiCA requirements.”
Other than USDT, retail customers on Coinbase Europe and Coinbase Germany will see the delisting of Paxos Standard Price (PAX), PayPal USD (PYUSD), and Gemini Dollar (GUSD). It'll also impact GYEN, which issuer GMO-Z.com calls the first regulated Japanese YEN stablecoin, and Maker Protocol's DAI.
A Tether spokesperson told Decrypt that, considering the MiCA implementation, the company “It is working on a long-term plan for the area, to which it is committed.”
The firm views the evolving regulatory environment positively but has concerns about the underlying systemic risks that such new regulation is adding, they added.
“Tether is against the actions taken by a small number of exchanges who may have decided to act early, due to their own self-interest, as they hold a large piece of another company, or because they had only a superficial understanding of the situation.” the Tether statement reads.
While the firm did not explicitly single out Coinbase, its statement may be a criticism to the firm’s action. The issue is further exacerbated by USDC being a joint product created by Circle in collaboration with Coinbase in 2018.
The exchange pointed out that the change may end up not being permanent for all the affected assets. Coinbase “We will review reenabling the services of stablecoins at a later time if they achieve MiCA conformity.” it said.
Coinbase pointed out that USD Coin (USDC) and EUR Coin (EURC) are MiCA-compliant and will continue to be supported. For now, the platform suggests that its users sell or convert assets not compliant with the new regulatory requirements before the restriction date or transfer those tokens out of the exchange.
Starting Dec. 13, Coinbase Europe users will be restricted from trading and receiving the stablecoins above and won’t be able to “Hold these assets in our platform.”
Coinbase spokeswoman told Decrypt MiCA will also continue to be held accountable for the “highest standards” of compliance with regulatory requirements.”
USDC issuer Circle secured a MiCA-valid license this summer, attracting attention from exchanges looking for a major stablecoin suitable for EU markets. Earlier this week, the world’s leading cryptocurrency exchange, Binance partnered with U.S.-based stablecoin issuer Circle to accelerate the adoption of the USDC stablecoin. That measure is also likely an early step to ensure compliance with the European Union’s MiCA regulation.
According to a September report by the consumer protection group Consumers’ Research, Tether’s world-leading dollar-backed stablecoin USDT is characterized by a lack of transparency regarding its stablecoin issuer’s U.S. dollar reserves. The report even stated that USDT is a “Consumers are in for a disaster.”
At the time, Tether defended itself against the accusation by pointing to a series of quarterly attestations and daily transparency updates, as well as its security measures and existing relationships with law enforcement. Still, as the report pointed out, no full audit of the dollar reserves backing USDT from a reputable accounting firm was produced.
Stacy Elliott is the editor.