Crypto exchange Uphold notified its European users of its decision to discontinue support for six Stablecoins effective July 1. Uphold says delisting these stablecoins aligns with the European Union markets in Crypto Assets (MiCA) regulations.
Consequently, Tether (USDT), Pax dollar (USDP), Gemini dollar (GUSD), Frax Protocol (FRAX), Dai (DAI), and TrueUSD (TUSD) will no longer be traded on the exchange.
Users holding these stablecoins must convert them to other cryptocurrencies before June 28. Failure to do so will result in an automatic conversion into USD Coin (USDC).
Regulations Changing Crypto Exchanges’ Operational Mode
The MiCA framework was endorsed in May 2023 but became partially effective in June 2023. The laws are anticipated to take full effect by the end of 2024. Meanwhile, MiCA’s stablecoin laws will take effect in the European Economic Area on June 30.
Consequently, Uphold and other crypto exchanges, including Binance, OKX, and Kraken, are implementing vital changes to their market listings to comply with the regulations. Further, crypto exchanges in the EU must possess licenses as credit or electronic money institutions under MiCA.
Interestingly, MiCA’s regulations are stricter on fiat-backed stablecoins. These measures cover electronic money tokens that have reached a certain adoption threshold predetermined by seven quantitative and qualitative indicators.
Moreover, these laws give the European Banking Authority control over the virtual tokens rather than the local authorities of EU member states.
Additionally, MiCA laws require fiat-backed stablecoins to have a 1:1 backing ratio of a liquid reserve. Stablecoin issuers must create and maintain liquid reserve assets managed by a third party and separated from other assets.
The new rules forbid algorithmic stablecoins, aiming to boost consumer confidence in digital assets and ensure their dependableness. Events such as the Terraform collapse and the delisting of the stablecoin UST prompted such regulations.
Crypto Exchanges React to Updated MiCA Regulations
Besides Uphold, other top crypto exchanges, like Binance, reviewed their stablecoin listing policies early in June to comply with MiCA. In compliance with the rules, Binance split its stablecoins into regulated and unauthorized coins.
Binance has not clearly defined which stablecoins qualify as regulated and which are unauthorized. OKX delisted Tether stablecoin in Europe but did not cite MiCA in its announcement.
On the other hand, Kraken is considering withdrawing its support for USDT in the European region. Meanwhile, Crypto advisor Anthony Welfare believes that the MiCA stablecoin regulations show that not all USD stablecoins receive equal treatment.
He says it will be fascinating to find out which stablecoins the regulators approve. However, while some stablecoins face uncertainty, those backed by the Euro could benefit from these new regulations. Overall, these laws will change the crypto landscape in Europe.
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