EU regulators target non-compliant stablecoins with a 90-day deadline

EU Regulators Set 90-Day Deadline for Stablecoin Non-Compliance

Overview of the EU's MiCA Regulation

The EU's Markets in Crypto-Assets regulation (MiCA) requires crypto firms to act in clients' best interests. The European Securities and Markets Authority (ESMA) has issued an opinion requiring firms to resolve clients' exposure to non-compliant stablecoins within 90 days, with a deadline of January 8, 2027.

Current State of Stablecoins

ESMA has identified non-compliant stablecoins as those that lack issuer-level safeguards. Tether's USDT is among the assets labeled as non-compliant by Coinbase, while Kraken's guidance lists USDT as delisted for EEA trading. However, USDT is still permitted for deposits and withdrawals.

Exit Services for Non-Compliant Stablecoins

National regulators must ensure firms provide limited exit services for non-compliant stablecoins, including liquidation, conversion, withdrawal, transfer, or safekeeping of existing holdings. These services must be time-limited, clearly communicated to clients, and closely supervised.

Implications for Firms and Clients

The opinion emphasizes the need for issuers to provide issuer-level safeguards. Providers cannot adequately mitigate the risks created by missing issuer-level safeguards. Warnings, disclosures, and client acknowledgments would not resolve those concerns. The opinion complements ESMA's previous guidance, preserving the earlier offer-to-the-public interpretation while adding expectations under providers' existing duties.