EU Gives Crypto Platforms Three Months to Remove USDT Under MiCA Rules

The European Securities and Markets Authority (ESMA) has given cryptocurrency platforms operating in the European Union up to three months to eliminate customer exposure to stablecoins that fail to comply with the bloc’s Markets in Crypto Assets (MiCA) regulations.

The guidance, released Thursday, targets unauthorized stablecoins, including Tether’s USDT and PayPal USD (PYUSD), although ESMA did not specifically identify any cryptocurrencies in its opinion.

Under the new requirements, crypto-asset service providers (CASPs) must stop offering services that allow European customers to purchase, exchange, trade or increase their holdings of noncompliant stablecoins.

ESMA established January 8, 2027, as the final deadline for resolving existing customer balances, giving national regulators responsibility for overseeing compliance.

The restrictions cover cryptocurrency exchanges, trading execution, transfers, custody services, investment advice, portfolio management and other activities involving affected digital assets.

However, platforms may temporarily provide limited services to help customers dispose of existing holdings. These include selling, converting, withdrawing or transferring stablecoins during the transition period.

New purchases, promotional activities and continued trading availability will not be permitted under the guidance.

The regulatory action strengthens enforcement of MiCA, the European Union’s comprehensive cryptocurrency framework designed to improve investor protection, financial transparency and stablecoin oversight.

MiCA's stablecoin provisions became applicable in June 2024, requiring issuers of asset-referenced tokens and e-money tokens to satisfy authorization, reserve management, redemption and disclosure standards.

The broader regulatory framework for cryptocurrency service providers took effect on July 1, requiring firms without appropriate authorization to discontinue operations serving EU customers.

Several major cryptocurrency exchanges had already introduced restrictions on USDT trading for European users ahead of ESMA's latest directive.

For investors holding USDT or other affected stablecoins on centralized exchanges, available options will depend on individual platform policies and instructions from national regulators.

Some customers may retain access to withdrawals or conversions throughout the transition, while others could encounter earlier restrictions.

ESMA emphasized that allowing unauthorized stablecoins to remain accessible through regulated cryptocurrency platforms could undermine MiCA's safeguards concerning reserves, governance, redemption rights and transparency.

National authorities will determine how platforms manage outstanding customer balances, provided the process is completed within the three-month deadline.

The latest guidance represents another significant step in the EU's efforts to tighten stablecoin regulation and establish consistent compliance standards across its cryptocurrency market.