EU watchdog gives crypto platforms three months to wind down non-compliant stablecoins

EU crypto platforms have up to three months to eliminate customer exposure to stablecoins that do not comply with the bloc's Markets in Crypto-Assets (MiCA) framework, following new guidance published Thursday by the European Securities and Markets Authority (ESMA). Issued as an opinion to national regulators, the document does not name specific tokens. Still, market participants point to Tether's USDT—the largest stablecoin by market capitalization—as the most prominent large-scale example lacking MiCA authorization. PayPal USD (PYUSD) $0.9997, the third-largest, is also not authorized. MiCA's stablecoin provisions started applying in June 2024, requiring issuers of dollar- and euro-pegged tokens made available to EU users to meet authorization, reserve, redemption and disclosure standards. ESMA classifies stablecoins under MiCA as asset-referenced tokens (ARTs) and e-money tokens (EMTs). "ESMA considers that CASPs should not provide crypto-asset services in relation to ARTs or EMTs that are not compliant with the applicable requirements under MiCA (non-MiCA compliant ARTs or EMTs)," the regulator said, using the acronym for crypto-asset service providers. Some platforms had already curtailed access to USDT for European users. MiCA's broader rule set for crypto platforms took effect on July 1, requiring firms without authorization to cease serving clients in the bloc. Under ESMA's guidance, authorized firms must stop offering services that enable EU customers to buy, trade, swap or otherwise increase holdings of affected stablecoins. The scope includes exchange services, trade execution, transfers, custody and administration, as well as advice and portfolio management. ESMA said national regulators should ensure any remaining customer holdings are addressed "as soon as possible, and no later than three months" after the opinion's publication—setting a deadline of Jan. 8, 2027. During the wind-down window, platforms may provide limited services aimed at resolving existing positions, such as selling, converting, withdrawing, transferring or safekeeping tokens. Purchases, promotion, trading and continued market availability would not be allowed. EU users holding USDT on an exchange will need to follow their platform's instructions. Some may be able to sell or withdraw during the wind-down period, while others could face an earlier cutoff. ESMA warned that keeping non-compliant stablecoins available through authorized platforms would undermine MiCA's reserve, redemption, governance and disclosure requirements for authorized issuers. The opinion is addressed to national regulators, which will determine how individual platforms manage remaining client balances within the three-month outer limit.