EU Regulators Set 90-Day Deadline for Non-Compliant Stablecoins

The European Securities and Markets Authority (ESMA) has issued a new opinion requiring crypto firms authorized under the EU's Markets in Crypto-Assets regulation (MiCA) to address their clients' exposure to non-compliant stablecoins within a strict 90-day timeframe. This directive, published on October 8, 2023, aims to ensure that firms remediate any legacy exposures by January 8, 2027.

ESMA's guidance stipulates that national regulators must act swiftly to enforce this remediation, allowing only limited services necessary for an orderly wind-down. These services can include liquidation, conversion, withdrawal, transfer, or safekeeping of existing holdings, but they must not facilitate new acquisitions or promote continued market availability of non-compliant tokens.

According to ESMA, any MiCA service involving a non-compliant stablecoin is presumed to be incompatible with providers' duties to act in clients' best interests. The opinion reinforces earlier guidance while introducing a timeline for compliance and supervised exit arrangements.

Although no specific tokens are named, Tether's USDT has been identified as non-compliant by some exchanges, raising questions about the future of such assets in the EU market. The opinion emphasizes that while access to stablecoins is restricted through regulated EU firms, there is no blanket ban on owning these assets globally.