The EU’s crypto law MiCA is set to take effect next year, setting a framework for stablecoins within the bloc.
With remaining legal gray areas and no approvals yet, there could be a bumpy landing in June.

New European Union rules due to kick in a few months from now could mean large-scale delisting of stablecoins, a Binance executive warned on Thursday, as lawyers attempt to decipher the implications of the bloc’s Markets in Crypto Assets (MiCA) regulation.

There are still gray areas in how the EU’s landmark law will apply to decentralized and foreign issuers, and officials from the European Banking Authority (EBA) have stressed there’s no grace period for coins already on the market.

MiCA was finalized last June, and is set to make the EU the first major jurisdiction in the world with a comprehensive crypto regulation, allowing exchanges and wallet providers to operate across the bloc with just a single license.

MiCA's provisions on stablecoins – crypto assets whose value is tied to other assets like fiat currency or gold – will take effect in June 2024 and in the meantime the finer details are being consulted on by the EBA and its sister agency, the European Securities and Markets Authority (ESMA).

“We are heading to a delisting of all stablecoins in Europe on June 30,” given that no project has yet been approved, Marina Parthuisot, head of legal at Binance France, told an online public hearing hosted by the EBA. “This could have a significant impact on the market in Europe compared to the rest of the world.”

In response to a social media post referring to this story, Binance CEO Changpeng "CZ" Zhao said the company has "a couple of partners launching EUR and other stablecoins, in fully compliant manners."

In a post on X, previously Twitter, Zhao said Parthuisot's comments had been taken out of context, and wrote "4," his usual shorthand to allege attacks and fake news. A blog published by Binance on Thursday said the company was "confident that there will be a constructive solution in place" before June in order to avoid an undue impact.

4.

It was a question taken out of context.

In fact, we have a couple of partners launching EUR and other stable coins, in fully compliant manners of course.
— CZ 🔶 Binance (@cz_binance) September 21, 2023

Zhao has hailed the clear rules brought in by MiCA, but regulatory pressure has already forced the exchange to flee many European jurisdictions, including the Netherlands, Cyprus and Germany.

Yet they aren't the only ones with issues. Others are scratching their heads over provisions requiring issuers to be EU-based undertakings, a wooly phrase that could rule out the innovative governance models favored by many blockchain foundations.

“A lot of the stablecoin issuers will be, or will purport to be, completely decentralized, therefore without any point of decision or issuance” and hence unable to meet MiCA strictures, Thomas Vogel, a partner at law firm Latham & Watkins, said. “This has become a sort of threshold question for a lot of the people we talk to, and as far as I can tell there is not much guidance.”

Ian O’Mara, a partner at Matheson law firm, told the hearing the rules could allow foreign issuers to register via a crypto provider based within the bloc – avoiding fragmentation of major international initiatives like Circle’s USDC.

“There are foreign firms who are seeking advice on their options here,” O’Mara told CoinDesk. “I am skeptical the EBA/ESMA will facilitate this but arguably the legal text allows for this.”

Officials held out little hope they’ll show regulatory largesse in implementing the rules, whose main features are already set out in stone.

“There is no transitional arrangement for these types of [stablecoin] tokens. The rules will apply from the end of June next year,” Elisabeth Noble, team leader for MiCA at the EBA, told Parthuisot.

Meanwhile, her colleague Isabelle Vaillant, who is director of prudential regulation and supervisory policy at the EBA, described concerns over decentralization as “very practical, difficult questions,” and added that in reality there’d always be a contractual link between issuers and customers as a point of contact.

UPDATE (Sept. 21, 13:42 UTC): Adds CZ's tweet.

UPDATE (Sept. 21, 15:16 UTC): Adds Binance blog comment in seventh paragraph.

CORRECTION (Sept. 22, 08.05 UTC): Corrects spelling of Noble's forename.

Regulations MiCA EU Stablecoin

Jack Schickler

Jack Schickler was a CoinDesk reporter focused on crypto regulations, based in Brussels, Belgium. He previously wrote about financial regulation for news site MLex, before which he was a speechwriter and policy analyst at the European Commission and the U.K. Treasury. He doesn’t own any crypto.