The European Securities and Markets Authority (ESMA) is urging swift action against stablecoins that fail to comply with the EU’s Markets in Crypto-Assets Regulation (MiCA). This regulatory move announced on Jan. 17, targets asset-referenced tokens (ARTs) and electronic money tokens (EMTs).
Since June 2024, MiCA has effectively been implementing strict regulations for the issuance and trading of these tokens. ESMA requires CASPs to comply with these standards by the beginning of 2025 as well as the whole process. The said regulation includes sanctions against unlicensed tokens and obliges concerned investors to be provided with well-defined pathways to migrate to validated alternatives.
The Commission has made it known that offering or trading non-compliant ARTs and EMTs is a violation of MiCA. CASPs should already be taking action to avoid sanctions. ESMA underlined the role of national regulators in the process of adjusting their overseen companies from two tensions. The market has to be stable throughout the whole EU by working together and keeping common rules.
CASPs operating trading platforms are expected to delist non-compliant tokens urgently. Similarly, if they engage in non-compliant tokens, they must stop offering other services. Such as getting clients’ assets out of the exchange or transmitting client orders. However, CASPs could stick to “sell-only” on their platforms until the end of Q1 2025. With this choice, investors will be able to liquidate their holdings one by one.
Investor awareness campaigns for stablecoins
Investor awareness is a priority. The CASPs must develop communication campaigns to inform their clients about MiCA compliance. Technical measures should also be implemented to provide a smooth transition for investors to use the approved tokens.
ESMA stated that sudden changes in the regulatory environment might cause market devastation. Still, at the same time, the regulators emphasized the point that every second is of great value and that the regulators should move as quickly as practicable. Multinational companies that do not comply with the EU Regulation on protecting retail investors and the integrity of the financial markets can be fined.
Moreover, with CASPs driving the finalization of MiCA, the pressure has been soaring for them to conform. It has been mandatory to understand that this new set of regulations is a clear intent of the EU to rebuild a structured and compliant cryptocurrency market.
