Uncertainty around Tether: ESMA confirms that custody and transfers are not restricted under MiCA

Uncertainty around Tether: ESMA confirms that custody and transfers are not restricted under MiCA

The European Securities and Markets Authority (ESMA) recently clarified that the rules of the Markets in Cryptoassets Regulation (MiCA) do not explicitly prohibit custody and transfers of stablecoins that do not comply with these regulations. This information comes at a time when many questions and uncertainties surround the classification and use of these digital assets in Europe.

On 3 March, Binance announced that it plans to remove nine stablecoins, including the popular Tether USDT, from trading for users in the European Economic Area (EEA). Although these tokens will be removed from trading, Binance has confirmed that deposits and withdrawals of stablecoins that are not MiCA compliant will continue to be supported.

According to ESMA's statement, the provision of custody and transfer services for these stablecoins is in compliance with European cryptocurrency laws. A spokesperson for ESMA said, "Custody and transfer services do not in themselves constitute a 'public offering' or 'seeking admission to trading' of non-compliant tokens." In doing so, ESMA confirmed that custody and transfer of USDT "are not expressly prohibited" under Titles III and IV of MiCA.

Despite this confirmation, ESMA stressed that European cryptoasset service providers (CASPs) should "prioritise limiting services that facilitate the acquisition" of incompatible assets. This follows guidance issued on 17 January 2025, when ESMA advised CASPs to limit their services to withdrawals only to allow investors to exit their positions.

This situation raises further uncertainties about MiCA compliance, particularly as ESMA is concerned that there may be confusion between permitted and prohibited services. A member of the Crypto Alliance's MiCA Technical Committee, Juan Ignacio Ibañez, has previously warned that the delisting of USDTs as a result of MiCA has been the subject of much debate.

In addition, other issues, such as the regulation of tokenised real assets and cryptocurrency betting, which are not directly addressed by MiCA, are also being raised in discussions on new European cryptocurrency regulations. ESMA and national competent authorities are therefore continuously monitoring market developments to ensure a smooth transition to the MiCA regime.

While the situation surrounding Tether USDT and other stablecoins remains uncertain, a clear communication from ESMA could help to provide greater clarity on this issue and provide much needed guidance to cryptocurrency service providers in Europe.

*This is not an investment recommendation.

Coingarage team