Stablecoins in Peril: Crypto Exchanges Make Changes

by Giorgi Kostiuk

a year ago

Some crypto exchanges are planning to remove stablecoins due to new regulations, sparking concern among investors.

What are Stablecoins?

Stablecoins are digital assets tied to the value of fiat money, typically the US dollar. They offer a mix of fiat currency stability and cryptocurrency features, making them popular among users.

Removing Stablecoins from Exchanges

Decentralized exchanges, like Coinbase, plan to remove stablecoins from their offerings. Coinbase will not sell stablecoins in the EU starting January 1, 2025.

Given our commitment to compliance, we intend to restrict the provision of services to EEA users in connection with stablecoins that do not meet the MiCA requirements by December 30, 2024.Coinbase

EU Regulations and Their Impact

The EU has introduced MiCA, a comprehensive regulatory framework limiting stablecoin trade unless certain conditions are met. Companies like Circle have adapted, whereas others, like Tether, face challenges.

Tether commends EU regulators for their efforts in establishing a structured framework, as it plays a key role in fostering growth within the sector. However, as we have consistently expressed, some aspects of MiCA make the operation of EU-licensed stablecoins more complex and potentially introduce new risks to both local banking infrastructure and stablecoins themselves.Tether

The decision by exchanges to drop stablecoins is driven by new regulations. Initially affecting specific platforms, its wider impact is anticipated as other exchanges adopt similar policies.