Bitstamp Prepares for MiCA by Dropping Tether’s Euro-Pegged Stablecoin

Bitstamp has decided to delist EURT in preparation of Europe’s MiCA regulation that will come into effect by the end of June.

Bitstamp announced that it will delist Tether’s euro-pegged stablecoin, EURT, by the end of June to comply with Europe’s Markets in Crypto-Assets Regulation (MiCA). Other exchanges like Uphold are also delisting stablecoins in response to MiCA. Meanwhile, North Carolina's General Assembly passed a bill that bans the state use of central bank digital currencies (CBDCs). In the UAE, new regulations might ban crypto payments unless they are backed by UAE dirhams, which could deliver the country’s digital economy a big blow, according to Irina Heaver. South Korea has also tightened its crypto regulations, as the South Korean government approved a decree on the enforcement of the Act on the Protection of Virtual Asset Users (PVAU).

Bitstamp Delists Tether’s EURT

Bitstamp crypto exchange is set to delist Tether's euro-pegged stablecoin, EURT, in preparation of the full enforcement of Europe’s Markets in Crypto-Assets Regulation (MiCA) by the end of June. Bitstamp initially listed EURT in November of 2021, but now the stablecoin is being removed to comply with MiCA, which will come into effect on June 30.

After its launch in 2021, EURT has seen a big decline in market capitalization. According to data from CoinMarketCap, EURT’s market cap currently stands at around $37 million, down from its peak of $236 million in February of 2022. 

James Sullivan, Bitstamp’s managing director for the United Kingdom, stated that the exchange fully supports MiCA’s mission to make crypto regulation more uniform across the European Union. Bitstamp is also trying to mitigate the effects of MiCA’s implementation by directly communicating with affected customers. 

Non-euro-denominated stablecoins on Bitstamp will not be impacted by this delisting. These Electronic Money Tokens (EMTs) will still be available but will be limited to certain products for European customers, and no new EMTs will be listed unless they meet MiCA requirements.

Other exchanges like Uphold have also decided to delist multiple stablecoins, including USDT, in line with MiCA rules. Tether CEO Paolo Ardoino is not at all happy with this, and has criticized the European regulation as he said that Tether does not intend to be regulated under MiCA.

North Carolina Passes CBDC Ban Bill

In other crypto regulation news, North Carolina's General Assembly passed House Bill 690 on Wednesday, which  restricts the state's government from using and accepting a Federal Reserve-issued central bank digital currency (CBDC). The bill now awaits Governor Roy Cooper's approval after passing the House with a 109-4 vote and the Senate with a 39-5 vote. 

If the bill gets signed into law, it will immediately bar state agencies and courts from accepting payments in CBDC and participating in CBDC tests conducted by any Federal Reserve branch. This move also coincides with Louisiana Governor Jeff Landry's recent signing of a similar bill banning CBDC acceptance and participation.

The widespread support for the North Carolina bill indicates that a veto from Governor Cooper could be very easily overridden, as it has backing from over three-fifths of lawmakers in both chambers. Cooper's office has not commented on his intentions regarding the bill.

Federal Reserve Chair Jerome Powell stated in March that the U.S. is still far from actually recommending or adopting a CBDC, despite the U.S. House passing a bill last month to ban the Fed from offering a CBDC, which now moves to the Senate. A recent survey by the Bank for International Settlements (BIS) found that 94% of surveyed central banks are exploring a CBDC, with a sharp increase in wholesale CBDC experiments and pilots. According to the BIS, a central bank is more likely to issue a wholesale CBDC than a retail CBDC within the next six years.

UAE’s New Rules May Ban Crypto Payments

Crypto and blockchain lawyer Irina Heaver has shared some of her concerns that new regulations in the United Arab Emirates (UAE) could prohibit crypto payments. On June 5, the Central Bank of the UAE (CBUAE) discussed initiatives under the country’s financial infrastructure program, and approved regulations for payment token services to oversee and license stablecoins. The guidelines require payment tokens to be backed by UAE dirhams, not linked to other currencies.

Heaver explained that these rules forbid the acceptance of cryptocurrencies for goods and services unless they are licensed dirham payment tokens or registered foreign payment tokens, neither of which currently exist. She believes this could contradict the UAE’s historically pro-commerce and pro-investment stance, which has thrived on foreign direct investment and liberal policies, including the absence of capital controls and freedom of contract under commercial law.

Heaver also touched on concerns that the new regulations could hold back the progress of the UAE's digital economy by banning the use of stablecoins like Tether (USDT), which she considers crucial for Web3 and crypto transactions. She also warned that this policy shift could signal to others that the UAE is becoming a less favorable environment for the crypto industry, which could negatively impact the UAE's image and ambitions in the digital economy.

Additionally, Heaver pointed out the lack of strong industry representation in the UAE, specifically the absence of associations like the Crypto Valley Association in Switzerland, which successfully lobbied against unfavorable regulations. She believes that existing associations in the UAE are fragmented and more focused on business development than advocating for the industry’s interests.

This means there is no one to fight back against policies that are not thoroughly thought through and could be detrimental to the growth of Web3 and crypto in the UAE.

South Korea Strengthens Crypto Regulations

Meanwhile, the South Korean government has approved a decree on the enforcement of the Act on the Protection of Virtual Asset Users (PVAU). Both laws are set to come into effect on July 19. This decree outlines the methods and procedures the Financial Services Commission (FSC) will use to implement the PVAU, including active steps and oversight measures.

The FSC will form a committee of government officials and private sector experts to develop policies for virtual assets that are regulated under legislation other than the PVAU or deemed harmless to users. The FSC will also designate credible financial institutions to manage customer deposits for virtual asset service providers (VASPs). These funds must be segregated from VASP funds and invested in "risk-free" assets, with banks returning customers’ money directly if a VASP is deregistered or bankrupt.

Additionally, the FSC will set the proportion of VASP customer digital assets to be stored in cold wallets, which will be no less than 80%. VASPs can limit deposits and withdrawals under specific circumstances, and there are rules for reporting abnormal trading activities with punishments up to life imprisonment. The decree also includes complex regulations for distinguishing public from nonpublic information.

South Korea has made it a priority to intensify crypto-related enforcement actions over the past year. The PVAU, which was passed into law in July of 2023, faced a lot of criticism for lacking a regulatory framework. Hopefully, the PVAU enforcement decree will now be able to help with this.

The introduction of Bitcoin exchange-traded funds (ETFs) in the United States also caused controversy in South Korea, with conflicting stances between the FSC and the president's office. 

The Enforcement Decree will be officially announced in early July.