Coinbase Europe Delists USDT, Other Stablecoins Citing EU Compliance

Coinbase Europe decided to delist multiple stablecoins, including Tether’s market-leading USDT, to comply with the European Union’s rules.

In a Wednesday announcement set to its users, Coinbase wrote that "due to the new European Markets in Crypto-Assets (MiCA) regulation, Coinbase will implement restrictions for stablecoin services that do not meet MiCA requirements.”

Other than USDT, retail customers on Coinbase Europe and Coinbase Germany will see the delisting of Paxos Standard Price (PAX), PayPal USD (PYUSD), and Gemini Dollar (GUSD). It'll also impact GYEN, which issuer GMO-Z.com calls the first regulated Japanese YEN stablecoin, and Maker Protocol's DAI.

A Tether spokesperson told Decrypt that, considering the MiCA implementation, the company “is finalizing its long-term plans for the region, where it remains committed.”

The firm views the evolving regulatory environment positively but has concerns about the underlying systemic risks that such new regulation is adding, they added.

“Tether disagrees with the rushed actions of a limited number of exchanges that may decide to take an early stance, either because of self-interest since they own a big piece of a competitor or simply had a superficial analysis of the situation,” the Tether statement reads.

While the firm did not explicitly single out Coinbase, its statement may be a criticism to the firm’s action. The issue is further exacerbated by USDC being a joint product created by Circle in collaboration with Coinbase in 2018.

The exchange pointed out that the change may end up not being permanent for all the affected assets. Coinbase “will assess re-enabling services for stablecoins that achieve MiCA compliance on a later date,” it said.

Coinbase pointed out that USD Coin (USDC) and EUR Coin (EURC) are MiCA-compliant and will continue to be supported. For now, the platform suggests that its users sell or convert assets not compliant with the new regulatory requirements before the restriction date or transfer those tokens out of the exchange.

Starting Dec. 13, Coinbase Europe users will be restricted from trading and receiving the stablecoins above and won’t be able to “hold these assets on our platform.”

A Coinbase spokesperson told Decrypt that the company aims “for the highest standards for regulatory compliance and will continue the same with respect to MiCA.”

USDC issuer Circle secured a MiCA-valid license this summer, attracting attention from exchanges looking for a major stablecoin suitable for EU markets. Earlier this week, the world’s leading cryptocurrency exchange, Binance partnered with U.S.-based stablecoin issuer Circle to accelerate the adoption of the USDC stablecoin. That measure is also likely an early step to ensure compliance with the European Union’s MiCA regulation.

According to a September report by the consumer protection group Consumers’ Research, Tether’s world-leading dollar-backed stablecoin USDT is characterized by a lack of transparency regarding its stablecoin issuer’s U.S. dollar reserves. The report even stated that USDT is a “disaster for consumers waiting to happen.”

At the time, Tether defended itself against the accusation by pointing to a series of quarterly attestations and daily transparency updates, as well as its security measures and existing relationships with law enforcement. Still, as the report pointed out, no full audit of the dollar reserves backing USDT from a reputable accounting firm was produced.

Edited by Stacy Elliott.