Shall CASPs Delist Stablecoins as of 30th June, 2024 or Not?
Recent announcements of some major crypto exchanges sparked discussions about whether stablecoins not meeting Markets in Crypto Assets Regulation (the “MiCAR”) criteria should be delisted by crypto asset service providers (the “CASPs”) before July 1, 2024.
The MiCAR requirements related to issuance of stablecoins come into effect on the 30th June, 2024, whereas MiCAR’s provisions regulating CASPs will come into effect on the 30th December, 2024.
A prevalent view is that CASPs are not obligated to comply with the MiCAR before December 30, 2024, as MiCAR does not formally apply to CASPs until that date. Until the end of the year, CASPs should continue operating under national laws, which generally do not have specific rules regarding the listing of stablecoins. Therefore, unless local regulations stipulate otherwise, CASPs have the discretion to determine whether to delist stablecoins that do not meet MiCAR requirements.
However, Article 94 of MiCAR establishes that competent authorities may implement measures necessary to ensure compliance with the requirements outlined from Titles II to VI of MiCAR. These measures, inter alia, may include prohibiting the offer or admission to trading of crypto-assets, if MiCAR rules are violated, or prohibiting the trading of crypto-assets within CASPs. Administrative penalties and other administrative measures may also be taken under Article 111 of the MiCAR.
Titles III and IV of MiCAR outline requirements for issuing, offering, and admitting stablecoins to trading. MiCAR does not explicitly define notion of “admission to trading”. Linguistic interpretation of MiCAR entails that “admission to trading” is one of the activities performed by CASPs (i.e., Recital 23 and Articles 3(16) and 3(21)). In turn, Recital 28 of the MiCAR stipulates that the mere admission to trading or publishing bid and offer prices does not constitute a public offer, unless it includes a communication as defined under MiCAR. Article 3(12) defines an “offer to the public” as a communication providing sufficient information on the terms and the crypto-assets offered to enable potential buyers to decide on their purchase. Given that CASPs typically provide extensive information about listed stablecoins and considering the linguistic meaning of “admission to trading“, a trading in global stablecoins (such as USDT or USDC) could likely be considered an offer to the public and / or admission to trading of EMTs that do not comply with MiCA requirements.
In the light of the above considerations, it is very likely that the EU and national competent authorities may have the power to take measures against both stablecoins’ issuers and CASPs after 30th June, 2024. Therefore, if CASPs act negligently, they could face regulatory scrutiny which might potentially negatively impact their chances of successfully obtaining a MiCAR based CASP license once the regulation comes into full force.
Article by:
Ieva Bakutienė
Associate Partner | Licensing Services
Banking and Finance. Project Finance | Cryptoassets Solutions
ieva.bakutiene@noewe.eu
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