FreeTheAI

EU Regulators Set January Deadline for Exchanges to Drop Unauthorized Stablecoins

BearishHigh impact
USDTUSD$0.9991 −0.01%

European Union crypto exchanges have until January 8, 2027, to halt transactions involving unauthorized stablecoins under guidance issued by the European Securities and Markets Authority. The directive impacts all firms licensed under the Markets in Crypto-Assets regulation, restricting trading, custody, transfers, and investment advice for non-compliant tokens. While users will be blocked from purchasing unauthorized assets, existing holders can still sell, convert, or withdraw their holdings until the deadline.

The rule heavily impacts Tether (COINBASE:USDTUSD), the major dollar-pegged stablecoin that has not secured EU approval. The asset issuer has chosen to let its token be delisted from European exchanges rather than adjust its reserve strategy to meet the regional requirement of holding 60% of backing in banks. Tether currently holds the majority of its reserves in U.S. government debt, and its leadership has publicly opposed the bank-deposit mandates. In contrast, competitor Circle obtained a license for its USD Coin token in 2024.

Market participants are now watching how individual European nations enforce this guidance, as well as potential regulatory adjustments. Circle is advocating for an equivalence pathway that would allow the EU to recognize foreign regulatory frameworks. Meanwhile, individual member states continue to advance their own crypto policies, such as Greece drafting a new tax on annual cryptocurrency gains.

Key points

  • Crypto exchanges in the European Union must stop offering unauthorized stablecoins by January 8, 2027.
  • The rule blocks EU clients from buying non-compliant stablecoins, though existing holders can sell or withdraw them before the deadline.
  • Tether has not sought EU authorization because it objects to rules requiring stablecoin issuers to keep 60% of reserves in bank deposits.
  • Competitor Circle holds a French license for its USD Coin token and is backing a regulatory workaround called equivalence.

Written by our AI from expert market sources across the web. It can contain mistakes: check the facts before acting on them. Write-ups powered by the free AI API at FreeTheAI.org

How we writeDisclaimer

Questions and answers

Why are European exchanges dropping Tether?

Tether has not secured approval under the EU's Markets in Crypto-Assets regulation, which requires large stablecoin issuers to hold 60% of their backing in bank deposits.

What is the deadline for EU exchanges to stop offering unauthorized stablecoins?

Licensed crypto companies in the European Union must stop offering unauthorized stablecoins to customers by January 8, 2027.

Can EU residents still sell or withdraw their unauthorized stablecoins?

Yes, existing holders are permitted to sell, convert, withdraw, transfer, or store their unauthorized stablecoins until the January 8, 2027, deadline.