The European Securities and Markets Authority (ESMA) has clarified that custody and transfers of Tether’s (USDT) are “not explicitly prohibited” under the Markets in Crypto-Assets Regulation (MiCA), the EU’s framework for regulating crypto-assets. This statement came on March 3, 2025, amid ongoing discussions about stablecoin compliance in Europe. While MiCA, fully effective as of December 30, 2024, sets strict rules for stablecoin issuers, ESMA noted that providing custody and transfer services for non-MiCA-compliant stablecoins like USDT doesn’t violate the regulation outrightly.
The MiCA is the European Union’s comprehensive framework for regulating crypto assets, finalized in June 2023 and fully applicable as of December 30, 2024. It aims to protect consumers, ensure financial stability, and foster innovation while bringing crypto under a unified EU regulatory umbrella. MiCA compliance details vary depending on the type of crypto-asset or service, with specific rules for stablecoins, crypto-asset service providers (CASPs), and issuers
However, there’s a nuance. ESMA encourages crypto-asset service providers (CASPs) to “prioritize restricting services that facilitate the acquisition” of such non-compliant stablecoins, referencing guidance from January 17, 2025. This means while holding or moving USDT is allowed, CASPs are urged to limit activities that promote buying it—like trading pairs—until March 31, 2025, after which stricter enforcement may kick in. For example, Binance plans to delist nine non-compliant stablecoins, including USDT, for trading in the European Economic Area (EEA) by March 31 but will still support deposits and withdrawals.
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This reflects a transitional phase in MiCA’s rollout. Stablecoins must meet specific reserve, transparency, and governance standards to be fully compliant, and Tether has not yet been approved under these rules (unlike 10 other issuers). ESMA’s stance aims to balance market stability with user access while regulators and firms adapt.
E-Money Tokens (EMTs): Stablecoins tied to a single fiat currency (e.g., USD or EUR), functioning like electronic money. Require full backing by fiat reserves. Other Crypto-Assets: Includes utility tokens, cryptocurrencies like Bitcoin, and non-stablecoin tokens, with lighter requirements focused on transparency. Issuers of ARTs or EMTs must be authorized by an EU national competent authority (e.g., France’s AMF or Germany’s BaFin) and operate as a legal entity in the EU.
ARTs need a 1:1 reserve of assets, regularly audited, held in custody by a third party. EMTs must be fully backed by fiat, with funds segregated and redeemable at par value on demand. Issuers must publish a detailed white paper (approved by regulators for ARTs/EMTs) outlining risks, governance, and reserve details. Minimum own funds (e.g., €350,000 for significant ARTs/EMTs) to ensure solvency.
Tether operates out of the British Virgin Islands, not the EU. MiCA demands audited, segregated reserves; Tether’s attestations have historically been less rigorous than required. Tether hasn’t sought or received EU approval as an EMT issuer. ESMA’s March 3, 2025, clarification reflects this: custody and transfers of USDT aren’t banned, but CASPs are nudged to restrict acquisition services (e.g., trading pairs) until March 31, 2025. Post-deadline, non-compliant stablecoins could face full exclusion from EEA markets unless they align with MiCA.
The ambiguity—custody and transfers are fine, but acquisition should be curbed—has sparked debate, with some in the crypto community seeing it as a temporary reprieve for USDT, while others note the looming deadline could still force changes if Tether doesn’t align with MiCA. Adapting to reserve rules and setting up EU operations is costly and complex. Only 10 stablecoins (e.g., Circle’s EURC) are MiCA-approved so far.