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ESMA Clarifies Stablecoin Custody and Transfer Rules under MiCA Regulation

mica esma stablecoin EU regulation crypto CASP

The European Securities and Markets Authority (ESMA), the top financial markets regulator in the European Union (EU), has provided clarity on the regulatory status of stablecoin custody and transfers under the Markets in Crypto-Assets (MiCA) regulation. This clarification has brought much-needed guidance to the digital asset industry, which had been left uncertain about whether basic stablecoin services were restricted under the new EU rules. The statement from ESMA confirms that non-MiCA compliant stablecoins can still be offered custody and transfer services, as long as they are not used for public offering or trading within the EU market.

This update follows an important announcement by Binance, the largest digital asset exchange in the world by daily trading volume. On March 3, 2025, Binance revealed its decision to remove nine stablecoins, including Tether (USDT), from its platform for users in the European Economic Area (EEA). These stablecoins did not comply with the MiCA regulations, which require stablecoins to be issued by authorized entities in the EU.

Despite the removal of these tokens from the platform, Binance reassured its users that deposits and withdrawals of non-compliant stablecoins would continue after March 31, 2025, as long as the services were in line with MiCA’s guidelines. ESMA confirmed that such actions are permissible and do not contravene the regulation, as they do not constitute a public offering or trading of non-compliant asset-referenced tokens (ARTs) or e-money tokens (EMTs).

The MiCA regulations, which came into full force on December 30, 2024, introduce a framework for the regulation of digital assets and set clear guidelines for stablecoins, which are cryptocurrencies pegged to a reserve asset, such as a fiat currency or another digital asset. The regulation distinguishes between different types of stablecoins, including ARTs and EMTs, which can only be offered in the EU if the issuing entity receives authorization from a National Competent Authority (NCA).

However, MiCA does not completely ban the use of non-authorized stablecoins for basic services, such as custody and transfers. According to ESMA’s March 4, 2025, clarification, crypto asset service providers (CASPs) are permitted to offer these services, provided they do not involve a public offering or request for admission to trading of non-compliant stablecoins. This has cleared up much of the uncertainty regarding the provision of essential stablecoin services within the EU.

While the MiCA regulations do not prohibit custody and transfer services, ESMA has emphasized that crypto asset firms should focus on restricting services that facilitate the acquisition of non-compliant stablecoins. This was emphasized in its guidance issued earlier in January 2025, which set strict deadlines for CASPs to ensure they limit the use of non-compliant tokens by March 31, 2025.

MiCA Regulations and the Future of Stablecoins

One of the key aspects of MiCA is the regulation of stablecoins, which have become increasingly popular in the digital asset ecosystem due to their price stability compared to traditional cryptocurrencies like Bitcoin and Ethereum. As stablecoins are pegged to a real-world asset, such as the US dollar or the Euro, they offer a much lower risk of price volatility. As a result, they have become widely used for trading, remittances, and as a store of value in the crypto market.

The MiCA regulation introduces new obligations for stablecoin issuers and service providers. From June 30, 2025, entities issuing ARTs and EMTs will need to comply with specific requirements, including the need for authorization by a competent authority and adherence to capital requirements. For stablecoins that are not authorized under MiCA, the new rules ensure that their trading is restricted, limiting their use within the EU market.

The regulation’s goal is to ensure that stablecoins are fully backed by assets and comply with the regulatory framework to ensure transparency, protect consumers, and minimize the risks associated with digital assets. MiCA seeks to provide a stable and secure environment for the growing cryptocurrency market while maintaining regulatory oversight.

Tether’s Dilemma Under MiCA Regulations

The world’s largest stablecoin by market capitalization, Tether (USDT), has found itself at the center of the debate surrounding MiCA regulations. Despite being one of the most widely used stablecoins globally, Tether has not applied for an EU license, making its future in the European market uncertain.

In mid-December 2024, Coinbase, the sixth-largest digital asset exchange globally, delisted USDT for EU clients, citing regulatory uncertainty. Other major exchanges like Binance and Crypto.com, however, continued to offer Tether to their European clients. This discrepancy has left many industry observers wondering whether Tether would seek authorization under MiCA or remain outside the regulatory framework.

Tether has made it clear that it has no immediate plans to apply for the necessary licenses to operate within the EU, prioritizing other initiatives until a more risk-averse framework is in place. This statement came after Tether’s decision to discontinue its Euro-pegged stablecoin (EURT), with the company emphasizing that its primary focus was on ensuring stability and protecting its users.

The uncertainty surrounding Tether’s compliance with MiCA regulations has led to further concerns about the future of non-authorized stablecoins in the EU market. However, with the clarification from ESMA, it is clear that Tether can still offer custody and transfer services for its stablecoin within the EU, provided it does not involve public trading or offering of the token.

Conclusion: ESMA’s Guidance Paves the Way for Clarity in Stablecoin Services

ESMA’s clarification on the custody and transfer of non-MiCA stablecoins has provided much-needed clarity for the digital asset industry. While MiCA regulations will restrict the trading of non-compliant stablecoins within the EU, the regulation allows for basic services such as custody and transfers to continue.

For crypto asset service providers, this means that they can continue to support non-authorized stablecoins for deposits and withdrawals, as long as they do not engage in public offerings or trading of these tokens. However, the emphasis remains on restricting the acquisition of non-compliant stablecoins, and CASPs are expected to prioritize this by the end of March 2025.

As the MiCA regulations come into full effect, the digital asset market will continue to evolve, and it is likely that more stablecoins will seek authorization to operate within the EU. The clarification from ESMA helps to ensure that the market remains compliant while still allowing for the continued use of non-authorized stablecoins in a limited capacity.