The European Securities and Markets Authority (ESMA) has urged crypto asset service providers (CASPs) to act immediately on stablecoins that do not comply with the Markets in Crypto-Assets Regulation (MiCA). ESMA's call, made on Jan. 17, gives firms until Jan. 31 to restrict or delist non-compliant stablecoins. MiCA, which will come into full effect on June 30, 2025, governs the issuance of asset-referenced tokens (ARTs) and electronic money tokens (EMTs) in the European Union, making it illegal for firms to offer stablecoins from non-authorized issuers.

While ESMA has not named specific stablecoins, major players such as Tether's USDT could face restrictions as it does not have MiCA authorization. According to the European Commission's guidance, any stablecoin issuer not authorized within the EU cannot legally offer their products in the region. Non-compliant stablecoins must be delisted or restricted to a "sell-only" basis by the end of Q1 2025.

Tether’s USDT, the largest stablecoin by market capitalization, has particularly come under scrutiny. A member of the MiCA Crypto Alliance, Juan Ignacio Ibañez, stated that USDT is considered non-compliant due to its lack of MiCA authorization and that CASPs would need to delist USDT by Jan. 31, 2025, except for "sell-only" services. Tether has acknowledged the evolving regulatory environment but has assured that discussions with local national competent authorities (NCAs) are ongoing and they do not expect immediate changes for users.

The deadline for compliance remains a pressing issue for CASPs. While ESMA has allowed firms to keep non-compliant stablecoins on a "sell-only" basis until March 31, 2025, the situation’s urgency has led to calls for quicker actions. ESMA has also emphasized the role of EU national regulators, or NCAs, in ensuring crypto firms adhere to MiCA regulations. These regulators are responsible for overseeing firms’ compliance with MiCA’s requirements. Firms that fail to comply by the end of Q1 2025 could face stricter regulations or penalties.

While the MiCA regulations aim to bring clarity to the crypto market, some uncertainty remains within the industry. Executives have expressed concerns about the interpretation of the rules, particularly about which stablecoins are compliant. As MiCA’s enforcement date approaches, many in the crypto sector seek clearer guidance from regulators.