The European stablecoin market is experiencing active development. From December 30, 2024, the Markets in Crypto-Assets Regulation (MiCA)
came into force in Europe, and introduces a unified legal framework for crypto-assets, including asset-referenced tokens (ARTs) and e-money tokens (EMTs) – both of which cover stablecoins.
The Impact of MiCA Regulation
Among its most important provisions, MiCA sets strict requirements for stablecoins, especially those considered “significant asset-referenced
tokens” These stablecoins must meet strict standards in terms of:
1. Backing: stablecoins must be fully backed in Europe by high-quality liquid reserves.
2. Transparency: issuers must publish periodic reports on their reserves and ensure their assets are externally audited.
3. Licensing and supervision: stablecoin issuers must be licensed as an EMI and subject to supervision by European financial authorities.
According to the
Public
Statement of the European Securities and Markets Authority (ESMA)
as of 17.01.2025, National Competition Authorities
(NCAs) should ensure compliance by CASPs regarding non-compliant ARTs or EMTs as soon as possible and no later than the end of Q1 2025.
In practice, this means that
CASPs operating a trading platform for crypto-assets are expected to stop making all crypto-assets that would qualify
as ARTs and EMTs but for which the issuer is not authorised in the EU (“non-MiCA compliant ARTs and EMTs”) available for trading. In case of doubt regarding the classification of a crypto-asset, concerned CASPs are expected to contact their relevant National
Competition Authorities for further guidance.
Other crypto-asset services may also constitute an offer to the public of non-MiCA compliant ARTs and EMTs in violation of Titles III
or IV of MiCA. In particular, CASPs offering in the EU services such as:
• reception and transmission of orders;
• execution of orders for crypto-assets on behalf of clients; and
• exchange of crypto-assets for funds or other crypto-assets,
are also expected to cease providing the relevant crypto-asset services and activities in relation to these non-compliant ARTs or EMTs
in the EU when their services constitute an offer to the public.
ESMA states that, to allow clients to smoothly and orderly transition to MiCA-compliant alternatives, CASPs providing services that
amount to offering to the public or seeking admission to trading are generally expected to prioritise restricting such existing services when they facilitate the acquisition of non-MiCA compliant ARTs and EMTs and, more generally, avoid entering into new products
and offering services involving non-MiCA compliant ARTs and EMTs.
The restrictions on the existing services are expected to be completed by the end of January 2025. To allow EU investors to liquidate
or convert their position in non-MiCA compliant ARTs and EMTs, concerned CASPs may, however, maintain crypto-asset services for these products on a “sell only” basis for a longer period (until the end of Q1 2025).
So basically, people in Europe can still hold or transfer USDT, but it can’t be offered to the public or
listed on official venues. In other words, you might still have USDT in your
wallet,
but good luck trying to swap it on a regulated platform.
MiCA Compliant Stable Coins
Several EURO-backed and USD-backed stablecoins are either regulated under the EU’s MiCA framework or are in the process of becoming compliant.
1. EURC – Euro Coin by Circle (France)
Issued by Circle, the company behind USDC, EURC is fully backed by euros held in regulated European financial institutions. With a strong reputation for transparency and regulatory compliance,
Circle positions EURC as a reliable choice for those seeking a euro-denominated stablecoin that aligns closely with MiCA requirements.
2. EURCV – Euro CoinVertible by Société Générale–Forge (France)
EURCV is issued by Forge, the digital asset subsidiary of Société Générale. Designed to integrate with traditional banking infrastructure, it is inherently compliant with MiCA due to
its issuance by a fully regulated European bank.
3. EURI – Eurite by Banking Circle (Luxembourg)
EURI is a euro-backed stablecoin designed for fast and borderless digital payments. Issued by Banking Circle and fully backed by euro reserves, it was built from inception to meet MiCA
standards.
4. USDC – USD Coin by Circle (France)
USDC is one of the most widely adopted stablecoins globally. Backed 1:1 by cash and short-term U.S. Treasurys, it is issued by Circle with a focus on transparency and MiCA readiness.
5. USDQ – Quantoz USDQ (Netherland)
Issued by Dutch-based Quantoz, USDQ is pegged to the U.S. dollar and fully backed by fiat and liquid assets. As an electronic money institution regulated by the Dutch central bank, Quantoz
ensures strong compliance and transparency.
The End of Tether
MiCA regulation, designed to harmonize the legal framework for cryptocurrencies in the European Union, has a direct impact on stablecoins,
including Tether (USDT), the most widely used stablecoin in the world. Launched in 2014, Tether has become the
stablecoin with the highest market volume, surpassing $130 billion in circulation in 2024. Its popularity is due to its wide adoption on exchanges and its use as a bridge between the traditional and crypto worlds, avoiding the volatility of other crypto tokens.
Tether decided
not to seek an EMI license in order to comply with updated MiCA regulations. As a result of MiCA restrictions
and ESMA statements mentioned above, most of the top exchanges have either delisted USDT or are adjusting their services to comply with MiCA, directly affecting traders and investors. 9 of 15 of top exchanges like Binance, Coinbase, OKX, Kraken,
Crypto.com, KuCoin,
Gate.io, HTX, and BitMart have already delisted USDT for EU users. Some exchanges still offer USDT, including Bybit, Upbit, Bitget, MEXC, Bitfinex, and BingX. They have not publicly disclosed
detailed compliance plans on delisting USDT.
So why did Tether leave Europe?
In our opinion, there were several main reasons for this.
1. The banking rule could backfire
One of MiCA’s most talked-about rules says that “significant” significant asset-referenced tokens — like Tether’s — must keep at least
60% of their reserves in European banks. The idea is to make stablecoins safer and more transparent.
Speaking to Cointelegraph at the Token2049 conference in Dubai in May 2025, Paolo Ardoino, CEO of
stablecoin issuer Tether, reiterated that Tether had no plans to apply for its US dollar-pegged stablecoin to be compliant under MiCA in European countries, potentially forcing exchanges to delist the stablecoin. He added that though crypto firms had to follow
regulations, there was a “fear of compliance” among companies in the EU.
“[...]
MiCA license is very dangerous when it comes to stablecoins, and I believe that is even more dangerous for the small, medium banking system in Europe,”
said the Tether CEO, adding that banks in the region could “go belly up” in the next few years thanks to MiCA’s requirements, such as keeping 60% of stablecoins
reserves in insured cash deposits in European banks.
Previously, Paolo Ardoino warned that this could
create new problems, forcing stablecoin issuers to rely so heavily on traditional banks could make the whole system more fragile.
After all, if there’s a wave of redemptions and those banks don’t have enough liquidity to keep up, we’d witness a struggling bank and a stablecoin crisis
simultaneously.
Instead, Tether prefers to keep most of its reserves in US Treasurys, assets it says are liquid, low-risk
and much easier to redeem quickly if needed.
2. Concerns Regarding the Digital Euro
Tether has expressed broader concerns about the regulatory and monetary direction Europe is taking,
particularly in relation to the development of a central bank digital currency (CBDC), namely the digital euro.
According to public statements by Tether’s leadership, including CEO Paolo Ardoino, the company
questions the implications of a centrally issued and controlled digital currency on user privacy and financial autonomy. Tether has emphasized the potential risk that such instruments may enable state-level monitoring of individual transactions, or even the
restriction of financial activity based on subjective or political considerations.
While the European Central Bank maintains that privacy safeguards – including options for offline
payments – are central to the design of the digital euro, Tether remains skeptical. From their perspective, concentrating financial authority in a single governmental entity may pose long-term risks to civil liberties and personal financial freedom. These
concerns are shared by a number of privacy and digital rights advocates across the EU.
3. Tether Prioritizes Emerging Markets Over the European Union
Tether’s strategic focus lies outside the European Union, primarily in regions facing high inflation,
currency instability, and limited access to U.S. dollars — such as Brazil, Turkey, Argentina, and Nigeria. In these jurisdictions, USDT serves as a practical alternative to unreliable local currencies and banking systems.
Complying with MiCA’s extensive regulatory requirements – including licensing, capital reserves, and
governance standards – would necessitate a substantial operational shift and financial investment from Tether. According to the company’s leadership, such a reallocation of resources would detract from its ability to support the high-demand markets where USDT
has proven most impactful. As a result, Tether has opted not to pursue a MiCA license at this time, choosing instead to concentrate on jurisdictions where its services address immediate and pressing financial needs.
Ardoino Said: “I
decided to not apply to the MiCA license because I need to protect the 400 million+ users that we have around the world. They are not as lucky as Europeans. I love Europe, but I think that unfortunately European Central Bank is more interested [in pushing]
the digital euro as a way to control people and control how they spend their money.”
NAVIGATING NON-EUROPEAN MARKETS
In January 2025, Tether announced that it would move the company and its subsidiaries to
El Salvador after it had secured an operating license in the Latin American nation.
In a January notice, Tether said it had acquired a license to operate in El Salvador as a
digital asset service provider and stablecoin issuer. The company said it planned to relocate its headquarters and subsidiaries
to El Salvador due to its “forward-thinking policies, favorable regulatory environment, and […] growing Bitcoin-savvy community.”
“This decision is a natural progression for Tether as it allows
us to build a new home, foster collaboration, and strengthen our focus on emerging markets,” said Tether CEO Paolo Ardoino, adding: “By
rooting ourselves [in El Salvador], we are not only aligning with a country that shares our vision in terms of financial freedom, innovation, and resilience but is also reinforcing our commitment to empowering people worldwide through decentralized technologies.”
Indeed, we at SBSB Fintech Lawyers understand that and it is not surprising to choose this particular jurisdiction.
In
El Salvador, there is a separate regulation: “Regulations
For Issuance Of Stablecoin Public Offerings” (hereinafter “Regulation”), which describes the requirements for registration of issuers, the list of documents and information required for
inclusion in the register, reporting requirements, and business conditions. The regulator is the National Commission of Digital Assets (CNAD).
CNAD supports the registration of stablecoin offerings, requiring issuers to register with the commission for placement and marketing
activities while meeting specified regulatory standards. For example, as the issuer the company must submit financial statements audited by an external auditor covering the previous three fiscal years. Additionally, the regulation mandates publication of a
Relevant Information Document (DIR), which must include detailed information on the stablecoin offering. This document should provide a thorough description of the financial institutions and digital platforms employed for the transfer, custody, and settlement
of any funds raised through the public offering.
But compared with the European, Salvadorian reserve requirements are more
reasonable.
Here the issuer must have reserves that fully cover the issue, at a minimum ratio of 1:1. 70% of the reserves must be invested in assets
that are liquid within 30 days, and 30% of the reserves must be invested in assets that are liquid in more than 30 days. An affidavit of information on reserves is submitted to the regulator every month. An external audit is conducted every quarter on the
accuracy of the amount of reserves and the composition of assets.
Stablecoin issuers must inform CNAD in which
financial or digital institution, with or without a location, they store the reserves as well as in the event of any changes. In any case, the issuer must ensure that the storage is carried
out, directly or indirectly, in accordance with best practices and international standards. CNAD may request such information as it deems appropriate to verify the information referred to in the preceding subparagraph.
Tether earns income partly by investing reserve funds in short-term assets such as US Treasury bonds. Under MiCA, there is a requirement
for significant issuers to keep 60% of these reserves in credit institutions in the EU (i.e. essentially European banks).
In a nutshell, El Salvador has more relaxed requirements and the issuers can keep reserves wherever they want, just informing the regulator about this. This fact makes
El Salvador a very attractive jurisdiction for crypto business.
BUT WHAT WITH EUROPE?
It is not surprising that Tether doesn’t want to leave such a big and developed European crypto market. That’s why now Tether expands
stablecoin presence in Europe, bypassing MiCA but without direct involvement.
-
In December 2024 Tether announced its investment in
StablR, the European stablecoin provider, which seeks to accelerate adoption in the region.
Tether’s investment into StablR signals its commitment to the European market and its support for
leading, fully regulated stablecoins. The decision comes amid a number of stablecoin launches in Europe, including StablR’s
EURR
and
USDR, which are poised to unlock improved
liquidity management, reduced transaction cost, and significant savings for their users.
In July of 2024, StablR secured an Electronic Money Institution (EMI) license authorized by the Malta Financial Services Authority, for its MiCAR-compliant stablecoins.
StablR stablecoins are fully compliant and trusted, fully-backed stablecoins launched to address the growing demand from financial institutions, enterprises, and retail users for compliant, secure, and easily redeemable digital assets.
Currently, StablR offers two coins: EURR and USDR, both issued as ERC-20 and Solana-compatible tokens.
As a standard, these stablecoins can be seamlessly transferred to any Ethereum or Solana wallet address. Fully regulated, StablR ensures compliance while delivering a reliable stablecoin solution.
- In addition, in May 2025, payment platform
Oobit announced their partnership with StablR to Enable MiCA-Compliant Payments with USDR and EURR.
This collaboration marks a major step toward ensuring that Oobit users in Europe can benefit from secure, regulated and compliant crypto payments in the region. As stablecoins continue to
gain significant traction in the European market, they’re at the forefront of integrating USDR and EURR into our platform, providing our users with a secure and compliant way to transact.
“By
introducing regulated stablecoins, we are making cryptocurrencies the main payment instrument,”
said Oobit CEO Amram Adar. To kick off the partnership, Oobit is offering 5% cashback on all EURR and USDR purchases.
STABLECOINS – THE FUTURE OF ONLINE PAYMENTS
Stablecoins, cryptocurrencies designed to maintain a stable value, are indeed emerging as a significant force in the future of online
payments, particularly for cross-border transactions. Their ability to offer faster, cheaper, and more transparent payment options compared to traditional systems is driving their adoption.
Look, there is one more interesting fresh case now. In June 2025, E-commerce platform
Shopify, in partnership with
Coinbase and Stripe, has added the ability to accept payments in USDC stablecoin from Circle. Customers will
now be able to pay for goods in “stablecoins” through the Base network using any crypto wallet. The Stripe payment service will automatically convert USDC into the merchant’s local currency and credit the funds to their bank account. According to Shopify COO
Kaz Nejatyan, Stripe will simplify the acceptance of payments in stablecoins and eliminate the need to understand the crypto infrastructure. The service will be available to merchants in 34 countries.
Opinion
We expect that in the coming years, the popularity of payments in stablecoins will only increase and perhaps even become equal to payments
in regular fiat currencies. The bad news for crypto projects – the regulation will be more tough and strict as a result of this development. We already see the preconditions for this.
For now, there is a certain overlap between cryptoasset services provided by CASPs under MiCA and payment services regulated under PSD2,
notably in the case of certain services relating to e-money tokens (EMTs). Under Article 48(2) of MiCA, “[e]-money tokens shall be deemed to be electronic money” and therefore, EMTs fall within the definition of “funds” set out in Article 4, point (25) of
PSD2. This means that EMTs have a dual nature being, at the same time, crypto-assets regulated under MiCA, and electronic money/funds within the meaning of PSD2
Recently, in June 2025, the European Banking Authority (EBA) issued the No Action letter in response to the EU Commission’s written
request of 6 December 2024 for the EBA, in close cooperation with ESMA,
to clarify the interplay between Regulation (EU) 2023/1114 on markets in crypto-assets (MiCA) and Directive (EU) 2015/2366 on payment services in the internal market (PSD2), in relation
to crypto asset service providers (CASPs) that transact electronic money tokens (EMTs).
It explains in detail that legal uncertainty must be removed following the entry into force of MiCA, while PSD2 simultaneously applies
to operations with e-money tokens. The EBA proposes temporarily easing the requirements for CASP to avoid double licensing while preserving the fundamental principles of consumer protection and the EU’s technological neutrality.
To that end, the EBA advises National Competent Authorities (NCAs) during intervening
period of 2-3 years during which PSD2 still applies until the application date of the future PSR and the transposition date of the future PSD3,
to regard the transfer
of crypto assets as a payment service under PSD2 where they entail EMTs and are carried out by the entities on behalf of their clients; to regard the
custody and administration of EMTs as a payment service under PSD2; and to regard a
custodial wallet as a payment account under the PSD2 where the wallet is held in the name of one or
more clients and allows to send and receive EMTs to and from third parties.
For these services, the No Action letter advises NCAs to require an authorisation under PSD2
through streamlined procedures that make maximum use of information that legal entities have already provided during their CASP authorisation under MiCA.
However, NCAs are advised to grant applicants a transition period
until 1 March 2026 before the authorisation needs to be
held. After that date, NCAs are advised to prevent entities that are not licenced as a PSP or have not entered into a partnership with a PSP, from providing services related to EMTs that qualify
as a payment service.
The EBA’s long-term goal is to create a unified, more efficient system and eliminate the need for double authorization. To this end,
the EBA proposes certain adjustments to MiCA – embedding provisions of the forthcoming PSD3/PSR on fee transparency, SCA, fraud reporting, own-funds calculation, and consumer protection. In that case, a CASP working with EMT would remain under the single MiCA
framework yet would still have to comply with payment standards.
Conclusion
In conclusion, we expect that further regulatory developments concerning stablecoin payments are inevitable – both in Europe and globally.
As the use of stablecoins continues to grow and increasingly resembles traditional payment instruments, regulators will seek to ensure consistent consumer protection, financial stability, and supervisory clarity. The recent steps taken by the EBA and the ongoing
legislative work on PSD3 and PSR illustrate that the regulatory landscape will become more detailed and demanding.
