

Circle Secures First Stablecoin License Under EU\'s New Regulatory Regime, While Rival Tether Continues to Avoid Discussions About Whether Its Stablecoin Will Ever Join This Euro Party
Circle has been furiously promoting USDC's new identity as a 'payment stablecoin,' hoping to also benefit from U.S. legislation that would elevate USDC while keeping Tether on the outs.
Circle has become the first stablecoin issuer to secure a license under the European Union’s new crypto regulatory framework, while Tether continues to face challenges due to its large foreign currency stablecoin.
Here’s what you need to know:
* Circle, the issuer of the stablecoins USDC and EURC, has obtained an Electronic Money Institution (EMI) license from France’s banking regulator.
* This license allows Circle to operate under the EU’s Markets in Crypto Assets (MiCA) regulatory framework, which went into effect on June 30.
* MiCA classifies stablecoins as either e-money tokens (EMT) or asset-referenced tokens (ART). EMTs are pegged to an official fiat currency, while ARTs can be pegged to a mix of currencies, real-world commodities, or other digital assets.
* EMTs can only be issued by holders of EMI permits, like the one Circle just received. Circle has been promoting USDC’s new identity as a ‘payment stablecoin,’ hoping to also benefit from U.S. legislation.
* However, foreign currency EMTs—including USDT and USDC—have to cease further issuance of a token if its daily usage exceeds (a) 1 million daily transactions or (b) €200 million ($215 million) in total value.
* Those limits apply “within a single currency area” (aka within the EU) but don’t appear to include typical ‘crypto’ transactions where one token is swapped for another, used in derivative contracts, transferred peer-to-peer via non-custodial wallets, etc.
* Despite the length of time MiCA has been in the oven, there remains some confusion regarding its specifics, and might require some real-time refereeing for clarity to emerge.
Tether, on the other hand, faces difficulties due to its massive foreign currency stablecoin, USDT:
* Tether has criticized MiCA’s banking requirements due to the company’s problems in establishing relationships with mainstream financial institutions.
* Tether claims to have most of its fiat reserves in T-bills allegedly custodied by Wall Street’s Cantor Fitzgerald, but its most recent reserves ‘attestation’ showed less than $100 million in cash.
* Another aspect of MiCA’s stablecoin rules that Tether finds distasteful is the requirement for ‘significant’ issuers to submit detailed info on their reserve assets.
* Tether has been promising to conduct an independent full-scale audit of its reserves for seven years now, but that magical moment never seems to arrive.
* Tether’s aversion to transparency has led to some exchanges, like Bitstamp, delisting its Euro-denominated stablecoin, EURT, as of June 30.
* Other exchanges, like OKX and Uphold, have delisted USDT entirely, while Binance has announced that it will restrict the availability of non-compliant stablecoins, including USDT, for EEA users.
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