Tether USDt Custody and Transfers ‘Not Restricted’ Under MiCA, Says ESMA

The European Securities and Markets Authority (ESMA) has clarified that the custody and transfer of stablecoins, including Tether (USDt), that do not comply with the Markets in Crypto-Assets Regulation (MiCA) are not explicitly prohibited under European cryptocurrency laws. This clarification comes after recent announcements from Binance, which revealed plans to delist several non-MiCA-compliant stablecoins, including USDt, for users in the European Economic Area (EEA).

Binance’s Delisting Announcement

On March 3, Binance, one of the world’s largest cryptocurrency exchanges, disclosed that it would remove nine non-MiCA-compliant stablecoins from trading, including Tether's USDt, for its EEA-based users. However, despite the delisting, Binance emphasized that it would continue to support deposits and withdrawals of these stablecoins, even after the delisting, which is set to take place on March 31.

ESMA’s Stance on MiCA and Non-Compliant Stablecoins

In response to Binance’s announcement, ESMA, which oversees compliance with MiCA regulations in Europe, confirmed that providing custody and transfer services for non-compliant stablecoins like USDt does not violate MiCA regulations. According to an ESMA spokesperson, "Under MiCA, custody and transfer services do not in themselves constitute an 'offering to the public' or 'seeking admission to trading' of non-compliant asset-reference tokens or e-money tokens."

The spokesperson further added, "These services are therefore not explicitly prohibited under Titles III and IV of MiCA."

Custody and Transfer Not Restricted, But CASPs Must Prioritize Compliance

While ESMA clarified that custody and transfer services are not explicitly prohibited, it did advise European crypto asset services providers (CASPs) to prioritize restricting services that facilitate the acquisition of non-compliant stablecoins. The regulatory body referenced its guidance issued on January 17, 2025, which encourages CASPs to take measures that prevent the further acquisition of such assets.

Importantly, ESMA reiterated that CASPs may continue to offer "sell-only" services or allow withdrawals for non-compliant stablecoins until March 31. After this date, ESMA recommends halting these services to ensure compliance with MiCA’s restrictions.

Ongoing Confusion Over MiCA Compliance

ESMA’s statement adds to the growing confusion over the practical implications of MiCA for non-compliant stablecoins. While the regulator confirmed that USDt custody and transfers are not explicitly restricted, the requirement for CASPs to halt withdrawals and restrict the acquisition of these tokens has raised concerns within the crypto community. Juan Ignacio Ibañez, a member of the Technical Committee of the MiCA Crypto Alliance, has previously noted that the delisting of USDt under MiCA regulations has been a subject of ongoing debate.

The MiCA framework, which was designed to regulate crypto assets across the European Union, has also sparked discussions about areas of the industry that remain unclear or unaddressed. These include sectors like tokenized real-world assets and cryptocurrency staking, which many experts believe require further regulatory clarity.

ESMA’s Monitoring of Market Developments

In light of these uncertainties, ESMA has stressed that it, along with National Competent Authorities, is closely monitoring market developments to ensure a smooth transition to the MiCA regime. The regulatory body is committed to enforcing MiCA regulations and maintaining order in the crypto market as the new rules take effect.

As MiCA continues to shape the landscape of cryptocurrency regulation in Europe, industry participants will need to stay updated on the evolving guidelines to ensure compliance. The clarification of USDt custody and transfer rules may provide some relief for crypto services providers, but questions around the full scope of MiCA compliance remain.