CryptoSlate
ESMA wants the EU to prohibit every licensable crypto-asset service involving stablecoins that fail MiCA’s applicable requirements. Its September 30, 2026 submission to the European Commission would extend restrictions beyond trading to custody and transfers. An existing holder could lose access to a licensed provider even without placing another trade. The submission is a proposal, not an enacted rule.
Why it matters
ESMA’s January 2025 approach distinguished trading and public offers from merely holding or transferring non-compliant stablecoins. That distinction let customers retain balances with a provider after trading pairs disappeared. The new proposal would replace it with a broader test based on whether the stablecoin complies with MiCA, which ESMA says would reduce disparities between issuers and limit regulatory arbitrage.
The proposal targets licensed services, not personal ownership. It does not order a freeze or compulsory conversion. Nor does the submission specify an implementation date, a withdrawal exception or a process for winding down existing custody. Those details matter because current MiCA custody rules require providers to return clients’ assets as soon as possible, while the proposed restriction would also cover transfers.
Market impact
Compliant stablecoins could gain a wider advantage in EU distribution if they retain access to regulated custody and transfer channels that non-compliant rivals lose. A study of USDT and USDC trading around the 2025 restrictions estimated USDC’s share rose by about six percentage points on regulated-facing exchanges relative to global venues, largely alongside a roughly 20% relative drop in USDT volume. The study measured trading, not EU custodial balances or worldwide demand.
The next decisive step is any legislative proposal from the Commission. Its treatment of existing balances and withdrawals will determine how a custody restriction works for holders already using regulated providers.
Frequently asked questions
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How would ESMA’s proposal affect people who already hold non-compliant stablecoins?
Licensed providers could be barred from holding or transferring those balances even if customers no longer trade them. The proposal does not itself ban personal ownership.
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How does the proposal differ from ESMA’s January 2025 approach?
The earlier approach restricted trading and public offers while allowing mere custody and transfers to continue. ESMA now wants the prohibition to cover every licensable service involving stablecoins that fail MiCA’s applicable requirements.
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Would holders have to convert or freeze their stablecoins?
The proposal does not order compulsory conversion or a freeze. It also does not specify how existing balances would be withdrawn if custody and transfer services were prohibited.
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What did the USDT and USDC trading study find?
Around the 2025 restrictions, USDC’s share of combined USDT and USDC trading rose by about six percentage points on regulated-facing exchanges relative to global venues. The study measured trading, not custodial balances.
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Is ESMA’s proposed custody restriction EU law?
No. ESMA submitted a policy proposal to the European Commission. A legislative amendment would be needed to establish the restriction and address its scope and treatment of existing balances.
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