The Crypto Roundup: 07 October 2024

Nasdaq-listed cryptocurrency exchange Coinbase has announced its decision to delist unauthorized stablecoins across the European Union by 30 December 2024 to comply with the EU's Markets in Crypto Assets (MiCA) regulations, which require stablecoin issuers to hold an e-money license in at least one of the 27 EU member states to continue operations within the region.

Coinbase emphasized its commitment to regulatory compliance in a statement as it plans to restrict access to stablecoins that do not meet MiCA's criteria for users within the European Economic Area (EEA) by the end of the year.

The exchange also confirmed that it will offer affected users options to switch to authorized stablecoins, such as Circle’s USDC and EURC, which are fully compliant with MiCA requirements.

Europe’s MiCA regulations for stablecoins took effect on 30 June 2024 and have prompted companies to secure necessary licenses to continue providing services within the EU. Circle, the second-largest stablecoin issuer, was the first to secure an Electronic Money Institution license in the region in July.

In contrast, leading stablecoin issuer Tether has yet to secure a license. Tether commended the EU's regulatory efforts but pointed out that the MiCA framework introduces operational complexities for stablecoins, potentially impacting both local banking infrastructure and stablecoins themselves.

To address these challenges, Tether has announced plans to develop a technology-based solution tailored specifically for the European market. The details of this solution have not yet been revealed, but will aim to streamline stablecoin operations under the new regulatory landscape. Coinbase will disclose further information regarding its de-listing plans in November.

Coinbase is urging the court to grant an interlocutory appeal in its ongoing legal battle with the U.S. Securities and Exchange Commission (SEC), following a similar appeal recently filed by the agency in its case against Ripple. The crypto exchange has requested that Judge Katherine Polk Failla, who is presiding over the case, approve the appeal before the case is fully resolved.

Coinbase initially filed for the interlocutory appeal in April 2024, aiming to have the Second Circuit of Appeals review a critical question: how the Howey Test—a legal standard set by the Supreme Court in 1946 to determine what qualifies as a security—applies to digital assets. Coinbase’s lawyers highlighted the complexity and contentiousness of this issue, noting that opinions are divided among lawmakers, regulatory bodies, and courts.

Despite the SEC’s opposition to the request, which the agency argued had "no substantial ground for difference of opinion," Judge Failla has yet to make a ruling. However, Coinbase is pushing the court to reconsider its motion in light of the SEC’s recent appeal in the Ripple case, which also involves questions about the Howey Test’s application to digital assets.

Coinbase believes that having both cases presented to the Second Circuit at the same time could provide the court with a comprehensive view of the SEC’s legal stance. A Coinbase spokesperson expressed confidence in their position, stating that "allowing the Second Circuit to have as complete a picture as possible will be important as it considers how Howey applies to secondary market transactions."

Crypto legal expert James "MetaLawMan" Murphy described Coinbase’s renewed appeal request as a "smart move," pointing out that the SEC’s actions in the Ripple case add weight to Coinbase's argument.